Protect Yourself From Online Auction Fraud

Browsing online auctions can give you a good deal on a quality item. You could find everything from antique furniture to used cars on an auction website, sometimes at a deep discount.

But scammers see the auction market as an opportunity. With often little oversight on online marketplaces, they seize the chance to lie and steal from unsuspecting shoppers.

Online auction fraud has grown into a significant consumer threat. Plus, fraud methods change as quickly as shoppers and law enforcement discover them.

Whether you're a seller or bidder, scammers may target you. Learn how to stay safe and what to do about internet auction fraud.

Check Out Multiple Auction Sites

EBay is one of the most popular auction sites, and most internet auction sites work similarly. Yet, they can have very different rules and policies for fraud, returns, and insurance.

Shop around before selecting a site that you feel most comfortable with. Pay special attention to the site's rules on insuring its users against fraud and scams. Start small by buying or selling low-stakes items to get accustomed to how online auctions work.

Compare Prices Before Bidding

One way to avoid getting ripped off is to shop around to get a sense of how much something should cost. If the item is no longer available through regular sellers, you may look at how much it cost when it initially hit the market.

Beware when someone offers something at half the price as anyone else. If a deal seems too good to be true, it probably is. In theory, online auctions can offer lower prices, but the savings shouldn't be dramatically higher than other online sources. Fraudsters often use low prices to lure customers and create urgency so they buy quickly. The seller may then send you a cheap knock-off or nothing at all.

Also, don't assume that online auctions are always cheaper. Auctioneers may use this misconception to sell unfairly priced products. Like a going-out-of-business sale, the seller may imply you're getting a huge discount when you aren't. The only way to know is to compare prices for the same or similar item.

Review Seller Feedback

Most online auction sites allow buyers to give feedback on a seller as a way to self-police. Reviews can be helpful, but temper your expectations with a healthy dose of skepticism.

It's easy for a seller to get friends and family to give positive feedback. It's even easier for a thief to set up multiple identities or bot accounts to give themselves positive feedback.

Check whether a seller has blatantly negative feedback. Also, check whether their reviews seem unnaturally consistent as if written by the same person. These red flags may warrant looking for a different seller with more reliable reviews.

Insist on Safe Payment Methods

One of the most popular online scams uses unsafe payment methods, such as wire transfer services, to make the payment. Once you wire the money, it's gone. There is no mechanism to claw back the funds.

Also, beware of cash-only and gift card requests. A seller might also want you to send payment to a P.O. box. These methods enable the seller to take your money and disappear.

Using a credit card offers much more protection while shopping online. Credit cards provide clear transaction tracking information. They also typically have built-in fraud protection and a process for disputing charges.

Another common alternative is using an online payment service. For example, PayPal, Apple Pay, Google Pay, and Venmo have similar functionality. Such services can help you track and sometimes even dispute charges. They also offer an extra layer of security to shield your credit card number. Yet, review each service's unique terms of use to understand your protections.

Choose Safe Shipping Methods and Insurance

Use established shipping methods that require a signature and are trackable. If you use untraceable methods, the other person can simply claim they never sent or received it.

You may also want to look for items insured through the seller or a reputable third party. However, insurance policies often contain limitations. Read the fine print of an insurance policy carefully to know what it protects.

Use Escrow Services for High-Value Items

Consider using an escrow service when you bid on expensive auction items. Escrows serve as neutral middlemen who hold onto the payment until the buyer receives and approves of the item before releasing the money to the seller.

Be very careful when selecting an escrow service. One of the most popular online scams is using a fake escrow service so the other party believes the transaction is safe. The scammer keeps the payment without honoring their end of the deal.

Do ample research before choosing an escrow service. Check that it has a good reputation and customer reviews.

Keep Records of Your Purchases

As with any online purchase, keep all of your records, such as:

• Receipts
• Emails and confirmations
• Packing slips
• Tracking numbers
• The seller's name and basic contact information
• If applicable, the seller's return policy

Many people also take pictures of items they receive as proof of their condition upon delivery.

Beware of Inflated Bids or Shills

A product listing might appear in high demand, tricking you into thinking it must be a good deal. Dishonest sellers may have a friend or accomplice place a bid to inflate the bidding price or start a bidding war.

Examine the seller's history on the auction website. Consider looking elsewhere if you see the same person constantly bidding up their items. It's not always a sign of fraud, but avoiding potential scammers is safer.

How Do I Report Online Auction Fraud?

There are several places to report online auction fraud, including:

• The internet auction site itself
• The Federal Trade Commission (FTC) consumer protection website
• The FBI's Internet Crime Complaint Center (IC3)
• The National Consumer League's Fraud Information Center

You may suspect that an online auction transaction could be the cause of identity theft. A purchase should never require sensitive information like your Social Security number or bank account information. Auction scams are internet crimes that can cause widespread damage to your finances and privacy.

If you are a victim of fraud, report it to a consumer protection agency. Thieves rely on apathy and embarrassment to keep their victims quiet. Consumer complaints can attract the attention of law enforcement.

Legal Disputes Involving Online Auctions

Blatant scams aren't the only issues you may encounter. Auction websites can lead to many of the same problems you might face while shopping at typical online stores.

Common auction disputes include:

• Nondelivery of the item
• Sale of counterfeit goods
• Inaccurate or misleading item descriptions (express warranty disputes)
• The quality of a secondhand item, especially if "sold as is"
• Return policy disputes

Auction websites are often peer-to-peer rather than business-to-consumer. This model can introduce unique issues. For example, a fellow user may be more prone to practicing harassment or discrimination than a worker who must follow strict store policies. Peer-to-peer purchases often aren't subject to many of the business regulations that protect consumers.

Get Legal Advice for Online Auction Disputes

You can find plenty of deals online, and participating in auctions can be thrilling. But when an auction is fraudulent or contentious, you may want extra support.

Hiring a consumer law attorney may help you resolve a dispute or recover from a scam. They can explain how federal and state laws protect you from deceptive sellers or platforms.