Auction is market mechanism by which buyers make bids and sellers place offers; characterized by the competitive and dynamic nature by which the final price is reached. E-auction is auction conducted online. For examples, www.lelong.com.my, www.ebay.com.my. The flexibility offered by online auction trading may offer innovative market processes. Major manufacturers and e-tailers use auctions to sell product and services.

Electronic auction frauds are common nowadays and there many types of electronic auction fraud that may be conducted likewise mentioned below:

Bid shielding (used by buyers to push down the price)

- a tactic to buy at low price

- get other people to bid for the item that you want

- you use these phantom bidders to bid at a very high price when the auction begins, to scare off other real bidders. The phantom bidders will suddenly pull out just before the due time of the auction.

- You will thus pay law price to get the item.

Failure to pay

- buyers do not pay after a deal is agrees upon.

Failure to pay the auction house

- sellers fail to pay the auction’s listing or transaction fees.

Fake photo and misleading description

- some sellers distort what they can truly sell.

In order to avoid such fraud to take place, there are several security measures that are implied by eBay for its bidders as follows:

1. Grading services which is a way to determine the physical condition of an item, such as ‘poor quality’ or ‘mint condition’. Different item have different grading systems. For example, trading cards are graded from A1 to F1, while coins are graded from poor to perfect uncirculated.

2. Authentication service. It is to determine whether an item is genuine and described appropriately. It difficult to perform because their training and experience, experts can detect counterfeits based on subtle detail.

3. Insurance policy. For example, eBay offers insurance underwritten, users are covered up to $200, will with a $25 deductible. The program is provided at no cost to eBay user

4. Feedback forum. It allows buyers and sellers to build up their online trading reputations. It provides user with ability to comment on their experiences with other.

5. User identity verification such in IC number, driver’s license number or date of birth. For example, verified eBay user, the voluntary program, encourages users to supply eBay with information for online verification.

6. Item verification which is a way of confirm he identity and evaluate the condition of an item. Third parties will evaluate and identify an item through a variety of means. For example, some collectors have their item “DNA tagged” for identification purpose. It provides a way of tracking an item if it charges ownership in future.

7. Non-payment punishment. To protect sellers, a friendly warning for first-time nonpayment. A sterner warning is for second-time offense, with a 30 day suspension for a third offense and an indefinite suspension for a fourth offense.

8. Physical inspection. It can eliminate many problems especially for collectors’ item.

9. Escrow services. Both buyers and sellers in a deal are protected with an independent third party. Buyer mails the payment to escrow services which verifies the payment and alerts the seller when everything checks out. An example of a provider of online escrow services s i-Escrow.

10. Appraisal services which use a variety of methods to appraise items. It includes expert assessment of authenticity and condition, and reviewing what comparable items have sold for in the marketplace in recent months.

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