Electronic Auctions

An electronic auction is just like an ordinary auction, except that the transaction takes place over the Internet. There are various Web sites that provide electronic auctions, the best-known being eBay .

When somebody wants to sell an item in an electronic auction, he goes to one of these sites and posts a description of the item with the price he is willing to sell it at. Then anybody who is interested in buying the item makes an offer. This goes on for a prescribed amount of time, and at the deadline, the highest bidder wins and the item is sold.

The buyer must then pay the seller for the item. This can be done by check, credit card, or through online payment services such as PayPal. Once the payment is made, the item is sent to the buyer. The auction Web site usually gets some commission on the entire transaction.

There are various abuses and fraud risks related to electronic auctions that you should be aware of. One example is bid shielding, where a high-value bid is withdrawn at the last minute, allowing a low bid to be accepted. Another is bid siphoning, where a seller observing an auction directly contacts a bidder on an item to offer an alternative item to the bidder.

Sites that provide electronic auctions usually specify the terms and conditions of participating in auctions on their site. You should read these policies carefully and check what kind of security the site provides and what measures the site take to prevent abuse. If you are planning to bid on an item, you should review information about the seller (eBay provides a seller ratings system) and read the item description carefully before placing a bid.