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Council of Better Business Bureaus ®
Start With Trust®
Council of Better Business Bureaus
Online Auctions
June 30, 2010
Looking for a special item, a hot collectible or simply a good deal? An online auction may provide one means. But before you place that cyber-bid, consider how online auction houses work.

Online auction houses facilitate communications between would-be buyers and sellers. Sellers list their goods, and auctions are conducted using e-mail to send and receive bids. If you're the highest bidder, the seller will contact you via e-mail to arrange for payment and delivery.

Most sellers accept credit cards, or use a third-party escrow agent to collect your payment, the product you're buying and process delivery of each. But be cautious if the seller asks you to pay by check or money order. Some online sellers have put items up for auction, taken the highest bidder's money and never delivered the merchandise. What's more, consumers who paid by certified check or money order have had little recourse when it came to getting their money back.

The Better Business Bureau, along with the Federal Trade Commission, advises consumers who plan to bid in an online auction, to take the following precautions:

  • Try to pay by credit card. If you don't get the merchandise, you can challenge the charges with your credit card issuer.
  • Ask about using an escrow agent, or paying by COD. Most escrow services charge a fee, so you may want to consider this option only for larger purchases.
  • Verify the seller's identity and check on their reputation. If you can't, consider this a red flag and avoid doing business with the seller. Some sellers may use a forged e-mail header, making it impossible to contact them if you need to.
  • Ask how you'll get follow-up service, if you need it. Many sellers don't have the expertise or facilities to provide service for the goods they sell. Is this important to you?
  • Avoid impulse bids and purchases. Online auctions may be enticing, but are you really getting the best price? Do some research on the product before bidding.
  • Ask about return policies. Returning merchandise to an online seller may be difficult.

For more information about online auctions, visit the FTC's web site on the Internet at www.ftc.gov.