The Law Handbook 2024

746 Section 7: Consumers, contracts, the internet and copyright the form of free insurance up to a specified amount if things go wrong (e.g. if the item purchased is not delivered). Also, before the auction, verify the seller’s identity and contact details and make arrangements with the seller about what to do if there is a problem. If you have any queries, contact the seller for answers. If their answers are unsatisfactory, do not make a bid. Check for any comments or ratings about the seller on the auction website. Comments from previous purchasers will help you decide whether to participate in the auction. Know the product that interests you. Look at the market or retail price, written descriptions and photographs of the product, and any warranties. Find out the terms of sale, including: who pays for shipping and handling; whether there is insurance, what it covers, who pays for it and what it costs; whether there is a return policy; and what payment mechanism can be used. Bidding at an internet auction Set the maximum price that you are willing to pay for the goods or services, and do not exceed it. The maximum price should include all costs, including insurance, taxes, shipping and handling. Setting a limit on what you are willing to pay helps to prevent you from bidding an excessive amount for an item. Note that prices can be inflated by fake bids; although they are not allowed by auction websites, fake bids do occur. A good method of payment when shopping online is to pay the supplier when the product is delivered (i.e. cash on delivery (COD)). If the seller does not agree to such an arrangement, a credit card should be used because of the ‘charge-back’ service that many financial institutions attach to their credit cards (i.e. reversing the charge if the seller fails to deliver the product). Sending a bank cheque or money order before you receive the goods or services exposes you to a higher risk of fraud. If a seller will not send the product unless you make such a payment, you have to decide if you are willing to take the risk. PayPal is an electronic payment system commonly used on auction sites and is an alternative to cheques or money orders. The recipient of a PayPal payment gets a financial transfer from PayPal, which processes payments for a fee. An alternative is to use an ‘escrow agent’. An escrow agent’s role is to hold the payment for the buyer until they receive the product. Escrow agents are used to protect both parties from fraud. They usually charge the buyer a percentage of the cost of the product. If you use an escrow agent, familiarise yourself with the terms of the service offered, and check if the agent is reputable. Always keep records, either by saving or printing details of the transaction, including the product description (a written and photographic description), the seller’s identification, every bid made, all emails between you and the seller, and every receipt or record provided. Consider using the insurance offered by the auction site (or another organisation) to protect yourself if something goes wrong. If something goes wrong Post feedback about the seller on the auction website Many auction websites allow you to post a comment about and/or ranking for a trader you bought goods or services from. This allows subsequent users to be warned about them, but it will not provide you with any refund or exchange. Make a claim to the auctioneer Some auction websites offer free insurance. Check the terms and conditions of the insurance policy on the auction website to see if you can make a claim. You will probably need to first apply to your credit card provider for a ‘charge-back’ (see ‘Bidding at an internet auction’, above) before you can make a claim with the auctioneer. Complain about the auction website Although you did not purchase the goods or services from the auction website but from a trader via the website, the auction website might have breached your rights as a consumer. Case example: Online auctions Evagora v eBay Australia & New Zealand Pty Ltd [2001] VCAT 49 Few complaints about internet auctions have come before the courts. However, in Evagora v eBay Australia & New Zealand Pty Ltd [2001] VCAT 49, VCAT determined that hosting online auctions is