Online auctions are beginning to take off on the Internet and there are now hundreds of online auction sites. Some of the big players are ebay and Yahoo!Auctions, which grow ever popular with consumers hoping to purchase top quality goods are bargain prices. However, auction sites have also become the target of many scams.

Auction sites are continually doing their best to combat fraud, but it is nearly impossible to totally eliminate it due to the nature of online auctions. There are a number of ways that online auction scams occur. The most frustrating and obvious scam is when a buyer sends money for a good, but it is never received. Because little contact information is usually provided, it becomes a nightmare trying to track down sellers.

A common scam is when sellers use a "shill", which is either a friend or a second e-mail address, to pump up prices and hopefully start a bidding war. Another scam involves a "shield", which again is either a friend or a second e-mail address, to discourage bids on an item by driving up prices. At the last moment, they will withdraw their bid to obtain the item at a cheap price.

Most online auction transactions are completed without problems, but there are steps you can take to avoid being scammed. First of all, make sure you read all the rules on bidding and listing items on an auction site. When you decide to bid, do so on inexpensive items first to reduce risk. Look at feedback on buyers and sellers, being careful of users with negative or no feedback. Beware of sellers with little billing information and anonymous e-mail addresses.

Make sure you know the retail price of the item you are bidding for so you do not get caught out paying more than retail price when you include shipping costs. Look out for shills and do not get caught up in a bidding war. Shills often have an e-mail address with the same domain name as the seller and have no feedback. Send money in a way that can be traced, such as by cheque. If you are a seller, only send products after you have received payment. Record the details of every transaction including the original product description and bidding history. Last, but not least, use common sense. As they say, if something seems to good to be true, it probably is.

Online auctions have a bright future, and by taking the right precautions, you should avoid being scammed and make the most of the benefits it brings.