Consumers Remain Confident in Online Auctions

A survey commissioned by the National Consumers League found that nearly one-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, conducted 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.

Reprinted from internet.com’s E-Commerce News.

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