Internet auction websites offer consumers the ability to purchase goods from around the world in an auction format. While internet auctions enable consumers to find good deals on consumer goods, the process is susceptible to fraud. Every internet auction site is different, and you will want to read the terms and conditions of the exchange before buying or selling anything through the online marketplace.
The winning bidder of an item up for auction may have a variety of payment options, including credit cards, cashier’s checks, money orders, cash on delivery, debit cards, PayPal, and auction escrow services. The seller usually chooses the method of payment. One of the safest forms of payments is a credit card, due to the protections guaranteed by the credit card company. However, before providing your credit card number to anyone, you should be familiar with your credit card’s terms and conditions regarding the dispute of charges. If you have a dispute with the seller, you should immediately dispute payment with (1) your credit card company, (2) the auction escrow company or online auction site, and (3) the Arizona Attorney General’s Office, Consumer Information & Complaints Unit.
- Know the auction site and how it works before you bid. Not all auction sites have the same bidding processes. Make yourself aware of the auction site’s terms regarding insurance and seller guarantees before you bid.
- Know the seller, including their identity (their name other than e-mail address – some sellers may use a forged e-mail address), verify their telephone number before placing your bid, and check their feedback rating.
- Know what you are bidding on before you bid on it. Make sure you understand the shipping, insurance, and return policies.
- Know the top price you will pay for the item and stick to that price. Conduct some research to make sure that the price you are paying for the item is similar to the price paid elsewhere online. If the deal seems too good to be true, it probably is. Watch for words like “off-brand,” “refurbished,” “like new,” and “discontinued.”
- Know the warranty (if available) terms and conditions before you bid. Verify warranty offers directly with the warranty company. Verify that the warranty is transferable, and make sure service centers are close enough to where you live. Review warranty termination clauses, and binding arbitration clauses.
- Know your payment options before you bid. If the seller will not accept credit cards, consider using an auction escrow service. However, be sure to use a reputable auction escrow service. Some fraudulent auction escrow services simply forward your money to a scammer as soon as you place the funds in escrow. Review the terms and conditions of the auction escrow service, including their policies and procedures.
- DO NOT give anyone your social security number, driver’s license number, or your birth date. No seller needs this information.
- Save all copies of your transaction information, including the seller’s responses (copies of ALL e-mails, copies of pictures, and note price, date, and time of bid).
- Do not bid on an item you do not intend to purchase. If you are the highest bidder, you are obligated to pay for the item. If you back out of the deal, you may be barred from bidding again on that auction site.
- Avoid bidding on any auction items in which the seller is from overseas. The majority of auction scams originate from foreign sellers.
- Do not wire funds directly to sellers. The auction sites are designed to be a clearinghouse and normally hold payments until the buyer has received the item. If you win a bid through the auction site, pay for the item through the auction site.
- If you are a seller, use caution when sending purchased items overseas. Be sure to verify that the billing address on file for the buyer is the same as the shipping address. Verify the identity of the buyer if the buyer wants you to ship the item to a different address than the billing address.
- Read the fine print. Many times the picture and specifications of a high dollar value item, such as a computer, is placed up for bidding, usually at an impossibly low reserve price. In the fine print, the seller states that the potential buyer is bidding on only the picture of the high dollar value item, not the actual item. Read all information concerning the product up for auction before placing a bid.
- Beware of cashier checks. A high volume of counterfeit cashier checks have been used lately. Avoid accepting cashier checks from buyers at all, especially when the check is for significantly more money than the winning bid. Never wire the balance of an overpayment back to a buyer.
More and more consumers are using internet classified sites to buy and sell items instead of internet auctions. This enables the consumer to circumvent shipping costs and costly commissions paid to the internet auction site. Unfortunately, as more consumers are using internet classifieds, fraud activity is significantly increasing.
The most important concern is personal safety. While the incidence of violent crime is low, precautions should be taken. When meeting someone to conduct the purchase or sale of an item from an internet classified ad, make sure to: meet at a public place, do not allow a stranger to come into your home, take your cell phone with you, and consider having a friend accompany you.
Beyond personal safety, here are some tips to help ensure that you aren’t taken advantage of:
- Do not wire funds through a wire service. Conduct the transaction in person and with a cashier check, money order, or cash.
- Beware of fake bank checks. If a buyer gives you a cashier check or money order, call the bank on which it is drawn to verify its authenticity before completing the transaction.
- Never give out personal information such as your address, bank account information, social security number, or any other financial information.
- Do not purchase goods or services sight-unseen.
- Do not provide information to submit to a background check before meeting an interviewer or landlord/agent in person.
- Do not send a seller a small down-payment for an item you have not yet seen.
- Do not agree to the terms of any transaction in which you are given a bank check or money order that significantly overpays for an item, and the buyer requests that you wire the balance back to them.
- Deal locally. Meet your counterpart seller or buyer in person, in a public place, and conduct the exchange of goods for cash in person.
- Do not respond to any emails that purport to be from the online classified site requesting payment to guarantee a transaction. Most of the sites do not issue any guarantees or charge you any fees for using the service.
- Do not accept a job offer from a foreign company in which you are required to accept payments for the foreign company and wire the proceeds from your account to an account overseas.
- Beware of work from home opportunities and “business opportunities” posted in online classified ads. Be sure not to give significant funds to “business opportunity” vendors for leads or “marketing campaigns.” If you are told that you will make thousands of dollars without expending any effort, it is probably a scam.