An online auction is an auction which is held over the internet. Online auctions come in many different formats, but most popularly they are ascending English auctions, descending Dutch auctions, first-price sealed-bid, Vickrey auctions, or sometimes even a combination of multiple auctions, taking elements of one and forging them with another. The scope and reach of these auctions have been propelled by the Internet to a level beyond what the initial purveyors had anticipated. This is mainly because online auctions break down and remove the physical limitations of traditional auctions such as geography, presence, time, space, and a small target audience.

Online auctions have become big business, with millions of items for sale at any given time. (5 million+ at eBay alone, right now.) Tens of thousands of people around the world currently make a full-time living selling items through Internet auction houses.

One reason for their incredible growth and popularity is that they make it easy for people to find great deals on hard to find items from around the world. The excitement also makes them prime hunting grounds for scam artists, ready to play on the desire many auction bidders have for that “unbelievable deal.”

We want to mention right off the bat that the vast majority of sellers and buyers at online auctions are honest people, and deliver on their promises. According to eBay, only one auction in 40,000 on their site ends with a reported case of confirmed fraud.

Tips for Avoiding Internet Auction Fraud:

• Understand as much as possible about how the auction works, what your obligations are as a buyer, and what the seller’s obligations are before you bid.
  
  
• Find out what actions the website/company takes if a problem occurs and consider insuring the transaction and shipment.
  
  
• Learn as much as possible about the seller, especially if the only information you have is an e-mail address. If it is a business, check the Better Business Bureau where the seller/business is located.
  
  
• Examine the feedback on the seller.
  
  
• Determine what method of payment the seller is asking from the buyer and where he/she is asking to send payment.
  
  
• If possible, purchase items online using your credit card, because you can often dispute the charges if something goes wrong.
  
  
• Be cautious when dealing with sellers outside the United States. If a problem occurs with the auction transaction, it could be much more difficult to rectify.
  
  
• Ask the seller about when delivery can be expected and whether the merchandise is covered by a warranty or can be exchanged if there is a problem.
  
  
• Make sure there are no unexpected costs, including whether shipping and handling is included in the auction price.
  
  
• There should be no reason to give out your social security number or driver’s license number to the seller.

Scammers can use the Internet to promote fraud through unsolicited or junk emails, known as spam and advertisings. Even if they only get a handful of replies from the millions of emails they send out, it is still worth their while. Be wary of replying, even just to "unsubscribe", because that will give a scammer confirmation that they have reached a real email address. Any email you receive that comes from a sender you do not know, is not specifically addressed to you, and promises you some benefit is likely to be spam.

Malicious software - also referred to as malware, spyware, key loggers, trojan horses or trojans - poses online security threats. Scammers try to install this software on your computer so that they can gain access to files stored on your computer and other personal details and passwords.

Phishing scams are all about tricking you into handing over your personal and banking details to scammers. The emails you receive might look and sound legitimate but in reality genuine organizations like a bank or a government authority will never expect you to send your personal information by an email or online.

Scammers use a wide range of tricks to get their software onto your computer. They may trick you into clicking on a link or pop-up message in a spam email, or by getting you to visit a fake website set up solely to infect people’s computers.

Scammers can easily copy the logo or even the entire website of a genuine organization. So don’t just assume an email you receive is legitimate. If the email is asking you to visit a website to "update", "validate" or "confirm" your account information, be sceptical.

Delete phishing emails. They can carry viruses that can infect your computer. Do not open any attachments or follow any links in phishing emails.

Online auctions and Internet shopping can be a lot of fun and can also help you find good deals. Unfortunately, they also attract scammers.

Scammers will often try to get you to deal outside of online auction sites. They may claim the winner of an auction that you were bidding on has pulled out and offer the item to you. Once you have paid, you will never hear from them again and the auction site will not be able to help you.

Listed below are tips to protect yourself and your family from various forms of Internet fraud:

• If you choose to shop online or participate in online auctions, make sure you know about refund policies and dispute-handling processes, and be careful that you are not overcharged. Also, you may want to use an escrow service, such as PayPal. This service will hold your payment and only release it to the seller once you have confirmed that you received what you paid for. There is usually a small fee for this service. A legitimate bank or financial institution will never ask you to click on a link in an email or send your account details through an email or website.
  
  
• Never buy from bidders with poor ratings on auction sites, and do your best to ensure that you are only making purchases from genuine shopping sites. Never provide your personal, credit card or account information unless you are certain the site is genuine.
  
  
• Don’t reply to spam emails, even to unsubscribe, and do not click on any links or call any telephone number listed in a spam email. Make sure you have current protective software or get advice from a computer specialist.
  
  
• If an email or pop-up offers you a product or service that genuinely interests you and it seems reasonable, be sure that you understand all the terms and conditions and costs involved before making a purchase or providing your details.
  
  
• Ask yourself: By opening this suspect email, will I risk the security of my computer? Are the contact details provided in the email correct? Telephone your bank or financial institution to ask whether the email you received is genuine.