Things to take note to prevent e-auction fraud when a consumer participating in an e-auction

Auction is a market mechanism where buyers make bids and sellers place offers to sell the products. The auctions will be held as the products are either valuable or when the prices of goods cannot be easily determined.

Whereas e-auction is auction conducts online where sellers use Internet-based software to bid against each other online and in real time against a published specification.

As the auction items are very unique, antique or used in many cases. The buyers may not look through or check the items that may be defective. However, sellers or buyers may conduct fraud. Some examples of fraud include bid shielding, shilling, fake photos and misleading descriptions, selling reproductions and so on.

There following are some preventions for the auctioneer to take notes to antifraud:
1. Authentication service.
Some products may be defective or may be fake thus the authenticators are able to determine whether the item is genuine and described appropriately.

2. Grading service.
The use of grading is to identify the physical condition of an item, such as “bad quality” or “mint condition”. It can differentiate the items that being graded. Different items have different grading systems.

3. Verification.
With verification, neutral third parties will identify and evaluate the condition of an item through various methods. For instance, some collectors own their item “DNA tagged” for identification purposes and provide a way of tracking an item.

4. Feedback forum.
The buyers and sellers are allowed to build up their online trading reputations. The users are able to comment on their experience with other people.

5. Insurance policy.
For instance, eBay, the Internet auctioneer offers insurance underwritten by Lloyd’s of London. The program provided with no cost to the eBay users.

6. Nonpayment punishment.
In order to protect the sellers, a friendly warning is given for the buyers who do not honor their winning bids. For a second-time offense, a sterner warning is issued. Warning will be given continuously until an indefinite suspension level reached.

7. Appraisal services.
These services include assessing the authenticity and condition and reviewing what comparable items have sold for in the marketplace.

8. User identity verification.
For instance, eBay uses the services of Equifax to verify user identities. This program encourages the users to supply eBay with information such as IC number, driver’s licence number, date of birth and so on for online verification.