Online Auctions

Know Before You Bid

If you're looking for a hot collectible or simply a good deal, online auction may appeal to you. But before you place a cyber-bid, consider how online auction houses work. Like a traditional "live" auction, the highest bidder "wins." That's where the similarity ends. Because an online auction house doesn't have the merchandise, the highest bidder deals directly with the seller to complete the sale.

If you're the highest bidder, the seller typically will contact you by e-mail to arrange for payment and delivery. Most sellers accept credit cards, and arrange a third-party escrow agent to collect your payment, the product your buying, and processing delivery of each. Be cautious, however, if the seller asks you to pay by certified check our money order.

Some online sellers have put items up for auctions, taken the highest bidder's money, and never delivered the merchandise. What's more, consumers who paid by certified check our money order had little recourse when it came to getting their money back.

Tips for Online Auctions

Follow these tips before you bid in an online auction:
  • Ask about return policies. Returning merchandise to an online seller may be difficult. For more information about fraud on the internet, visit the Federal Trade Commission.
  • Ask about using escrow agent, or paying by COD. Most escrow services charge a fee, so you may want to consider this option only for larger purchases.
  • Ask how you'll get follow up service, if you need it. Many sellers don't have the expertise our facilities to provide service for the goods they sell. Is this important to you?
  • Avoid impulse bids and purchases. Online options may be enticing, but are you really getting the best price?
  • Try to paid by credit card. If you don't get the merchandise, you can challenge the charges with your credit card issuer.
  • Verify the sellers identity. It you can't, consider this a red flag and avoid doing business with the seller. Some sellers may use a forged email header, making it impossible to contact them if you need to.