While most buyers and sellers on internet auction sites are honest, there is always threat of underlying fraud.

Auction sites have had instances of sellers posting pictures of items for sale, only to include in extremely small print that buyers are only bidding for photo rather than item itself. When photo arrives in post and not product, buyers are obviously outraged.

Steps to avoid online auction fraud 1)Check seller's feedback

One of best ways to judge a seller's honesty is to check his or her feedback. Most buyers will give feedback on a sale, rating seller in seller's Feedback Profile. If feedback is negative, it will be very difficult for that seller to buy or sell anything on that auction site in future. Check seller's feedback and if it is not overwhelmingly positive, do not buy.

2)Find out seller's contact details

Before you enter into a deal, try to establish contact with seller. On eBay you can search information on a member by visiting Find Members page. If you can get a phone number or an email address, you have a better chance of solving any future problems. You could establish contact with buyer by requesting further information about nature of product in which you are interested.

3)Payment Methods

The Internet gives bogus companies opportunity to "take money and run" with less chance of getting caught than in offline world. It's fairly easy to hide behind a website and an, oftentimes fake, e-mail address.

I recently came upon this program, Invest With Gold, (http://www.investwithgold.com) when asked by one of my newsletter subscribers to try and find out whether it was legitimate. It only took me about 5 minutes to make my decision on this one.

Here's a direct quote from main page:

"Welcome to InvestWithGold.com, Consistantly paying out our investors since 1998! The only site on internet utilizing currency exchange markets for our investors, and making them money. We offer you up to 800% PROFIT in 2 weeks, GUARANTEED, and completly hands free! And best of all, you are NEVER in danger of losing your investment capitol!"

So they invest their clients money into foreign currencies and make a profit. The profits, less a 1% service fee, go back to clients, thus earning money on their investment.

It sounds pretty good, doesn't it? 800% profit in 2 weeks? What a deal! And they've been in business for 6 years, so they must be good, right?

Not so fast! Keep reading before you hand over your money.

The second paragraph on page invites website visitor to "Just look what our investors have to say" which is a clickable link to a message board for investors to add their comments.

The problem is message board is empty! I'd assume happy clients would post *something* there. (Well, maybe they're working on that page. I'll give them benefit of doubt.)

I continued reading main page and saw this:

"Although we can not "legally" say you will never lose any money, we can tell you that we have NEVER LOST MONEY in over 6 years! If you're interested, take a look at tracking section, to see how other people's investments are doing, and then read message board, and comments from our clients."

I'd venture to say that "they" probably haven't lost any money, but their clients, if they have any, probably have. I already knew message board was empty, so I decided to check out tracking section.

Here's where it got *really* good. I went to page and, lo and behold, I found a list of e-mail addresses of this company's clients! They didn't list complete extension (.com, .net or whatever) but rest was there.

Wait a minute! Don't they have a privacy policy? I wouldn't want to have *my* e-mail address plastered there for whole world to see. How unethical!

I slowly scrolled down page and certain things caught my attention. I recognized 10-15 names as Internet business owners, several of whom are quite well-known. So I e-mailed 8 of them to ask if they've really invested money with this company and, if so, whether or not it was a good investment.

I wasn't surprised to learn that, of 4 people who have replied to me so far, *none* of them has ever heard of this company, much less invested money with them. (I e-mailed them less than 48 hours prior to this writing, so hopefully remaining 4 will reply to me soon. But I don't expect their answers to be any different.)

I also noticed as I scanned listing of "clients" that approximately 75% of e-mail addresses looked like this: