Things to take note to prevent e-auction fraud when a consumer participating in an e-auction

Fraud in Auctions and Its Prevention

According to Internet Fraud Watch (fraud.org/internet), among all e-commerce activities conducted over the Internet, fraud is most serious in e-auctions. It accounted for 87 percent of the e-commerce fraud that occurred in 1999. According to the National Consumer League’s National Fraud Information Center, 9 out of 10 registered Internet related complaints are concerned with auction fraud.

METHOD TO PROTECT AGAINST E-AUCTION FRAUD

The largest Internet auctioneer, eBay, has introduced several measures in an effort to reduce fraud. Some are free and some are not. The company has succeeded in its goal.

Product authentication is a way of determining whether an item is genuine and described appropriately. Authentication is very difficult to perform because it relies on the expertise of the authenticators. Because of their training and experience, experts can often detect counterfeits based on subtle details (for a fee). However, two expert authenticators may have different opinions about the authenticity of the same item.

Grading services is a way of determining the physical condition of an item, such as “poor quality” or “mint condition.” The actual grading system depends on the type of item being graded. Different items have different grading systems—for example, trading cards are graded from A1 to F1, while coins are graded from poor to perfect uncirculated.

The eBay Feedback Forum allows registered buyers and sellers to build up their online trading reputations. It provides users with the ability to comment on their experiences with other individuals.

For items valued at more than $200, or when either a buyer or seller feels the need for additional security, eBay recommends escrow services (for a fee). With an easy to access link to a third-party escrow service, both partners in a deal are protected alerts the seller when everything checks out. At that point, the seller ships the goods to the buyer. After an agreed-upon inspection period, the buyer notifies the service, which sends a check to the seller. (An example of a provider of online escrow services is i-Escrow.)

Appraisers use a variety of methods to appraise items, including expert assessment of authenticity and condition, and reviewing what comparable items have sold for in the marketplace in recent months. An appraised value is usually accurate at the time of appraisal but may change over time as an item becomes more or less popular in the marketplace.