CONSUMER ALERT

MIKE COX

ATTORNEY GENERAL

The Attorney General provides Consumer Alerts to inform the public of unfair, misleading, or deceptive business practices, and to provide information and guidance on other issues of concern.

avoid auction scams ? know the facts before you bid

Public interest in live and online auctions has grown.  More and more people are turning to auctions to purchase anything from household goods to real estate.  While these auctions may be a good way to find a deal, you should do your research before you bid.

"Estate" and "Government" Auctions

You may have seen the advertisements before:  "County Sheriff Seized Property Auction," "Drug Dealers Seized Assets Up For Auction," "Items Previously Seized by Customs," "Spectacular Estate Auctions," and the list goes on.  These ads often include a list of high priced art, antiques, jewelry, household items, and oriental rugs that can supposedly be purchased at the auction.  While these advertisements may seem tempting, you should take some precautions before you decide to attend an auction.

Research the validity of "government" auctions.  Contact the government agency allegedly being represented to make sure the auction is legitimate.  If the ad merely states that seized items are up for auction, ask the auctioneer which government agency seized the property.  Be wary of advertisements that only refer to the government in a generic way. 

Know the reputation of the auctioneer and whether the auctioneer has complied with applicable Michigan and local laws.  Although Michigan's Public Auctions Act does not apply to auctions held within cities and only requires a license for the sale of new merchandise, additional local licensing requirements may apply.  You should contact your city, township, or village clerk to determine whether the auctioneer has obtained a license to conduct the auction.  Further, Michigan requires a person or company to become registered when the title "Registered Auctioneer" is used.  You can find a list of Registered Auctioneers at: www.cis.state.mi.us/bcsc/forms/auct/list.xls.

You may also contact the Better Business Bureau and the Attorney General's Consumer Protection Division to see whether there are unresolved complaints against the auctioneer.  Be aware that a lack of complaints does not necessarily mean that an auctioneer has had no problems. 

Know the value and quality of the goods before you bid.  If purchasing high value items, make sure to substantiate their authenticity.  Do not rely solely on the representation made by the auctioneer.  Unscrupulous auctioneers may substitute copies of art, furniture, and rugs.  If a deal sounds too good to be true, it probably is. 

Shop around to make sure you are getting a good deal.  Check with local, established merchants for similar merchandise.  You may be able to find the item for less money. 

Know the terms and conditions of the auction before participating in the auction.  Find out whether you could be on the hook for entry fees, prebid deposits, buyer's premiums (fees paid by the winning bidder), taxes, or shipping.  You should also find out about return policies and warranties.  Often auctioneers do not have return policies and warranties to back up purchases. 

Do not get caught up in the excitement of auction buying.  Establish spending limits before the auction and stick to them.    

additional precautions for Online auctions

Be familiar with the auction site before you participate in the auction.  Find out what protections the auction site offers buyers.  For example, some sites may offer protection in the event that you do not receive your item or the item is significantly different from its description in the seller's listing.  Carefully check each site's policy, do not assume one site's rules are the same as another's.

Before bidding, find out all you can about the seller.  Many Internet auction sites provide feedback on sellers by other buyers.  This area is helpful when researching the seller's reputation.  Pay particular attention to numerous negative comments about the seller, especially if these comments concern the same issue, i.e. the product never arrived.  Be aware that because this information can be easily manipulated, some of the positive feedback may be self-created "shill" testimonials.    

Make sure you know how to contact the seller in case there is a problem.  Get the seller's name, physical street address, email address and phone number.  Avoid doing business with sellers you cannot identify, especially those who try to lure you off the auction site with promises of a better deal.

Find out who pays for shipping and delivery.  Generally, sellers specify the cost of shipping the item and give buyers the option of express delivery for an additional fee.  If you are uncertain about shipping costs, check with the seller before you bid.  Beware of inflated shipping charges.  If a shipping charge seems unreasonable, e-mail the seller and ask how they determined the rate; verify the information with your local postal and delivery services.

If the seller insists on using a particular escrow or online payment service you have never heard of, check it out.  Visit its website and call its customer service line.  If there is no customer service line, or you call and cannot reach someone, do not use that service.  It is important that you thoroughly research the service and are comfortable with the service because you will be using it to provide payment to the sellers.  You may also contact the Better Business Bureau and the Attorney General's Consumer Protection Division to see whether there are unresolved complaints against the service.  Again, be aware that a lack of complaints does not necessarily mean that the service has had no problems. 

Protect your privacy when bidding.  Never provide personal information such as your Social Security number, driver's license number, or bank account information.   

Save all the transaction information.  Print or make note of the seller's identification, the item description and the time, date, and price you bid on the item.  Print and save a copy of every e-mail you send or receive from the auction company or the seller.

CONTACT THE ATTORNEY GENERAL'S CONSUMER PROTECTION DIVISION

Consumers may contact the Attorney General's Consumer Protection Division at:

Consumer Protection Division
P.O. Box 30213
Lansing, MI 48909
517-373-1140
Fax: 517-241-3771
Toll free: 877-765-8388
www.michigan.gov/ag (online complaint form)