Online Auctions

Study Guide

What are online auctions?

    Online auctions are places that people can go in order to buy or sell goods or services online for a small fee. Anyone can sell an item and anyone can bid on an item. The highest bidders wins the auction and pays for the good or service and then expects for to receive their winning in the next couple of days through the mail or some other way of delivery. The largest online auction website is eBay followed by other sites such as Yahoo and Amazon. These sites allow ordinary web citizens to sell their goods. The sale is generally based on a system of trust, but some people are finding profit in abusing the trust of others, while some are stretching the limits of the law via online auctions. 

How are online auctions being abused?

    People are selling items that are of questionable ethics.  The eggs of beautiful women and other items that aren't illegal, but may not be ethical either.  Con artists are using online auctions for criminal intent.  Online auctions were named the number one internet fraud complaint for 1998.  All the time people try to sell items that they have obtained illegally on the internet.  Scalped Star Wars tickets, basketball and football tickets have shown up online in auctions.  One man claimed to have a large stock of the popular Christmas gift Furbies and then failed to deliver after he took the money. Another stole thousands of dollars of computers and projectors from a large software firm in Research Triangle Park. The only way the authorities were able to catch him is that they tracked the auction through the serial numbers provided on the auction webpage. 

What are online auction sites to do?

    eBay has become one of the largest targets for fraud online.  Because of this, eBay has taken many antifraud measures.  They have also stopped many illegal auctions. relies on it's users to report unethical sales or fraudulent activities.  The FTC even stepped in and barred one man from using the Internet because of his scams. 

What will happen in the future?

    The IRS watches online auctions to crack down on people not paying taxes for businesses being run via online auctions and sellers neglecting to collect sales tax on items sold in the same state.  The government is hesitant to regulate for fear of stifling e-commerce and crippling the economy.  No matter what happens, ethics plays a large role in the development of auctions on the internet. If sellers and buyers without ethics continue to become a problem the resulting illegal actions will affect everone. If, on the other hand, they are stopped or kept to a bare minimum, the phenomenon of bidding for merchandise can continue to grow. Whether it's for fun or business, online auctions are a great medium for finding just about anything