A new survey commissioned by the National Consumers League says that nearly a
third of online Americans have participated in Internet auctions, but 41
percent of buyers reported having a problem at one time or another, such as
late delivery of goods or merchandise that never arrived.
The survey, performed by Harris Interactive, found that 31 percent of
Americans who go online, or approximately 35 million people, participate in
online auctions. However, online auctions made up 78 percent of Internet
fraud complaints last year, with an average loss of $326 per victim, the
survey found.
Still, a whopping 94 percent of respondents who have participated as bidders
said they are “somewhat” or “very confident” that as the winning bidder in an
online auction, they will get what they pay for from a seller.
“Consumers’ overconfidence that they’ll get what they paid for is one big
reason why they easily fall victim to scams,” said Susan Grant, director of
NCL’s Internet Fraud Watch, “Many don’t know about the safe ways to pay in
online auctions.”
Internet Fraud Watch (IFW), which just released its
top 10 list of frauds
for 2000, said the survey data shows that online auctions remain the
most likely place for a consumer to be defrauded and consumers who have been
victims are more likely to have paid with a check or money order.
The amount of money consumers are losing to Internet fraud is increasing, the
organization said. Losses overall are estimated by IFW at $3.38 million last
year.
The most common way that buyers pay is by sending a check, cashier’s check,
or money order directly to the seller (69 percent). Unfortunately, by the
time the buyer discovers that there is a problem, the check or money order
has usually already been cashed. And if the seller encounters a problem with
the buyer’s payment, such as a check bouncing, the merchandise may have
already been shipped.
“Credit cards offer more protection because buyers have the right under
federal law to dispute the charges if the goods were misrepresented or never
delivered,” said Grant.
Escrow services are another way that auction buyers and sellers can protect
themselves. For a small fee, an escrow service holds the buyer’s payment and
forwards it to the seller upon the buyer’s receipt and approval of the item
within an agreed upon inspection period. But overall, only six percent of
those who have bought items have paid through an online escrow service.
The Consumers League offered these tips for auction users:
- Understand how the auction works.
- Check out the seller before you bid.
- Get the contact information of the person or company you’re dealing with.
- Look for information about insurance for buyers.
- Payment by credit card can protect both buyer and seller.
- Consider using an escrow service.
