|
Place a bid online
|
 |
August 7, 1998: 4:15 p.m. ET
Online auctions can bring you bargains as long as you bid carefully
|
NEW YORK (CNNfn) - The familiar scenes of auctions -- gavels, hand signs and a guy with a mile-a-minute voice taking bids -- are gradually being replaced by a sleeker, Internet-based version.
Online auction companies are continually sprouting up, with more than 1,500 of them having set up shop already.
Not content to just offer a mixed bag of goods, many are specializing, selling Beanie Babies, sports memorabilia and even rare vintages of wine.
Most bids are for computer-related products and the deals you find online can be solid. For example, you can get Quicken software for as little as $25 (retail price: $70) or Word Perfect for $12 (retail: $260).
However, large companies selling bulk commodities and manufactured goods have also pushed the limits of online auctions with millions of dollars being spent in a single transaction.
The money changing hands through this process will keep increasing, according to a 1998 study by Forrester Research, a Cambridge, Mass.-based research firm. Forrester estimated by 2002, Internet auctions will grow to an expected $52.6 billion.
While the bulk of that market will be in large-scale commodities trading, Forrester said the independent segment of online auctions where ordinary folks sell their odds and ends could reach $14.5 billion by 2002.
The largest of such online trading sites is eBay. In fact, eBay has become so successful in this realm -- $14 million in revenue for the first half of 1998 -- that it announced last month it would launch an initial public offering. (The company is currently in its silent period and declined to be interviewed for this article.)
Online auctions are conducted much like their non-virtual counterparts. Internet auction houses act as the medium in which buyers and sellers get together. Some sites, such as First Auction, sell their own products. Others, like eBay, allow individuals to set up auctions of their own goods, with eBay as the middleman.
Once the goods are put up for auction, bids are made via the site's Web pages. Prospective buyers then reload the pages to see the most current bids. Some sites are using new applications which will enable real-time bidding.
The length of an auction is set in advance. Unlike traditional auctions, which may take just minutes, online auctions usually take longer and can run up to a week.
Once a bidder "wins" a product, he then arranges via e-mail or phone with the seller about the purchase and shipment of the product.
Online auction scams
As with most other types of commerce on the Internet, the lure of money unfortunately can sometimes bring scam artists who are out to make a quick, dishonest buck. Online auctions generate the greatest number of complaints from Internet consumers, according to the National Fraud Information Center.
The most common problem individuals run into is when they think they've sealed the deal and sent off their money, only to receive something much different from what they ordered. Others wait and wait for purchases which never arrive.
Some auction scams can be particularly heartless, said Cleo Manuel, spokeswoman for the National Fraud Information Center.
On one occasion, recalled Manuel, a disabled woman won a bid for what was advertised as a lightweight aluminum wheelchair. What she received was an aluminum folding chair with casters on the legs.
The occurrences, which are growing as more and more people take to the Web and, consequently, participate in these auctions, have received the increased scrutiny of the U.S. Federal Trade Commission.
The FTC in April took action against an online auction company, issuing a restraining order and freezing the assets of an Internet merchant who offered merchandise but never delivered the goods to consumers.
The FTC alleged Craig Hare of Experienced Designed Computers in Lake Worth, Fla. bilked online bidders, some of whom forked over as much as $1,450 for computers. Consumers complained they received neither a computer nor a refund.
The situation can become particularly tricky with auction sites which offer individuals the chance to auction their merchandise to others online.
While the overwhelming majority of these deals are satisfactorily completed, the lack of a face-to-face transaction can make it more difficult, said Manuel.
"The Web has become a huge garage sale but the problem is you can't examine the goods you're buying," she said.
The problem lies with the anonymity of the sellers, who can set up "front" e-mail accounts using services such as MailExcite or Hotmail to conceal their identities. The use of a post office box can further make it more difficult for you to trace them once you've sent your money.
A bid for regulation
The growing problem of dissatisfied online auction customers has led to calls for legislative action.
"For private to private sellers, there aren't a lot of protections," said Manuel. "If the problem continues to be as large as it is, there's going to have to be laws put in place."
David Freeman, president of computer-related online auction house Cyberswap, disagreed on the need for more government regulation. He envisioned an industry-wide, self-administered regulation process as being much more efficient.
Freeman said his firm and others already do a good job at dealing with shady sellers.
"We scrutinize carefully the outside vendors that we approve," he said. "If they don't adhere to our terms, then we preclude them from selling more products."
Freeman explained his firm hears very few complaints from its customers, with the main gripe being outside sellers don't ship their products as quickly as Cyberswap ships its own goods.
Regardless of whether or not any more stringent laws are passed, you can take steps to limit the chances you'll run into problems bidding online.
You'll want to pay with a credit card if possible, the Federal Trade Commission urges. While it may seem much more dangerous to give your card number to a stranger, it actually makes it easier for you to challenge any unauthorized charges.
If possible, you can look into using an escrow agent which will act as a third party through which the transaction can take place. Since escrow services charge a fee, you'll probably only want to do this with larger purchases.
Verifying the seller's identity goes a long way toward avoiding problems. If you can't do this, it's a red flag telling you something may be amiss.
Many sites, such as eBay, give you an opportunity to learn how the seller has treated other customers. On these sites, buyers are encouraged to give feedback and ratings on how satisfied - or unsatisfied - they were with their purchases. It's worth checking out before you get involved with any bidding.
You'll also want to consider what happens after a sale. If you buy a product such as a computer or other electronic device, think about the follow-up and repair service you might need.
Many sellers provide little or none of these services. If you run into problems you'll be on your own and might need to go to a more expensive repair shop. You may end up saving money in the short run but paying more in the long run if additional services are needed.
And, as with any purchase, avoid impulse bids. Enter the auction process with a set limit in mind. The Web provides you with many resources for finding out the best price for a product. Find that price and make sure you don't exceed it in the excitement of bidding. 
-- by staff writer Randall J. Schultz
|
|
|
|
|
 |
|
