35.6 Million Americans Participated in Online Auctions; 41% of Buyers Encountered Problems, Survey Reports

Auctions Remain Internet Fraud Watch’s Top Complaint for 2000

NCL Launches Campaign on Safe Ways to Pay in Online Auctions

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.

§        Survey results

§        NCL’s Internet fraud statistics for 2000

§        New online auction tips for buyers and sellers

 Auction participants in the dark about safe payment methods

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.

Tradenable provided an unrestricted educational grant to NCL for public education outreach.

Tradenable, formerly i-Escrow.com, provides transaction settlement services, including escrow, that enable online marketplaces to provide a virtually risk-free trading environment, allowing businesses and consumers to securely conduct e-commerce. For more information, visit www.tradenable.com or call 650-598-3800.

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