On-line Auction is
one of the few bright spots in dotcom ventures. It is a big business
today with millions of participants across continents, buying and
selling millions of products everyday. Tens of thousands of people
around the globe currently make a full-time living selling items
through Internet auction houses.
Major reason for such incredible growth and popularity in an otherwise
gloomy dotcom scene is the simplicity and phenomenal reach of Internet
auction. People find it simple and convenient to get great deals
from around the world.
The excitement also makes them prime victims for scam artists, ready
to play on the desire many auction bidders have for that "unbelievable
This is not to doubt the integrity of vast majority of honest buyers
and sellers who deliver on promises. According to eBay, only one
auction in 40,000 on their site ends with a reported case of confirmed
However, it is also true that above statistics doesn't take into
account unreported cases and in any case it's little comfort if
you find yourself the unfortunate one in 40,000.
In fact, on-line auction scam accounts for roughly 48% of all online
fraud reports to the Federal Trade Commission (FTC) of USA. Almost
500 reports per week, committed by both sellers as well as buyers.
So how do you protect yourself, short of simply staying away from
the online auctions ? Before discussing the various auction related
scams, let us understand how Internet auction works.
What is On-Line Auction
The process of an online auction is much the same
as a live auction. Its a public sale in which a seller specifies
minimum amount for an item. The buyers bids for the item for a duration
specified (ranging from 1 hour to 7 days). At the end of the auction,
the item is sold to the highest bidder. Similarly, a buyer may participate
in an auction by bidding for an item. The person who offers the
highest bid wins the right to purchase the item at that price. Successful
bidders are notified through email on the status of their bids.
Actual transaction takes place between successful buyer and seller
DIRECTLY without any significant involvement of the auction house.
No physical inspection of goods, anonymous nature of Internet communication,
lack of rigorous legal safeguards for buyers etc. make the process
somewhat vulnerable to swindlers and frauds.
Common Auction Scams
Internet Scambusters (www.scambusters.org) have identified following
most common frauds seen in on-line auctions
We shall discuss each of them as also how to safeguard
your interest in next issue
- Newsletter on Business Opportunties from India and Abroad
Vol: 4, Issue 02
April 10' 2003
Dr. Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various
capacities like Research and Information Analysis, Market Development,
MIS, R&D Information Systems etc. before starting his e-commerce
venture in 1997. The views expressed in this columns are of
his own. He may be reached at firstname.lastname@example.org