Are online auctions becoming the medicine show of the new millennium? The U.S. Federal Trade Commission worries that this may be the case, as consumer confidence in e-commerce erodes due to an escalating number of organizations conducting fraudulent auctions.
FTC officials have released a report that states the agency received over 10,700 consumer complaints last year, up from 107 complaints in 1997. Most of the complaints are from people who either didn't receive what they were promised by an auction, or received something of less value than what they paid for.
To combat this problem, FTC officials have promised to increase their training of law enforcement officers in the identification of online fraud. The agency also vows to work directly with online auction sites to encourage adoption of consumer protection measures and to better educate consumers.
Although there are currently no licensing or regulatory requirements for Internet auction companies (Ebay, iBid, and most others prominently post disclaimers that absolve them of any responsibility for transactions made through their sites), this could be looming on the horizon. Escrow services provide a measure of protection, but can't guard against faulty merchandise.
And why should they?
There is an inherent risk of anonymously buying an item online, based entirely on a description or a fuzzy .GIF of the item in question. Just because the forum for these transactions happens to be a major corporation, should the company be held responsible for buyer stupidity?
No one has legal precedent to sue their broker after the stock they buy becomes worthless, since a broker exists as an intermediary between buyers and sellers. The fact that online auction sites deal with physical merchandise instead of futures doesn't mean they're responsible for bad buying decisions, as they have no role in the original manufacture of the goods they sell. Auctions are intermediaries, not retailers, and as such: buyer beware.