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

Electronic auctions (e-auctions) are similar to off-line auctions except that they are done on a computer. Host sites on the Internet serve as brokers, offering services for sellers to post their goods for sale and allowing buyers to bid on those items.
Major online auctions such as eBay offer consumer products, electronic parts, artwork, vacation packages, airline tickets, and collectibles, as well as excess supplies and inventories being auctioned off by B2B (business-to-business) marketers.

One of the limitations of e-auction is possibility of fraud. Auction items are in many cases unique, used, or antique. Because buyers cannot see the item when participating in an e-auction, they may get a defective product, and the buyers can also commit fraud. Thus, the fraud rate in e-auctions is very high.

There are some protecting against e-auction fraud when a consumer participating in an e-auction are:

1. By authentication service. Product authentication is a way of determining whether an item is authentic and described appropriately. Authentication is very difficult to perform because it relies on the expertise of the authenticators. Because of their training and experience, experts can often detect counterfeits based on subtle details. However, two expert authenticators may have different opinions about the authenticity of the same item.

2. By grading services. Grading is a way of determining the physical condition of an item, such as “poor quality” or “mint condition.” The actual grading system depends on the type of item being graded.

3. By Feedback Forum. The e-commerce website 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.

4. By non-payment punishment. For example, a e-commerce website to help protect sellers in e-auction, a first-time non-payment 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.

5. By appraisal services. Appraisers use 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. An appraised value is usually accurate at the time of appraisal but may change over time as an item becomes more or less popular in the marketplace.

6. By 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


For more information about e-auction, can refer to
http://myphliputil.pearsoncmg.com/student/bp_turban_introec_1/Turban-Appendix2A.pdf