WASHINGTON, DC—Of online Americans, 31 percent, or approximately 35 million people,
participate in online auctions, according to a Harris Interactive survey
commissioned by the National Consumers League. A whopping 94 percent of
respondents who have participated as bidders said they are somewhat or very
confident that as the winning bidder in an online auction, they will get what
they pay for from a seller. But 41 percent of online auction buyers reported
having a problem.
“Consumers’ overconfidence that they’ll get
what they paid for is one big reason why they easily fall victim to scams,”
said Susan Grant, director of NCL’s Internet Fraud Watch, “Many don’t know
about the safe ways to pay in online auctions.”
Additionally,
Internet Fraud Watch’s top ten list for 2000, also released today, shows
that online auctions remain the top fraud and consumers that have been victims
are more likely to have paid with a check or money order.
NCL
has launched a media campaign, made possible with an unrestricted educational
grant from Tradenable, formerly I-Escrow.com, to educate consumers about safe
ways to pay for online auction transactions.
§ NCL’s Internet fraud statistics
§ New online auction tips
The most common way that buyers pay is by sending a check, cashier’s check, or money order directly to the seller (69 percent). Unfortunately, by the time the buyer discovers that there is a problem, the check or money order has usually already been cashed. And if the seller encounters a problem with the buyer’s payment, such as a check bouncing, the merchandise may have already been shipped.
“Credit
cards offer more protection because buyers have the right under federal law to
dispute the charges if the goods were misrepresented or never delivered,” said
Grant. “Payment by credit card can also be safer for the seller than accepting
personal checks. However, the frequency that the auction buyers reported paying
by credit card is a relatively low 17 percent.”
Escrow
services are another way that auction buyers and sellers can protect themselves.
For a small fee, an escrow service holds the buyer’s payment and forwards it
to the seller upon the buyer’s receipt and approval of the item within an
agreed upon inspection period. But overall, only six percent of those who have
bought items have paid through an online escrow service.
Unfortunately,
42 percent of survey respondents who don’t typically use an escrow service
aren’t familiar with them. Another 30 percent don’t think it’s necessary
to use them, and 19 percent don’t want to pay the fee.
“Our Internet Fraud Watch statistics show that online auction scams aren’t going away. The survey confirms the need for buyers and sellers alike to know more about how these services can protect them,” said Grant.
The
National
Consumers League, founded in 1899, is America's pioneer consumer
organization. Our mission is to identify, protect, represent, and advance the
economic and social interests of consumers and workers. NCL is a private,
nonprofit membership organization. For more information, visit www.nclnet.org.