[5] The largest consumer-to-consumer online auction site is eBay, which researchers suggest is popular because it is a convenient, efficient, and effective method for buying and selling goods.
[7] Online auctions originated on web forums as early as 1979 on CompuServe and The Source, as well as through email and bulletin board systems.
[8] Auctioneers and sellers would post notices describing items for sale, minimum bids, and closing times.
[9] In September 1995, eBay was founded by French-Iranian computer scientist Pierre Omidyar using a different approach to online auctions by facilitating person-to-person transactions.
[13] The format is popular due to its ease-of-use in an online environment (since computers are capable of tracking and awarding an auction to the highest bidder from many bids).
Critics compare this type of auction to gambling, as users can spend a considerable amount of money without receiving anything in return.
[16][17][18][19][20] The auction owner makes money in two ways: the purchasing of bids, and the actual amount made from the final cost of the item.
Once a buyer wins a lot and pays for it, the fraudulent seller will either not proceed with the delivery,[22] or send a less valuable version of the purchased item (replicated, used, refurbished, etc.).
It is thought to be a safer option than fencing stolen items due to the anonymity and worldwide market online auctions provide.
[31] Governments have identified and taken steps to ensure the safety of online auctions and protect the interests of their citizens, typically by setting up relevant departments to deal with it.
In the United States, the Federal Trade Commission (FTC) takes responsibility for protecting consumers from unfair, fraudulent, and deceptive business practices.
The Australian Competition & Consumer Commission (ACCC) provides information and advice on online auction fraud through its Scamwatch website.
Their actions include publicly revealing the personal information of identified scammers or disrupting transactions by blindly bidding up prices and then refusing to pay.
The current mainstream online platforms act more as "intermediaries" and collect deposits from sellers who sell large-value products.