1.. Educate yourself. Start slowly, whether you're a buyer or a seller.
Carefully read the auction site's rules and FAQ pages before listing an
item or making a bid. Spend some time on a particular site to get
the lay of the land. The auction sites have different rules, which can
be quite technical, so if you switch sites, make sure you understand
the differences. When you're ready, start by bidding on relatively
inexpensive items, or, if you're selling, first sell a low-cost item or
two. This reduces your risk while you learn how online auctions really
2.. Check out sellers and buyers. Take the time to find out more
about the buyer or seller you're dealing with. Stay away from
transactions with minors if you can spot them (called "kid-bids" in
online auction jargon). Check out feedback on the other party --
auction sites allow users to post positive or negative comments about
their experiences with other users. Be extra cautious when dealing with
users with negative feedback or no feedback. And remember, you can't
always believe positive feedback, since a user can use an alternate
email address or a friend to pad their feedback with undeserved praise.
3.. Be wary of untraceable users. While most sites require sellers
to supply billing information (including an email address and a
physical address) and sometimes pay a listing fee up front, most sites
do not require buyers to put up any funds or credit card information in
advance. That makes it harder to find someone should a deal go sour.
(Amazon, which requires and verifies credit card information from
buyers and sellers, is one exception.) For example,
Web-based email services, such as those provided by hotmail.com,
myownemail.com, Yahoo! and Excite, may require a physical address for
registration, but they don't verify the location, much less a user's
identity. Use the following links to verify a members email and mailing address.
Click here to verify a members email address. Click here to verify a members mailing address. 4.. Check retail prices before bidding. Don't assume you'll get a
great deal -- or even a good one -- just because an item is being
auctioned online. Don't forget the costs of shipping and insurance,
which may make buying locally a better deal. After you've figured out a fair price for the auction item, set
the highest price you'll pay and stick to it. If you don't, you may get
swept up in the heat of the bidding moment and end up paying higher
5.. Watch for shills and shields. Spotting a shill on the Internet can
be difficult, but it's not impossible. Do a search of a seller's past
sales. Often the same shill will have bid on everything the seller has
offered, to artificially jack up the price of the seller's offerings.
The shill's email address may have the same domain name as the seller's
(or an anonymous domain name) and the shill may have little or no
feedback, or feedback that comes from the same seller or another shill
with the same domain name.
To spot a shield, look for the same person in other auctions in which
the winning bidder has participated. Has this person ever actually won
one of the auctions, or has he withdrawn his bid at the last minute?
Some sites allow sellers to cancel suspected shield bids. However, no
one can spot every scamster, so the trick here is: don't get caught up
in a bidding war.
6.. Contact the other party by phone. Always telephone the other party
before completing the deal -- to confirm the details of what you've
bought or sold, to verify the other party's phone number, and to
discuss further details such as payment and shipping method. Buyers
usually pay the shipping and insurance costs.
7.. Choose a safe payment and shipping method. Buyers should pay in
a way that can be traced, such as with a credit card or check. (Never
send cash, and never send payment to a P.O. box.) Sellers shouldn't
ever send the product unless they've received the money -- money orders
and cashier's checks are a sure thing, but if you accept personal
checks, wait until the check clears before sending the merchandise to
the buyer. Always use a traceable shipping method (such as FedEx, UPS
or some types of U.S. Mail), and insist on shipping insurance. Since
the buyer has to sign for the package, she can't say she never got
it.One good solution for both parties is to use UPS's COD (collect on
delivery) system, which costs about $5 per delivery (in addition to the
regular shipping cost). The driver won't release the package until the
buyer hands over a money order or cashier's check.
Even better, escrow services (which charge from 3% to 6% of the sale
price) let the buyer inspect the goods for a short period of time.
Here's how they work: The escrow company collects and verifies the
payment from the buyer, then notifies the seller, who ships the item.
If the buyer finds the merchandise satisfactory, the escrow company
releases the funds to the seller. If not, the buyer sends the
merchandise back to the seller. There are several online escrow
companies. The most popular are i-Escrow at www.iescrow.com and TradeSafe at www.tradesafe.com. They're excellent choices for transactions over $250.
8.. Record every step of the purchase or sale. Print out all details of
every transaction, including the original product description and the
bidding history. Take pictures of items you send and receive. Also
print all email correspondence and the contact information for each
buyer or seller you deal with.
9.. Report any problems. Contacting the auction site's customer
service or admin department. In addition, you can
register a complaint with the National Fraud Information Center
10.. Use common sense. If something is too good to be true, it
probably is. Watch out for fakes -- online auctions have been known to
list counterfeit Beanie Babies, watches and handbags. For rare or
collectible items, have the seller send you a signed, written statement
describing the product and its value before you pay for it.
If you follow these tips, you
shouldn't get burned.