Merchant Auction Sites: Bidder Beware

SAN FRANCISCO (02/02/2000) - Shortly after Jamie Engel bid on a Sony VAIO notebook at Onsale.com, she received an e-mail saying she'd won. She was thrilled. Onsale.com is a merchant auction site--a site that acquires unsold merchandise (everything from computers to cruises) from outside vendors and auctions it to the public. Unlike EBay Inc. and Amazon.com Inc., merchant auction sites don't auction items from individuals. "It was my first experience bidding in an online auction," Engel says, "and when I won the bid, I thought I'd struck gold."

What she got was more like a lump of coal. The computer didn't show up on time, and a week later she received an e-mail stating that Onsale couldn't fulfill her order since the unit was lost in transit from Sony to Onsale's warehouse.

The company, recently merged with Egghead and now known as Egghead.com, canceled her order and refunded her credit card. A customer service rep offered to notify her if the unit appeared, but it never did. Onsale.com wouldn't even give her a tracking number, says Engel, a small-business owner in Miami.

Engel's experience with merchant auctions isn't unique. PC World has received complaints from about 30 consumers who feel they've been burned by Egghead/Onsale.com or uBid Inc.'s UBid.com, two of the largest merchant auction sites. Sources of complaints include products that never arrived, incomplete or incorrect shipments, inaccurate product descriptions, and erroneous notification of having won bids. If you plan to shop at these sites, you'd better read the fine print first. The sites don't guarantee that the products you bid on are in stock. And if problems arise, you'll likely have to deal primarily with the merchandise vendor, not the auction site.

WHO YOU GONNA CALL?

The problem is, many consumers we heard from didn't consider the fine print before bidding. Take David Brownell, a photographer in Andover, New Hampshire.

He got lost in a game of vendor tag after his bid on a refurbished Compaq PC won at UBid.com. The unit was advertised as including Windows 98, but it arrived without an installation disk. A shipping error? No, says UBid.com. The bidding information didn't specify an installation disk. Brownell says he paid for the right to use the software, and he believes that includes the right to reinstall it if necessary.

"After talking with four or five people at Compaq, I got someone to send me a 'restore' disk," Brownell reports. But he says he doesn't dare test the disk because it will only restore the PC to its original configuration--and since the PC is refurbished, he fears that he may run into trouble. "I feel I've been misled by UBid," Brownell says.

In fact, both UBid.com and Egghead.com post disclaimers on their sites that limit their liability when problems or disputes occur, though most of the consumers we spoke to didn't read all this information before bidding. At UBid.com, for example, the House Rules section covers everything from product quality to returns--but it's located three clicks down from the home page.

Here, UBid.com spells out its policy that products purchased on the site are generally considered nonreturnable, unless they are defective. You have one week to return defective products, and if they're found upon return not to be defective, you're subject to a 15 percent restocking fee. Read the Products subsection under House Rules, and you'll learn that refurbished equipment may not come with recovery disks--something Brownell wishes he'd seen. And under the last House Rules heading, Legal Stuff, you'll learn that the selling merchants, not UBid.com, are responsible for providing merchandise and processing orders. UBid itself makes very few guarantees.

Egghead.com, which posts its policies under a Help section on the site's home page, states that merchants provide all product descriptions, and that Egghead.com is not accountable for typos, or for erroneous product descriptions, pricing, or shipping information published on-site.

What about the question of what "in stock" means? Although the auctions advertise a certain number of products up for bidding, the sites don't guarantee that an item will be available after your bid wins it.

NO RAIN CHECKS

Egghead.com's Terms and Conditions section says the company may "cancel a bid" for merchandise that is "advertised in error" or "is unexpectedly out of stock." And the Legal Stuff section at UBid.com notes that the company "will not be responsible should an item be unexpectedly out of stock."

Charles Gallea of Commack, New York, a customer engineer for a printing company, got confirmation that he had won a bid for two UPS/surge protector products at UBid.com, for a great price of $7 each. But later on he received e-mails from UBid.com support saying the auction had been put up by mistake, the items were not in stock, and the vendor selling the products had gone out of business. Gallea persistently sent e-mails to the product vendor, to UBid.com, and even to AOL's shopping help staff. But he didn't get anything for his effort. His final e-mail from UBid.com says: "Your complaint is with the vendor not UBid. We are now closing our file on this case."

Facilities engineer John Collins of Webster, New Hampshire, made a winning bid on a Mustek scanner at UBid last August 23. On September 9, he learned via UPS online tracking that the scanner had shipped on August 24, gotten to within a state away, and then returned to UBid on September 1. He called customer support. A rep said the scanner was returned to the warehouse but that UBid had others in stock and would reship. "On September 13 I called to make sure it shipped...only to find out that they'd canceled the order and credited my account," Collins says. "I couldn't believe it. They said I'd have to rebid to get the scanner." Collins says he never received a clear explanation.

THE RISK FACTOR

Disappointing experiences aside, there are bargains to be had on these sites.

And the risk of having a problem is statistically low, the companies say. Jeff Sheahan, president and COO of Egghead.com, says that 10,000 to 12,000 transactions take place on Egghead/Onsale.com every day, with a product return rate of less than 3 percent. "The challenge of the merchant auction business is to stand behind all of your products--and that includes even those that are remanufactured or refurbished. We constantly monitor our vendors on sales and customer service requests, and we issue a monthly report card to help us evaluate which ones we'll continue to do business with."

In a similar vein, UBid.com says that it screens vendors on such criteria as their shipping times, their level of cooperation, and their accessibility before it agrees to partner with them. Jason MacLean, the vice president of customer care at UBid.com, says, "Once a merchant is in place, we keep communications tight and don't leave customers without an avenue for assistance." Nevertheless, according to the dissatisfied consumers we heard from, the customer is often told to deal with the product vendor directly.

Troy Folger, a software developer in Austin, Texas, won a bid at Onsale.com last summer for a new telescope. But when it arrived, he could see that it was obviously a used model. Thus began a nightmarish product return odyssey. Folger was told to return the telescope to its vendor for credit. When the vendor failed on three occasions to pick up the telescope as arranged, Egghead.com offered to pay the shipping costs. Six months and countless phone calls and e-mails later, Folger got his shipping costs reimbursed.

Certainly, you can get a good deal at merchant auction sites. But are they worth your time and money? Remember: The sites make no promises about what's in stock, so if you need a product at once, you're wise to look elsewhere. And read all the fine print before you bid.

UBID.COM TOUTS AUCTIONS on goods from PCs to jewelry. Be sure to drill down and read the House Rules...

...including the Legal Stuff section: Selling merchants are responsible for products and order fulfillment.

Be Wise About Bidding

* Read all the terms and conditions you can find on the site before you spend time shopping.

* Remember that if anything goes wrong, the merchant--not the auction site--is usually accountable.

* If you've never heard of the product merchant, research it.

* Check all product details, including upgradability, warranties, and the specific items (equipment, software, and manuals) that are included.

* Learn about return policies: Are you subject to restocking fees? Who pays for shipping? What's the time limit?

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