Auctions have been around for centuries. People with goods wanted an efficient way to sell those goods to people who wanted those goods. Historically, the highest level of technology used for an auction involved plugging a microphone into a wall.
But nowadays, the Internet becomes more popular than paperless catalog. The Internet could be used to expand the universe of potential buyers for any one item. It could be used by buyers to compare goods more efficiently and accurately. Anyone could enjoy an auction from a comfortable seat at anytime, anywhere.
The online auction proved to be a great application of technology for those wishing to sell products and services. Traditionally, the auction represented the seller and involved one seller to many buyers. Auctions helped drive up prices for the seller But now auctions could be used to represent the buyer and help drive prices down.
Over the years, various auction formats were devised and executed, including the most well-known format, the e-auction (which also called reverse auction). E-auction is a repetitive process involving an electronic device for the presentation of new prices, revised downwards, or new values concerning certain elements of tenders, which occurs after an initial full evaluation of the tenders, enabling them to be ranked using automatic evaluation methods. The examples of e-auction are: lelong.com, ebay.com, Yahoo and other.
The type of e-auction fraud
- Bid shielding: The practice of placing a low bid in an online auction and having a second person enter a bid that is high enough to discourage other bidders. At the last second, the high bid is retracted and the low bid wins. This fraud is performed by the buyers.
- Shilling: Placing fake bids on auction items to increase the bidding price. It is far harder to detect on the Internet, where anonymity and easy-to-shed electronic identities make it easy for a seller to single-handedly a shilling without tipping off a legitimate bidder.
- Improper grading techniques
- Selling reproductions
- Failure to pay
Ways to prevent e-auction's fraud
- Escrow service
- a licensed and regulated company that collects, holds, and sends a buyer's money to a seller according to instructions agreed on by both the buyer and seller. Typically, once th e buyer receives and approves the item from the seller within an agreed time fra me, the escrow service then sends the payment to the seller.
- If you are a buyer or a seller and, you should only use Escrow.com to make the payment, for example, eBay's approved escrow service.
There are fraudulent escrow services, so be caution if a seller suggests using a service other than escrow. - To avoid being deceived by fraudulent emails, you should sign in to www.escrow.com to verify information you have received via email. Make sure you type the entire address. Do not let the browser auto-type the site address for you. It could auto-type a fraudulent address
2. Feedback Forum
- a place where you can express your opinions by leaving Feedback on your transactions. Besides that, you can learn about your trading partners and viewing their reputations. These member-to-member ratings and comments can help the millions of buyers and sellers. A very good example was in Ebay’s feedback forum,
- For each transaction, buyers and sellers can rate each other by leaving Feedback. Each feedback consists of a positive, negative, or neutral rating, and a short comment.A buyer can also rate the seller on additional criteria which are the accuracy of item description, communication, shipping time, and shipping and handling charges. Sellers can't tell which buyer left which detailed rating, so buyers can feel free to leave ratings that honestly tell the story about their experience.
3. Authentication service
- determining whether an item listed in an e-auction site is genuine and described appropriately and correctly. Usually done by experts who are knowledgeable about certain products. E-bay offers this service to authenticate some of the items listed in e-bay.
- public or private service that authenticates the identity of an online applicant for a TreasuryDirect account using information provided by the applicant. For example, e-bay authentication and grading services
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