Things to Take Notes to Prevent E-auctions Fraud

Electronic auction (e-auction), auctions conducted online such as www.lelong.com.my and www.ebay.com.my. Although the majority of consumer goods are not suitable for auctions and are best sold through conventional sales techniques (i.e., posted-price retailing), the flexibility offered by online auction trading may offer innovative market processes.

However, e-auction has the possibility of fraud; the fraud rate in e-auction is very high. Fraud may be conducted by sellers or buyers such as bid shielding (a buyer’s action), shilling (a seller’s action), and so on.

As a result, there are several things need to take notes in order to protect against e-auction fraud:

• User identity verification.
  Verify e-auction users’ identity. By offering their Social Security number, driver’s license number, and date of birth, users can qualify for the highest level of verification on e-auction.

• Authentication service.
  Product authentication is a way of determining whether an item is genuine and described appropriately.

• Grading services.
  Grading is a way of determining the physical condition of an item, such as “poor quality” or “mint condition.”

• Feedback Forum.
  Feedback Forum allows registered buyers and sellers to build up their online trading reputations. It provides users with the ability to comment on their experiences with other individuals.

• Insurance policy.
  Some sites provide insurance on auction frauds but usually extra cost is incurred.

• Escrow services.
  Both sellers and buyers in a deal are protected with an independent third party. This third party will verify the payment from the buyer and inform the seller. This third party will also hold onto the money from buyer until confirmation is received from buyer to pay seller. (An example of a provider of online escrow services is www.tradenable.com)

• Nonpayment punishment.
  Implement a policy against those who do not honor their winning bids in order to help protect sellers, a first-time nonpayment results in a friendly warning. A sterner warning is issued for a second-time offense, a 30-day suspension for a third offense, and indefinite suspension for a fourth offense.

• Appraisal services.
  There has a variety of methods to appraise items, including expert assessment of authenticity and condition and reviewing what comparable items have sold for in the marketplace in recent months.

• Physical inspection.
  It can eliminate many problems especially for collectors’ items.

• Item verification.
  One way of confirming the identity and evaluating the condition of an item is through verification. With verification, neutral third parties will evaluate and identify an item through a variety of means.

• Other security services.

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