Bidders Be Wary
Online payment and escrow services
have become extremely popular in the Internet auction world - and for
good reasons: Online payment services allow buyers to use a credit
card or electronic bank transfer to pay sellers who may not be
equipped to accept these kinds of transactions. Online escrow services
accept and hold a buyer's payment until the merchandise is received
and approved; then, they forward the payment to the seller.
But the Federal Trade Commission (FTC) is advising online buyers -
and sellers - to be alert to phony online payment and escrow services.
The consumer protection agency says that occasionally operators of
these sites pose as sellers and buyers to improperly obtain money or
How can you determine whether an online payment or escrow service
is legitimate? The FTC offers these tips:
Read the service's terms of agreement.
If it's an online payment service, find out whether it offers buyers
any recourse if sellers don't keep their end of the bargain, whether
it prevents sellers from accessing their funds if buyers are not
satisfied with the product, and who pays for credit card charge
backs or transaction reversal requests.
security measures. Never disclose financial or personal information
unless you know why it's being collected, how it will be used, and
how it will be safeguarded.
Check out the online payment or escrow
service's Web site. Sites that are of poor quality, say, with
misspelled words, or that claim to be affiliated with the government
Call the customer service line. If there
isn't one - or if you call and can't reach someone - don't use the
Be suspicious of online escrow services
that can't process their own transactions, but rather require users
to set up accounts with online payment services.
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 unresolved complaints against the service. Be
aware that a lack of complaints doesn't necessarily mean that a
service has no problems.
Internet Auctions: A Guide for
Buyers and Sellers.
The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop and
avoid them. To file a
complaint or to get free information
on consumer issues, visit
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other fraud-related
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
FEDERAL TRADE COMMISSION
FOR THE CONSUMER