Are you thinking about buying at an internet auction? This article is designed to provide you with the details on how online auctions work and how to avoid getting caught in a scam. Specifics may vary from auction to auction; however, the following information includes helpful and important guidelines from which everyone can benefit.



Internet auctions are like an online marketplace. You can "walk in," scan the goods for sale, choose a few items you'd like to buy and then bid on them. Some internet auctions features sellers who are businesses that offer merchandise and accept payment for their goods, which are usually shipped from a warehouse or other location. Other internet auctions are private party only sellers where items are auctioned directly to consumers and shipped directly from the seller's location.

To participate in an online auction as a bidder, you must register. Registration requires you to set up an account where you will either receiver a bidder number or a unique user name. You will also be required to choose a method of payment, and often times, prove that you will be able to pay. Registration must be completed before you participate in an internet auction.

Sellers must also register to sell in an online auction. Then, they can list the items they have for sale and, in most cases, set a time limit and a reserve price (the lowest price they will accept for an item. Sellers also agree to pay a fee every time they conduct an auction, and sometimes a commission fee once they sell.

When the bidding closes at the scheduled time and the reserve price has been met, the highest bidder wins the auction. If no one bids at or above the reserve price, the auction closes without a winner and is usually relisted. At the end of a successful auction, the buyer and seller communicate - usually by email - to arrange for payment and delivery.

Sounds pretty simple right? Not always! The internet is filled with people who are looking to make a quick buck - no matter what. Online auctions are no different. They can often be the target of fraud. However, internet auctions can be a lot of fun and a relatively safe way to do business if you know what you're doing.

Here are some tips that will help you avoid an online auction scam:

- Become familiar with the auction site. Never assume that the rules of one auction site apply to another.

- Know and understand what form of payment the seller accepts. If the seller accepts only cashier's checks or money orders, decide whether you're willing to risk sending your payment before you receive the product.

- Protect your privacy. Never provide your Social Security number, driver's license number, credit card number, or bank account information until you have checked out the seller and the online payment or escrow service, if you're using one, to ensure legitimacy.

- Learn about the protections (if any) the auction site offers buyers. Some sites provide free insurance or guarantees for items that are undelivered, not authentic or not what the seller claimed.

- Read the entire description of the item, including the fine print. Look for words like "refurbished," "close out," "discontinued," or "B-grade" - especially when shopping for computer or electronic equipment - to get a better idea of the condition of the item being auctioned.

- Find out everything you can about the seller. Avoid doing business with sellers you know nothing about, especially those who try to lure you off the auction site with promises of a better deal. Some auction sites post feedback ratings of sellers based on comments by other buyers. Check them out. These comments and ratings may give you some idea of how you'll be treated.

- Establish the highest price you're willing to pay and stick to it. This can help ensure that you get a fair price and protect you from snipers. Don't bid on an item you don't intend to buy. If you're the highest bidder, you're obligated to follow through with the transaction. Some auction sites bar "non-paying" bidders, also known as "deadbeats," from future bidding.