Online auctions can be a good way to shop for a great bargain. Understanding your rights and responsibilities before registering to participate in an online auction, will reduce the risks involved.
As a general rule, protection under the Australian Consumer Law does not apply to goods purchased at auction, including internet auctions.
What is an online auction?
An online auction business like eBay, operates a website where buyers and sellers from any country can bid for items. 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 cannot see the contract between you and the seller so it is not liable for claims made about the goods, non-delivery of the goods or damages. Payment and delivery of the goods are negotiated between buyer and seller.
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 buy the goods immediately, without 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 this way, consumer protection laws might still apply, but only if the seller is in the business of selling goods.
In most circumstances, manufacturer’s warranties do not apply to new or used goods purchased at auction. Also, generally the consumer guarantees under Australian Consumer Law do not apply to goods purchased at auction.
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.
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.
- 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. This could expose you to a scam. Also you may not benefit from buyer protection policies provided by the site.