Thursday, February 19, 2009

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

E-auction can be defined as a market mechanism by which sellers place offers and buyers make bids which conducted online and is characterized by the competitive and dynamic nature by which the final product is reached. However, there is also limitation of e-auctions and one of them is that it faces the possibility of fraud. Furthermore, e-auction fraud is growing epidemic worldwide, as online shopping has grown significantly every year that online shopping has been available.

The following are few types of e-auction fraud:

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Bid shielding

Phantom bidders bid at a very high price when an auction begins; they pull out at the last minute, and the bidder who bid a much lower price wins.

Shilling

Placing fake bids on auction items to artificially jack up the bidding price, in this way, sellers get more benefits.

Hidden shipping costs and handling fee

Sellers hide the real shipping cost and handling fee. By the time buyers get the product, they might need to pay more than they expected.

Failure to deliver

Some times buyer will never get the product even after he/she paid for it.

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And now I would like to share some tips to prevent e-auction fraud. The largest Internet auctioneer, eBay, has introduced several measures in an effort to reduce fraud:

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aaaUser identity verification

A voluntary program that verify users by offering their Social Security number, driver’s license number and date of birth, users can qualify for the highest level of verification on the sites. In order that, encourages users to supply the sites with information for online verification.

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Authentication service

It is a way of determining whether an item is genuine and described appropriately. Authentication is very difficult to perform because their training and experience, experts can often detect counterfeits based on subtle details.

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Grading services

It determined the physical condition of an item, such as “poor quality” or “mint condition.” Different items have different grading system, for example trading cards are graded from A1 to F1, whereas coins are graded from poor to perfect uncirculated.

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Feedback Forum

The 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.

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Insurance policy

For example, eBay offers insurance underwritten by Lloyd’s of London. Users are covered up to $200, with a $25 deductible. The program is provided at no cost to eBay users.

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Escrow services

Both buyers and sellers in deal are protected with an easy-to-access link to third party escrow service. The buyer mails the payment to the escrow service, which verifies the payment and alerts the seller when everything checks out. An example of a provider of online escrow services is tradenable.com.

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Nonpayment punishment

To help protect sellers, first-time nonpayment results in a friendly warning. A sterner warning is issued for a second-time offense, a 30-day suspension for a third offense, and indefinite suspension for a fourth offense.

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Appraisal services

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.

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Verification

It is a way of confirming the identity and evaluating the condition of an item. With verification, neutral third parties will evaluate and identify an item through a variety of means. For example, some collectors have their item “DNA tagged” for identification purposes. This provides a way of tracking an item if it changes ownership in the future.

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There are some tips on keeping your risk at a minimum when purchasing items from an online auction website.

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· Become familiar with the auction website

· Before placing a bid, learn as much as you can about the seller.

· If the seller wants you to use an escrow service you’ve never heard of, look into it.

· Never ever give out your social security number, driver’s license number, credit card number, or bank account information until you have thoroughly checked out the seller and the escrow service.

· Always save 100% of the transaction information.

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http://www.ecommerce-journal.com/articles/beware_of_e_auctions

http://wps.prenhall.com/wps/media/objects/260/267260/online_appendices/Turban-Appendix2A.pdf

5 comments:

Anonymous said...

tis one here is very useful n informative for new or potential participants in e-auction...smth worth reading :)

d-expressionist said...

Indeed it is useful and informative for new potential participants. We are also glad that you can share any ideas or experience in e-auction as it is usefull to everyone.

Anonymous said...

well done! I found something great! keep it up!

Adrian said...

I think it is very helpful

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