An internet or online auction is an electronic ‘marketplace’ where sellers and buyers come to trade their goods. No other online forum can bring as many buyers and sellers together as an internet auction.
For buyers, online auctions offer the chance to snap up every possible kind of consumer good, often at bargain prices. It is not surprising that they are an extremely popular way to buy.
Marketplace internet auctions: the business that runs the website is not directly involved in the auction process. It simply provides a forum and rules for buyers and sellers to deal with each other through a bidding process. Ebay is the best known example.
Traditional auctions: instead of conducting an auction 'in person', an auction house uses a website to sell goods on behalf of a vendor.
Auctions conducted by businesses: the business that runs the website is directly involved in the auction process. These websites offer buyers an opportunity to bid on the website’s own products and include:
low bid auctions—where the lowest unique bid received becomes the successful bid
high bid auctions—where the highest unique bid received becomes the successful bid
beat the clock auctions—where each new bid increases the time of the auction and the user who has submitted the highest bid at the auction’s conclusion wins
reverse auctions—where the role of the buyer and seller are reversed and the sellers compete to get your business.
Buying from another person on an auction website is not the same as buying from a business online or a shop. You should be aware of how your rights may differ and what protections are available to you.
Online auctions have become extremely popular and can offer great bargains. However, the popularity of the internet auction marketplace means you need to be cautious about shopping online.
You may come across inexperienced sellers who are not aware of their responsibilities to you and to the law; you may also encounter dishonest traders.
If you take a few simple precautions and know what to look out for, you can participate more safely in internet auctions.
Ensure you understand the way the auction works. Read the terms and conditions, especially any fine print before you participate.
Some auction websites provide safe trading guidelines—follow all their rules and tips for a safer shopping experience.
Find out whether the auction site has any procedures for resolving disputes. Many auction sites have buyer protection policies or complaint-handling policies that are designed to help you resolve your concerns.
Check for these policies before you make a purchase. There may be terms and conditions which could affect your eligibility—it is a good idea to know your responsibilities before you start.
3. Learn about the seller, the product and the site
Learn as much as you can about the seller as you can before you buy. If the auction site uses a feedback rating system, check comments left by other buyers and sellers. A seller with a large number of positive comments is more likely to be trustworthy.
Be wary of auctions started by sellers who have no trading history, and auctions that include several bids from buyers with no history. This could be a warning sign that an auction is not genuine.
Do not agree to do business privately 'outside' the auction site, even if you are offered a better deal. This is a tactic used by scammers and you may not be covered by any fraud protection offered by the website.
Check out some online discussion forums to see what other consumers have to say about the auction website.
Learn as much as possible about the product as you can. Do not be afraid to ask the seller detailed questions or request extra pictures.
Do not rely on the auction website’s valuation of the product—do your own research to determine how much an item is really worth.
4. Don’t get caught with unexpected fees and charges
Ensure that you know all of the costs associated with the online auction before you start bidding.
Alternative ways of bidding are emerging and being offered at some auction websites. Some of these new bidding methods attract extra charges that can vary significantly from site to site.
Some websites charge users just to bid in an auction irrespective of whether they ultimately win the item:
some websites may credit this amount, but often the terms and conditions mean that the credits are hard to use
you might also have to pay more money before being eligible to access any credits
ensure you understand how any credits can be redeemed.
Other additional charges to look out for include administrative fees, subscriptions costs and delivery charges.
Only use payment options recommended by the auction site. Some electronic money transfer services cannot be traced, which makes them more popular with scammers.
Consider using a reputable escrow agent for valuable items. An escrow service is an independent third party that will hold a payment in trust until the buyer receives and accepts the item.
Keep printed and electronic records of all bids, item descriptions, emails and receipts. If there is a dispute, these will be important to prove what happened.
The internet has made it very easy for you to buy goods and services from sellers located all over the world.
Many legitimate online auction websites and sellers are based overseas. Some unscrupulous traders may, however, try to take advantage of overseas locations to target consumers in other countries to carry out scams and frustrate the efforts of consumer protection law enforcement bodies.
Most online auction sites put a lot of effort into spotting scammers, but you need to be careful too.
Stay one step ahead of the scammers. Visit our SCAMwatch website to learn more about online shopping and auction scams and dozens of other scams that target you or your small business. You can find out more about how scams work and how to protect yourself, and also how to report scams to us via SCAMwatch.
If you take the right precautions and know what to look out for, you can greatly reduce your chances of being scammed online. Explore SCAMwatch for yourself, or follow these quick links to find the page that you are looking for:
Do I have rights if there is a problem with my purchase?
When you buy goods and services from an online business or in a shop, for example, consumer protection laws give you certain rights. Your protections are not the same when you buy goods at an auction.
If you are dealing with an overseas-based business or website, you may not be able to get any assistance if there is a problem and the business chooses not to follow Australian consumer protection laws. Visit our page on Buying from overseas for more information about your consumer rights when dealing with overseas businesses or sellers.
Federal, state and territory consumer protection laws do not normally apply to purchases where the goods have been bought at a private auction. These laws will only apply where:
You have not received clear title for the goods. This means that you can expect to own the goods outright and any restriction on ownership should be explained to you before you buy.
The seller has misrepresented the product or its attributes in any way.
In other situations, if you have bought goods at auction or from an individual seller on an auction website, you may need to seek independent legal advice if you have a problem.
The auction site is usually not a party to the contract and therefore may not be liable for claims made about the goods, non-delivery of the goods or damages resulting from a dispute about the goods.
Most auctions are a case of 'buyer beware' as there are normally no returns or refunds.
Some auction sites give you an option to buy a good immediately without having to bid for it (e.g. the 'Buy it now' option on eBay). If you are willing to pay the listed price, you can secure the purchase without going through the bidding process. This type of sale is not an auction so you may have rights under consumer protection laws.
If the seller was a private individual, you will probably not be able to rely on consumer protection laws to remedy your problem. However, if you purchased goods at a price set by a trader or a business, your purchase may be covered as it would be in ordinary circumstances.
Contact the seller and try to negotiate a resolution. There may be a reasonable explanation for the problem or the seller may want to resolve the problem to avoid negative feedback.
If you cannot reach a resolution with the seller, check the auction website for information on dealing with disputes, or whether you are entitled to any compensation under a buyer protection scheme.
If the seller is an Australian business operating through the auction site, you could contact the office of fair trading in your state or territory. They will be able to tell you if the transaction is covered under any local laws and whether there is action you can take. You can search our Consumer and business directory for contact information.
The ACCC’s SCAMwatch website provides information on common scams. The website has tips on how to protect yourself from scams and report them to the relevant agencies.
