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Online Auction Tips

With total sales expected to reach $19.6 billion in 2004, online auctions have become one of the most popular commercial venues on the Internet. Yet surveys show that 40 percent of online auction buyers report problems with their transactions, suggesting the need for caution when you bid and buy online.

Here are a few tips that should improve the chances that your online auction experience will be a good one:

  1. Use a credit card. When a consumer uses a credit card, the bank that issued the card acts as an intermediary if there is a problem with the transaction, and allows the consumer to charge back an unauthorized or erroneous charge.
  2. Use third party payment services. Third party payment services that are affiliated with the auction site act as intermediaries between a buyer and seller. Depending on the auction site’s particular system, purchasers may also be able cancel charges for unsatisfactory or non-delivered goods.
  3. Consider online auction insurance. Some online auctions offer insurance to protect the buyer. Under these programs, when the seller fails to deliver, or the goods aren’t what was promised, the buyer can recover some of what was paid. However, consumers need to check the insurance policy and procedures carefully. Often, there are very short windows of opportunity to file a claim, and some policies limit the types of claims that can be filed.
  4. Consider using an escrow service for expensive purchases that aren’t covered by insurance or bonding. Online escrow services allow consumers to deposit money in trust with a company that holds money until a consumer receives the goods that were purchased in an auction. If there is a dispute, the escrow service may act as a referee. 
  5. Ask about delivery, returns, warranties and service before you pay. Get a definite delivery time and insist that the shipment is insured. Ask about the return policy. If you’re buying electronic goods or appliances, find out if there is a warranty and how to get service.
  6. Study consumer feedback sections of online auction sites. These areas contain reviews of seller practices by previous customers.
  7. Check out the seller before you bid. Some auction sites have feedback forums with comments about the sellers based on other people’s experiences. Be aware that positive reports may have been “planted” by the seller and negative comments could be from a competitor. Other sources of information are state or local consumer protection agencies and the Better Business Bureau. Negative information is a good warning sign, but a clean complaint record doesn’t guarantee that your transaction will go smoothly.
  8. Be careful if the seller is a private individual. Many consumer protection laws don’t apply to private sales, though government agencies may take action if there are many complaints the same individual or criminal fraud is involved.
  9. Be especially cautious when dealing with sellers in other countries. If you have a problem, the physical distance, difference in legal systems, and other factors could make resolving it very difficult.
  10. Get the name and contact information of the seller. The name, physical street address, email address, and phone number are helpful to have for checking the seller out and following up later if there is a problem. Don’t do business with anyone who refuses to provide that information.
  11. Try mediation to resolve disputes. Not all problems are due to fraud. Sometimes people simply fail to hold up their side of the bargain in a timely manner or there may be a misunderstanding about something. Some auction sites provide links to third-party mediation services that help people resolve disputes. There may be a small fee that is usually paid by the party who requests the mediation.
  12. Inform auction sites about suspected fraud. They may have policies to remove sellers from their sites if they don’t live up to their obligations.
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