Beware Of Internet Auctions

Amy Adams, "Junebug"
Sony Pictures Classics
If you're considering joining an online auction, you won't have difficulty finding one. But as Consumer Correspondent Herb Weisbaum reports, let the high-tech bidder beware.

Peter Henry is sold on Internet auctions.

Henry, a businessman in San Francisco, is what you'd call a frequent buyer.

Pretty much half the equipment in his office has wound up being auction-purchased, and he is getting good prices.

"Great prices actually," he said.

Henry buys a lot of stuff from a company called OnSale. Their Web site specializes in computer equipment, consumer electronics, and sporting goods. Remember, this isn't an online catalog, it's an online auction house run by Jerry Kaplan.

"Think of it as a stock market of goods and services. The prices will constantly vary and so will the availability," said Kaplan.

Some of what OnSale sells is new merchandise, but most is excess goods or equipment that has been returned and refurbished.

In the last three months, OnSale auctions took in more than $58 million.

Kaplan says, "This is a new way to buy, a new way to get bargains, and one where your skill and your involvement is important to saving you money."

One of the most popular sites on the Web right now is another auction house called eBay. Just three years old, eBay already has more than 850,000 registered users.

Lela McKenna is one of them. She buys and sells Barbie dolls and other toys this way.

"It's more stores than you could ever visit in an entire day, especially if you collect stuff," she said.

In fact, 70,000 new items are posted on eBay every day which makes it a one-stop shop for all sorts of collectibles.

But keep in mind, an auction in cyberspace is not like any other auction.

When you're there in person, you can handle the merchandise before you make your bid. You can check it out before you pay.

That's not the case online. And federal watchdogs say that's an important difference.

Jodie Bernstein of the Federal Trade Commission said, "You may or may not know who you're dealing with. If you don't know who you're dealing with you may have a problem."

And there are problems. Christina collects Beanie Babies.

Earlier this year, she was looking for a rare beanie, a Wingless Quackers. Looking on eBay, she found someone selling just what she wanted. So she sent off a cashier's check for $1,815.

And what she got was a current Quackers with its wings just cut right off. She said, "I don't know anybody who would pay money for this, to be honest with you."

The problem is that some auction sites, such as eBay are just a matchmaker, bringing together buyers and sellers. They can't guarantee that the seller - the person you send your money to - is honest or reliable. Bt eBay says the sites' on-screen feedback system, based on customer comments, lets you check out an unknown seller.

Steve Westly, vice president of marketing at eBay, said, "If someone does something inappropriate they'll get a negative rating point. And since your reputation goes with you everywhere at eBay, people are very reluctant to damage their reputation."

Christina felt comfortable sending off her money because she checked that feedback report. And the person who sold her the worthless Beanie Baby had 25 positive comments. But you have to take that information with a grain of salt

Susan Grant, who runs the Internet Fraud Watch at the National Consumers League, says you should be skeptical of all feedback. She says that glowing feedback report was probably a phony:

"We know that some of the reports about sellers that you find in those feedback forums are planted there by those individuals themselves, using different return email addresses to make it appear as though there's messages from other people."

Her advice:"If you haven't dealt with that person before or you don't have friends who've dealt with that person, you're really taking a risk."

eBay says it tries to weed out the bad apples. In fact, the company has a team of 20 people dedicating to doing that. But clearly they can't catch them all. So remember: when it comes to online auctions, let the bidder beware.

To protect yourself, use a credit card or one of the new online escrow services. Fraud experts say you should never send a check to an unknown auction seller.

By Herb Weisbaum
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