Online auctions can be risky business, according to the Federal Trade
Commission (FTC), a federal agency that works to prevent fraud, deception and
unfair practices in the marketplace. Among the thousands of consumer fraud
complaints the FTC receives yearly, those dealing with online auction fraud
consistently rank at or near the top of the list. The complaints generally deal
with late shipments, no shipments, or shipments of products that aren't the same
quality as advertised; bogus online payment or escrow services; and fraudulent
dealers who lure bidders from legitimate auction sites with seemingly better
deals. Most complaints involve sellers, but in some cases, the buyers are the
focus. Whether you're a buyer or a seller, understanding how Internet auctions
work can help you avoid these problems.
Internet auctions are online bazaars. Some are the scenes of business-to-person
activity, where a Web site operator physically controls the merchandise for sale
and accepts payment for the goods. But most specialize in person-to-person
activity where individual sellers or small businesses auction their items
directly to consumers. In these auctions, the seller — not the site — has the
merchandise.
The person-to-person sites require sellers to register and obtain a "user
account name" (or "screen name") before they can place items for bid. Sellers
also must agree to pay a fee every time they conduct an auction.
Many sellers set a time limit on bidding and, in some cases, a "reserve price" —
the lowest price they will accept for an item. When the bidding closes at the
scheduled time, the highest bidder "wins." If no one bids at or above the
reserve price, the auction closes without a "winner."
At the end of a successful person-to-person auction, the buyer and seller
communicate — usually by email — to arrange for payment and delivery.
If you have problems during a transaction, try to work them out directly with
the seller, buyer or site operator. If that doesn't work, file a complaint with:
the attorney general's office in your state.
your county or state consumer protection agency. Check the blue pages of the
phone book under county and state government.
the Better Business Bureau.
the FTC. File a complaint online at www.ftc.gov or call toll-free 1-877-FTC-HELP
(1-877-382-4357).
The FTC works for the consumer to prevent fraudulent, deceptive and unfair
business practices in the marketplace and to provide information to help
consumers spot, stop and avoid them. To file a complaint or to get free
information on consumer issues, visit www.ftc.gov or call toll-free,
1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet,
telemarketing, identity theft and other fraud-related complaints into Consumer
Sentinel, a secure, online database available to hundreds of civil and criminal
law enforcement agencies in the U.S. and abroad.
