Things to Take Note to Prevent E-Auction Fraud when a Consumer Participating in an E-Auction

E-auction is an electronic auction that done through the internet. It 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. There are many information available to both buyers and sellers in this market such as prices, product, current supply and demand.

E-auction fraud is a growing epidemic worldwide, as online shopping has grown significantly every year that online shopping has been available. Since the buyers cannot look at the items directly, they may get defective items. The fraud rate are become higher and higher. Most e-auction fraud cases involve straightforward scams where consumers allegedly win merchandise by being the highest bidder. All sounds good until they send the payment and never receive the merchandise.

There are many types of e-auction fraud. For example:

• Shilling: It is a place where placing fake bid on auction items. The main purpose is to rise up the bidding price.



• Bid shielding: There is some phantom bidders bid at a very high price at the start of an auction and pull out at the last minute and this will cause a bidder of a much lower price to win.

Beside that, there is also a lot of way of fraud can happen. Some will charge with a high shipping costs and handling fees, misleading the description like put on the fake picture of the products, failure to ship to the products and many more.

From the above statements, it is important for everyone to prevent e-auction fraud.


Prevention method
To protect the buyers and sellers in the e-auction, there are several measures in an effort to reduce fraud. Following are actions to prevent e-auction fraud:

• Authentication service is used to determine whether an item is genuine and described appropriately. Authentication is very difficult to perform because it needs training and experience. So, only the experts can detect the counterfeits based on subtle detail.



• Escrow Services is a licensed and regulated company. They collect, holds, and send a buyer’s money to the seller according to instructions agreed on by the buyer and seller. Once the buyer receives the items and approved, the escrow service will sends the payment to the seller within the agreed time frame.

Example for an escrow services is http://www.iescrow.com/

• User identify verification is a program that use to verify the user identity. For example, eBay uses Equifax services to verify the user identities. Verified eBay User is a voluntary program that encourages users to provide eBay with the information for online verification. By offering their MyCard number, driver’s license number, and date of birth, users can qualify for the highest level of verification on eBay.
  


• Feedback forum is to allow the buyers and sellers to build up their online trading reputation. It also provides the user with ability to comment on their experiences with other.



• Nonpayment punishment is to protect the sellers. For example, eBay implemented a policy against those does not honor their winning bids. There will be friendly warning for the first time nonpayment. In the second time, they will issue sterner warning. There will be 30-days suspension for the third offense and the indefinite suspension for the fourth offense.



• Appraisal services are a variety of methods used to appraise items. This including expert assessment of authenticity and condition and reviewing what comparable items have sold for in the marketplace in recent months. However, it is only useful at the time appraisal done since the market products changing rapidly.



• Verification is a way to confirm the identity and evaluate the condition of an item. Neutral third parties will evaluate and identity an item through a variety of means.

Buyers also need to take note when they are dealing with e-auction. Buyers are advise to read the company reputation whether the company can be trusted before making any transaction with them. Some of the company who deals with the e-auction will provide some forum to let users to read on the other users comments towards their company image and products.

Nevertheless, check the courier services provided by the company to make sure the delivery are delivered on time without any problems. On the other hand, buyers should be smart enough and bear in mind never bank in money to other people account easily caused there are some fake accounts created to cheat buyers.

“Caution to users: Never give out your bank account and your personal information”