Bidding for merchandise through on-line auction houses can be a wonderful way to purchase hard-to-locate items. Simply go on-line, punch in your price and you could find yourself the top bidder for that rare china pattern or limited-edition rookie card.
But as consumer protection groups will attest, “Buyer beware” applies at least as much to on-line auction purchasing as it does to any other kind of buying.
According to the Washington, D.C.-based National Consumers League, scams perpetrated through on-line auctions constitute the biggest problem in Internet fraud, accounting for 68 percent of Internet fraud cases reported to the agency in 1998.
And, said Susan Grant, director of the NCL’s National Fraud Information Center and Internet Fraud Watch program, the number of on-line auction scams is certain to grow.
“This year, from statistics we’ve gathered thus far, reports of fraud in on-line auctions will represent an even greater percentage of the Internet fraud reports we hear,” she said.
And that increasing percentage is based on a skyrocketing total number of Internet fraud reports, which soared 600 percent from 1997 to 1998. “There’s just a lot more people going onto the Net and being exposed to the fraudulent things you can find there,” Grant noted.
The majority of those selling merchandise over on-line auction sites are reputable, according to consumer protection experts. But to guard against those who aren’t, make sure you follow several precautions when purchasing through on-line auction houses.
The first is to avoid paying by check or money order. “Pay the safest way,” Grant insisted. “It’s hard to be sure about the seller and what the seller is offering until you’ve paid. If you pay by credit card, you have legal dispute rights, the right to dispute the charges and refuse to pay in cases where you never received the merchandise or the merchandise was misrepresented.”
The use of an escrow agent is also a wise approach, especially with big-ticket items. You send your payment to an escrow agent, who holds it while you inspect your merchandise. The seller doesn’t receive your payment until you’ve confirmed with the escrow company that you got what you were supposed to get, said Grant.
“You pay a small fee, which varies from company to company,” she reported. “But it’s well worth it, considering the hundreds, and even thousands, of dollars a person may spend on an item of merchandise. Some of the on-line auction companies have information about escrow companies right on their sites, which you can link to.”
Also check into whether the item you’re purchasing can be insured. Some on-line auction companies offer insurance that can cover purchases. According to Kevin Pursglove, senior director for communications with San Jose-based eBay, Inc., the company’s insurance program offers coverage on items costing up to $200, and has a $25 deductible.
“Our program is run through Lloyd’s of London, and it’s absolutely free to every eBay user,” said Pursglove. “If a person bids on an item and the item is not delivered or it’s not as described, they can use the insurance program. They’d make a claim just as they would with any other type of insurance.”
For additional peace of mind, attempt to verify the seller’s identity before purchasing from him or her, said Patricia Kelly, Chicago-based division chief of the Consumer Protection Division of Illinois Attorney General Jim Ryan’s office.
“Do a little investigation about `Who is selling this product?’ and `How can I contact him?’ ” Kelly urged. “If you can’t get a satisfactory verification of the seller, don’t do business with him. The less you know about the seller, the fewer remedies you have if you’re dissatisfied.”
Verification of a seller’s identity is also recommended by the Federal Trade Commission’s Bureau of Consumer Protection in Washington, D.C. Staff attorney Lisa Hone urges would-be buyers to make sure they can reach sellers via telephone and e-mail, and that sellers respond to their messages. “And if it’s a big-ticket item, make sure that the telephone number and the address correspond,” said Hone. “If they don’t, it should raise a red flag.”
If the seller is a company, consider contacting the Better Business Bureau and state or local consumer protection agencies, said Grant. Such organizations may be able to provide information on the company’s track record.
“There may be information on-line from some of these agencies,” she said. “But the fact that there’s no information or even good information is no guarantee you’ll have a good experience. A company can have an OK reputation for a while and then go bad.”
Buyers may be able to get help in verifying identities of sellers through the on-line auction companies they use. For instance, the Verified eBay User program is a strictly volunteer program in which eBay users send their names, addresses, telephone numbers, driver’s license numbers and other information to a third party, Equifax, for confirmation.
Once their identities are confirmed, small icons are displayed next to the users’ names on the eBay site. “It tells buyers that (the seller) is enrolled in the Verified eBay User program,” said Pursglove.
Some on-line auction houses also allow users to offer comments on their dealings with other users. The Feedback Forum on the eBay site is one example. “That’s the track record of buyers and sellers who have used eBay,” said Pursglove. “Carefully read through the Feedback Forum, because you’ll get an understanding of what other eBay users have to say about that individual, pro or con.”
Once you’ve satisfied yourself as to the seller’s identity, ask the individual or company how you can obtain follow-up service if the item is likely to need repair down the road.
If no follow-up service is offered, said Kelly, “think about whether it’s important to you. Are you still willing to buy the product and deal with any service issues by yourself?”
One additional precaution is to avoid impulse buying. In those cases in which the item didn’t turn out to be what the consumer wanted, he or she can’t just go to the store and return it, noted Kelly. “(Ask if) there are return policies at all with the seller,” she recommended. “It could be there aren’t, and you need to understand that before buying.”
If, despite all your precautions, you still have a problem with delivery of the merchandise or the item itself, Pursglove suggests contacting the seller to make sure the problem hasn’t resulted from a misunderstanding. “A lot of times, these are just miscommunications between the two parties, and they’re easily patched up over the phone or by e-mail,” he said.
In those cases in which you can’t obtain redress, don’t hesitate to take your complaint to authorities. Hone suggests reporting it on the FTC’s on-line complaint form at www.ftc.gov. In addition, contact local law enforcement agencies in the area where the seller resides or does business, she said. “You can also report it to the U.S. Postal Inspection Service,” Hone added. “They’re actively involved in investigating Internet auction fraud.”
Complaints can be filed through the Consumer Protection Division of the Illinois attorney general’s office by calling 800-386-5438 and requesting a consumer complaint form. And you can report on-line auction fraud to the National Consumers League by calling 800-876-7060 and speaking with a counselor. The NCL also has an on-line Incident Report Form at www.fraud.org.
