Auction Action OnLine

From about fifty years ago, when one heard the word “auction” the names Christie’s and Sotheby’s come to mind. It also conjured images of distinguished ladies and gentlemen in fine clothes gathered in a plush room bidding for rare and / or luxurious items and antiques.

But the Internet, as it has done with almost all human activity, changed all that with online auction sites. The most popular of which is eBay. Today, any person with Internet access can participate in an auction. Bidders don’t even have to be in the same time zone, much less in the same room. And whereas before when items for auction were limited to expensive antiques and works by master artists; today, one can put up anything, even one’s own creations for sale.

If you’re still unfamiliar with how an Online auction works, below is a brief description.

All participants (particularly sellers) need to 'sign on' to establish an account. An account is identified by a user-designated screen name (e.g. dogbuddy123). Should the user turn out to violate auction rules consistently, the website can discontinue the account, as sanctions against the user.

With the exception of drugs, pornography and illegal items, a seller can put up anything for a bid (e.g. glow in the dark dog collar). The seller can set a reserve price, also known as the minimum bid (e.g. $2).

He announces the item for sale along with a sales pitch, the product’s description and photo (e.g. Never Need to Look for Rover at Night with Glow In the Dark Collars!). A bidding period is set for the auction, averaging around 2 weeks, after which the bid is closed and the last bid is set as the selling price.

Once a buyer finds an item they’re interested in. They can place a bid for the item. That bid has to be greater than the minimum bid and higher than bids previously placed by other interested parties.

As more and more interested people place their bids for the item, the price increases in value. The highest placed bid when the auction period ends becomes the final price. After that, it’s simply a matter of coordinating with the buyer to arrange payment and delivery of the item.

If it sounds simple to you, then you already know why this method has become one of the most popular ways to sell and buy goods online. Not only has it become easier to locate and purchase hard-to-find items, it also allows a fair deal to be struck between buyer and seller.

However, that is not to say that this form of transaction is free of its own cases of fraud. In fact, according to the Federal Trade Commission (FTC) Internet auction fraud ranks consistently as one of the most filed consumer fraud complaints of the past three years. And the complaints aren’t exclusive to buyers either. Apparently, even sellers have been scammed by deceitful buyers.

It is best to know what these scams are so that in the chance you might come across it, you may be able to recognize the setup before you realize things too late.

Bid siphoning After you’ve located an item you want, sometimes, the person selling it will communicate to you (usually via email) that there is an “alternate” auction site where he can sell you the item for much less than what he’s posted on eBay.

Legitimate auction sites like eBay offer protection for buyers in the form of insurance. Should a seller fail to deliver an item you’ve paid, eBay may be able to replace the money you’ve lost. In turn, they will go after the seller and charge him accordingly. However, if you made the transaction outside eBay, then that protection is unavailable to you.

Shill bidding A shill is a swindler’s accomplice whose job is to drive up the bids from legitimate bidders for an item that apparently does not carry the value of the price it commands.

The shill places high bids for the item luring other bidders to top his offer. In the end, the person who made the highest bid pays for something that is of compromised value (stolen, knock-offs, refurbished instead of brand new, etc.).

Bid shielding A scam perpetrated by buyers, am item is shielded from a fair bid by a buyer when he places an very high bid for the item. Other bidders leave the auction when they see the high price they have to compete with.

Just before the bid closes, however, the scammer will withdraw his bid and then under another name, will place a much lower bid. Since the auction is about to end, the lower bid is set as the item’s final selling price.

These are the most filed cases of Internet auction fraud and being aware of these and others can help in avoiding the unpleasant experience of being scammed out of your money. Nevertheless, buying and selling over eBay still proves to be a good way to buy and sell the items you want at prices that are fair to everyone.