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Online auctions 

Many people enjoy the excitement of online auction websites. It can also be a good way to shop for a great bargain. Understanding your rights and responsibilities before registering to participate in an online auction, can help you to reduce the risks involved.

Consumer protection 

As a general rule protection under the Australian Consumer Law does not apply to goods purchased at auction, including internet auctions. However, Fair Trading may be able to look at matters where a seller, who is in the business of selling goods, has made false, misleading or deceptive representations about the goods you have purchased.

Consumer protection laws do not apply to purchases where the goods have been auctioned privately. If there is a problem with a private sale, the buyer may need to seek independent legal advice.

Where goods have been purchased overseas, consumers should contact the relevant consumer body in the country where the trader is situated or lodge a complaint through

There are consumer protection agencies operating on the internet which maintain a database of traders with a record of dubious trading activities. Some also maintain registers of traders abiding by national or international codes of practice for internet trading.

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What is an online auction? 

An online auction business such as eBay, operates a website where buyers and sellers from any country can bid for items that can be anywhere in the world. The principles of conventional auctions also apply to online auctions. These include:

  • The buyer determines that the goods are what they want before bidding.
  • Final bids are likely to be binding.
  • Normally there are no return or refund policies.
  • Goods must be sold with ‘clear title’. This means the seller must have the right to sell the goods. If there are any restrictions on ownership such as debts or mortgages, these must be disclosed to you before you purchase the goods.

The auction site is usually not a party to the contract and therefore may not be liable for claims made about the goods, non-delivery of the goods or damages resulting from a dispute about the goods.

Payment and delivery of the goods are negotiated between buyer and seller.

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Bidding versus buying 

Some auction sites also allow goods to be purchased immediately, without bidding (eg. eBay’s 'Buy it now' option). This type of sale is not an auction. The advantage of this option is that if you think the price being offered is reasonable you can obtain the goods immediately, without the uncertainty of waiting to see if you have been the successful bidder. The disadvantage is that you may pay more for the goods than if you had won the auction normally.

If goods are bought at a price set by the seller, consumer protection laws may apply, but only if the seller is in the business of selling goods. If the goods were purchased in this way from overseas, the buyer may be protected by the relevant laws of the country from which they were purchased.

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Generally the consumer guarantees under Australian Consumer Law do not apply to goods purchased at auction. However, the seller is still required to provide goods with ‘clear title’, ie. free of debt, charges and mortgages, unless they are disclosed or known to you before you purchase the goods.

In addition, in most circumstances, manufacturer’s warranties may not apply to new or used goods purchased at auction.

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Online auction tips 

The following are some useful tips that are specific to buying goods through online auctions:

  • Don’t participate unless you read and understood the rules. There are many types of auctions, and the rules about how a particular auction works should be on the website.
  • Before registering or joining an online auction site, read the terms and conditions and know all the fees and charges. These can include registration or administration fees or being charged to bid even if yours might not be the winning bid.
  • Check if the site has buyer protection policies, complaint handling procedures and a dispute resolution process.
  • Check seller reputation using the feedback ratings on the site.
  • Do not enter into an arrangement with a seller to buy privately outside the auction site. Doing so could expose you to a scam. Also you may not benefit from buyer protection policies that might be provided by the site.

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