On-line Auction is one of the few bright spots in
dotcom ventures. It is a big business today with millions
of participants across continents, buying and selling
millions of products everyday. Tens of thousands of
people around the globe currently make a full-time
living selling items through Internet auction houses.
Major reason for such incredible growth and popularity
in an otherwise gloomy dotcom scene is the simplicity
and phenomenal reach of Internet auction. People find
it simple and convenient to get great deals from around
the world.
The excitement also makes them prime victims for
scam artists, ready to play on the desire many auction
bidders have for that "unbelievable deal."
This is not to doubt the integrity of vast majority
of honest buyers and sellers who deliver on promises.
According to eBay, only one auction in 40,000 on their
site ends with a reported case of confirmed fraud.
However, it is also true that above statistics doesn't
take into account unreported cases and in any case
it's little comfort if you find yourself the unfortunate
one in 40,000.
In fact, on-line auction scam accounts for roughly
48% of all online fraud reports to the Federal Trade
Commission (FTC) of USA. Almost 500 reports per week,
committed by both sellers as well as buyers.
So how do you protect yourself, short of simply staying
away from the online auctions ? Before discussing
the various auction related scams, let us understand
how Internet auction works.
What is On-Line Auction
The process of an online auction is much the same
as a live auction. Its a public sale in which a seller
specifies minimum amount for an item. The buyers bids
for the item for a duration specified (ranging from
1 hour to 7 days). At the end of the auction, the
item is sold to the highest bidder. Similarly, a buyer
may participate in an auction by bidding for an item.
The person who offers the highest bid wins the right
to purchase the item at that price. Successful bidders
are notified through email on the status of their
bids.
Actual transaction takes place between successful
buyer and seller DIRECTLY without any significant
involvement of the auction house.
No physical inspection of goods, anonymous nature
of Internet communication, lack of rigorous legal
safeguards for buyers etc. make the process somewhat
vulnerable to swindlers and frauds.
Common Auction Scams
Internet Scambusters (www.scambusters.org) have identified
following most common frauds seen in on-line auctions
- Misrepresentation
- Failure to ship merchandise:
- Failure to pay:
- Shilling:
- Bid Shielding:
- Piracy and counterfeiting:
- Internet Fencing:
- Triangulation:
- The "Buy and Switch":
- Fee stacking:
- Loss or Damage Claims:
- Shell Auctions:
We shall discuss each of them as also how to safeguard
your interest in next issue
