Are you an online auction nut? Figures released earlier this year show that you're hardly alone--over 35.6 Million Americans participated in online auctions. That's 31% of the US Internet population!

However, despite our love for the great deal, it's a practice that's ripe for fraud and misunderstanding, and indeed a Harris Interactive survey commissioned by the National Consumers League reported at the beginning of the year that 41% of Internet auction customers had some sort of problem.

The National Consumers League Internet Fraud Watch says that Auction Fraud was at the top of their Top Ten list for 2000, as it was in 1999.

The Way To Pay

One of the largest problems that auction customers have is that they don't know the safest ways to pay for auction merchandise. Most successful bidders, at leat 69% in the Harris Interactive survey estimates, pay by sending checks, cashier's checks, or money orders to the seller. If there's a problem, the customer has little or no recourse since the check or money order has been cashed. (This caveat holds true for the seller as well, who has little protection for bounced checks.)

Experts say if possible, you should use a credit card, although only 17% of the Harris Interactive survey did. If the seller will accept it, a credit card has the best protection for both buyer and seller.

Another way to protect both buyer and seller is by using what's known as an escrow service. An escrow service charges a small fee, and the buyer sends payment to the service, which is verified, and only sent to the seller when delivery is made and the buyer is satisfied with the merchandise. Although this seems like a win-win situation, only 6% of the survey did, with the remainder giving such excuses as unfamiliarity with the services, not seeing the need for an escrow service, or not wanting to pay the fee. If you're a frequent auction user and haven't had a problem, it still might be wise to look into escrow services as a means of protecting yourself.

More Tips for Safe Bidding

The National Consumers League also offers these additional tips for a successful auction transaction:

• Understand how the auction works. Familiarize yourself with the auction procedures, and find out if the auction website merely acts as a listing agent for the seller, or if they have any protections for the buyer.
  
• Check out the seller before you bid. Use auction feedback, and Better Business Bureau listings for businesses to see if there's any history of complaints.
  
• Be careful if the seller is a private individual. Consumer protections for private sales are sketchy, and may require that you prove criminal fraud before they'll get involved.
  
• Be especially cautious when dealing with buyers or sellers in other countries. Remember that US consumer protections may not apply, and differing legal systems, language barriers and distance may increase problems.
  
• Get the name and contact information of the company or individual. Don't do business with anyone who won't tell you where they're physically located.
  
• Buyers. be wary of claims about expensive collectibles. Pictures and descriptions should not be relied on, since you can't have an item appraised until you receive it. Keep records of claims made about the item in case of a problem later.
  
• Ask about delivery, returns, warranties, and service before you pay.
  
• Avoid cash payments. For the buyer, a seller requesting cash can be a danger sign of fraud.
  
• Look for information on the auction site about insurance for buyers.
  
• Let the auction site know if you have a problem. Sites may investigate complaints such as fraud, and other problems and bar the seller from further participation.
  
• Try mediation to resolve disputes. If fraud is not involved but a problem or miscommunication exists, a third-party mediation service can often resolve your dispute without costly legal intervention.
  
• Buyers should report suspected fraud to law enforcement agencies. Internet Fraud Watch and the Federal Trade Commission will accept Internet Fraud reports online at their websites.
  

As always, we caution Internet auction participants to familiarize themselves with everything they can before entering into a transaction, and not to get caught up in the thrill of the bargain-chase. Use your common sense and self-protective instincts to their full advantage to keep from being an auction victim.