eBay and Online Auctions: Tips for Buyers and Sellers

Learn how to protect yourself when buying and selling on eBay andother online auctions.

eBay and other auction sites have gained in popularity in recent years. But as more consumers buy and sell on eBay and other online auctions, buyers and sellers are encountering more problems from disappointing merchandise to high prices to outright scams. In fact, according to the National Consumers League, online auction complaints were the number one Internet fraud complaint in the U.S. in 2005.

To make sure your online buying experience is a good one and to protect yourself from fraud, follow this advice:

1. Educate yourself. Start slowly, whether you're a buyer or a seller. Carefully read the auction site's rules and FAQ pages before listing an item or making a bid. Spend some time on a particular site to get the lay of the land. When you're ready, start by bidding on relatively inexpensive items or, if you're selling, first sell a low-cost item or two. This reduces your risk while you learn how online auctions really play out.

2. Check out sellers and buyers. Take the time to find out more about the buyer or seller you're dealing with. Check out feedback on the other party auction sites allow users to post positive or negative comments about their experiences with other users. Don't deal with users with negative feedback or no feedback. And remember, you can't always believe positive feedback because a user can use an alternate email address or a friend to pad their feedback with undeserved praise.

3. Check retail prices before bidding. Don't assume you'll get a great deal or even a good one just because an item is being auctioned online. Internet auctions have become such big business that brick-and-mortar retail stores are selling their goods online at regular retail prices. Check the price of the same or a similar item elsewhere by searching online stores, classified ads, and/or auction sites for comparable prices. Don't forget the costs of shipping and insurance, which may make buying locally a better deal.

4. Set a maximum price you'll pay. After you've figured out a fair price for the auction item, set the highest price you'll pay and stick to it. If you don't, you may get swept up in the heat of the bidding moment and end up paying higher than retail.

5. Choose a safe payment and shipping method. Buyers should pay in a way that can be traced, such as with PayPal or a credit card. (Never send cash, and never send payment to a P.O. box.) You can dispute credit card charges if the seller never delivers or misrepresents the goods. Always use a traceable shipping method (such as FedEx, UPS, or some types of U.S. Mail), and insist on shipping insurance. Because the buyer will have to sign for the package, she can't say she never got it.

6. Record every step of the purchase or sale. Print out all details of every transaction, including the original product description and the bidding history. Take pictures of items you send and receive. Also print all email correspondence and the contact information for each buyer or seller you deal with.

7. Watch for scams. Educate yourself about common online auction scams such as fraudulent requests for payment, fraudulent bid retraction, stolen or counterfeit goods, fake letters requesting confidential information, threats to post negative feedback, and shill bidding (shill bidding occurs when a seller uses multiple identifies to jack up the price of an item). The more you know, the better you can protect yourself. Actions such as reading eBay guides, using an escrow service for costly items, and using a bonding service that guarantees reimbursement in the case of fraud go a long way toward protecting you from scams. To learn more about eBay scams and ways to avoid them, read Nolo's article Avoiding eBay Fraud.

8. Learn how to resolve disputes. If a problem does arise during an eBay transaction (for example, the winning bidder doesn't pay or the seller doesn't send the merchandise), take advantage of existing services designed to resolve eBay or online auction disputes. Some examples include www.SquareTrade.com (a non-eBay mediation service) and the PayPal Buyer Protection Program. To learn more about common eBay disputes and how to resolve them, read Nolo's article Resolving eBay Disputes.

9. Report any problems. Contact the auction site's customer service department if you have trouble with a buyer or seller. In addition, you can register a complaint with the National Consumers League's Fraud Center (www.fraud.org) and the FTC's Consumer Sentinel (www.ftc.gov/sentinel).

10. Use common sense. If something is too good to be true, it probably is. Watch out for fakes online auctions have been known to list counterfeit collectibles, watches, and handbags. For rare or collectible items, have the seller send you a signed, written statement describing the product and its value before you pay for it.

More Information

To learn more about eBay rules and strategies you can use to create successful online auctions, get The eBay Business Start-Up Kit, by Richard Stim (Nolo).