A Seller's Guide To Online Auctions
Know Your Legal Obligations
- Under federal law, you're required to advertise your product or service and the terms of the sale honestly and accurately. You can't place "shill" bids on your item to boost the price or offer false testimonials about yourself in the comment section of Internet auction sites.
- You're prohibited from auctioning illegal goods. While many auction sites monitor their sites to ensure that illegal items are not being offered, the responsibility for ensuring that a sale is legal rests with the seller and buyer. Some auction sites post a list of prohibited items as a guide.
- You are required to ship merchandise within the time frame specified during the auction, or, if a time frame is not specified, within 30 days. If you can't meet the shipping commitment, you must give the buyer an opportunity to cancel the order for a full refund or agree to the new shipping date. To learn more about your responsibilities when shipping products, see A Business Guide to the Federal Trade Commission's Mail or Telephone Order Merchandise Rule.
Advertising Your Product
- When describing your item and its condition, state whether it's new, used or reconditioned.
- Anticipate questions buyers might have and address them in the description of your item or service.
- When possible, include a photograph of the item. The saying that a picture is worth a thousand words is especially relevant in Internet auctions.
- Specify the minimum bid at the lowest fair price you're willing to accept.
- Specify who will pay for shipping, and note whether you'll ship internationally.
- State your return policy, including who's responsible for paying for shipping costs or restocking fees if the item is returned.
- Let prospective bidders know whether you provide follow-up service; if you don't, tell them where they can get it.
Dealing with Bidders
- Respond as quickly as possible to bidders' questions about the item you're auctioning or the sales terms.
- When the auction closes, print all information about the transaction, including the buyer's identification; a description of the item; and the date, time and price of the bid. Save a copy of every email you send and receive from the auction site or the successful bidder.
- Contact the "winning" bidder as soon after the auction closes as possible; confirm the final cost, including shipping charges, and tell the buyer where to send payment.
Arranging for Payment
- If you accept credit card payments from the buyer directly, bill the credit card account only once you've shipped the product.
- If a buyer insists on using a particular escrow or online payment service that you've never heard of, check it out. Visit its Web site. Be suspicious of claims about being affiliated with a government agency. Call the customer service line. If there isn't one, or if you call and can't reach someone, don't use the service.
- Before agreeing to use an online payment or escrow service, read the terms of agreement:
*If it's an online payment service, find out who pays for credit card charge backs or transaction reversal requests if the buyer seeks them.
- Be suspicious of an online escrow service that cannot process its own transactions and requires you to set up accounts with online payment services. Legitimate escrow services never do this.
- Check with the Better Business Bureau, state attorney general or consumer protection agency — where you live and where the online payment or escrow service is based — to see whether there are any unresolved complaints against the service. Be mindful that a lack of complaints doesn't necessarily mean that the service has no problems.
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