Are online auctions actually auctions?
Auctions in New Zealand are governed by a law called the
Auctioneers Act. It is not clear whether this Act covers online
auctions, which would require the operator to be licensed.
Do you need to be a registered secondhand dealer to sell at an
online auction?
The introduction of the Secondhand Dealers and Pawnbrokers Act on
1 April this year has created concern among some online auction
sellers over whether they must now hold a secondhand dealers
licence. If you are selling your own property, which you originally
got for your own use, you do not have to hold a secondhand dealers
licence to sell at an online auction.
Under this Act you must hold a secondhand dealers licence if you
are “in business” as a “secondhand dealer”. The Act says a
“secondhand dealer” is someone who buys (for the purpose of trade),
sells, exchanges, or deals in secondhand articles or scrap metal.
You are “in business” as a secondhand dealer if within 12 months
you:
- buy secondhand articles or scrap metal for the purpose of
trade on six or more different days; or
- sells, exchanges or deals in secondhand articles or scrap
metal on six or more different days or so as to receive revenue of
$2,000 or more.
For more information on the Secondhand Dealers and Pawnbrokers
Act, and a full list of secondhand articles as defined by the Act,
see the New Zealand Police website (
www.police.govt.nz – see
Info4traders).
Before you start
Use a reputable site. Ask family members, friends or workmates to
see if they can recommend one they have used successfully. The site
should:
- clearly state its terms and conditions, rules for buying and
selling, and privacy policy
- provide a feedback facility where users can give feedback on
buyers or sellers based on their experience
- offer a payment service.
Familiarise yourself with the bidding and/or selling process. How
does it work? What are you required to do? It is likely you will
have to register by providing some personal information such as your
name, address, date of birth and home phone number. Make sure you
read and understand the site’s privacy policy on how it stores and
uses this registration information.
Find out if the site offers access to a dispute resolution
process. If you can’t resolve the dispute yourself, it is reassuring
to know you have the backup of the auction provider.
Disputes could include:
- goods not delivered to the buyer
- payment not delivered to the seller
- goods of lesser value or very different from the description
sent to the buyer
- goods delivered late
- failure to give relevant information about a product or terms
of sale.
Tips for buyers
Before you place a bid
- Know what you’re bidding on. Read the description carefully.
Look at any photos. If you need more information ask the seller
for clarification.
- Check how much you would pay for the item if you bought it
new, or a similar item in a local auction or secondhand store.
- Factor in any postage/freight costs you may need to pay. The
seller should state who will be responsible for these costs in the
item description.
- Find out all you can about a seller’s trading history on the
auction site. Many sites post feedback ratings of sellers, as well
as buyers, based on comments from users. If you find negative
comments, consider carefully whether or not to trade with this
seller.
- If buying from an overseas site, make sure you know what
currency the prices are in and what that converts to in New
Zealand dollars (some sites may provide a currency converter).
- Know what form of payment the seller will accept.
When bidding
- Establish your top price and stick to it.
- Keep a record of all item descriptions, bids you make and any
correspondence (eg emails) with the seller.
Paying
- Consider using a reputable payment service (sometimes referred
to as an “escrow” services). This involves an independent third
party that holds payment in trust until you receive and accept the
item from the seller. Some sites promote their preferred service.
- Check out any payment service suggested by the seller before
agreeing to use it.
- If buying from a company or using a payment service, consider
payment by credit card where you can. You may be able to reverse
the charge if you don’t receive the goods.
- Consider insuring expensive items against loss or damage in
transit.
- If receiving the item by post, request it be sent using a
traceable courier service.
- Keep a record of all transactions/receipts.
After the sale
- Use the site’s feedback function so other buyers know what to
expect – be it good or bad. You may wish to comment on how quickly
the seller responded to your emails, how quickly they sent your
item and how well it was packaged. Any feedback should be fair and
accurately describe the issue or problem you encountered.
Tips for sellers
Before you advertise an item
- Know what fees the site charges. Charges should be disclosed
to you.
Advertising your item
- Provide a full and accurate description of the item for sale.
- Where possible, include clear photographs of the item – more
than one photo might be required for items where buyers will need
to see other angles. A picture is worth a thousand words.
- Set a realistic minimum price (reserve price) that you’re
willing to sell the item for. If the reserve price is not met, you
are under no obligation to complete the sale.
- State who will pay for any postage/freight.
- State your return policy. Will you accept returns? What
timeframe will you allow for a return? Will you give a full
refund?
- If accepting payment by cheque, you may wish to note that the
item will not be released until the cheque has been cleared.
Dealing with bidders
- Respond quickly to any questions from prospective buyers.
- Keep a record of all item descriptions, bids made and
correspondence with bidders.
- Contact the successful bidder as soon as the auction closes.
Confirm the final cost and arrange payment and delivery.
Payment
- Check out any payment service before agreeing to use it.
- If receiving payment by cheque, make sure it clears before you
hand over the item.
After the sale
- Send the item promptly and in accordance with your agreement
with the buyer.
- When posting an item, wrap it well so it won’t get damaged.
- Use the site’s feedback function so other sellers know what to
expect from the buyer – be it good or bad. You may wish to comment
on their promptness to pay and how quickly they responded to your
emails. Any feedback should be fair and accurately describe the
issue or problem you encountered.
Know your rights
Buying from a trader in New Zealand
If goods are faulty or don’t match description
Under the Consumer Guarantees Act auctions are excluded (insert
link) so online auctions, which in the Ministry’s view fit the
definition of “sales by auction”, are also not covered by the Act.
This means you do not get the same protection as you do when you buy
in other retail situations.
The auction website operators and online sellers who are
considered to be operating in trade (as compared with private
sellers) must comply with the Fair Trading Act.
This Act prohibits people in trade from misleading the public about
goods or services for sale, or making false representations about
those goods or services. If you have been misled or deceived, you
might have a right to be compensated, or in some circumstances
cancel the purchase.
Private sellers in New Zealand
If you are buying from a private seller through an online auction
site, you are not covered by the Fair Trading Act. The Act does not
apply to private sales. The Consumer Guarantees Act also does not
apply to private sales.
As a buyer, the
Contractual Remedies Act may give you some protection when
buying from a private seller. However to seek a remedy under this
Act you must show that:
- you were persuaded to buy the item by what the seller said
about it, and
- what the seller said was untrue, and
- the seller’s false statements have caused you to lose money –
eg, by having to pay for repairs when the seller told you the item
was in excellent condition.
Buying from an overseas online auction
New Zealand consumer laws will not apply to your transaction. Be
sure to check for information on any overseas online auction website
about your rights and remedies against the seller or auction
operator.
If problems occur
- First try to resolve the dispute directly with the other
party.
- If they are not contactable, use the site’s dispute resolution
process if they provide one.
- Place feedback on the site about the buyer or seller so others
are aware. Any feedback should be fair and accurately describe the
issue or problem you encountered.
- You may be able to use the Disputes
Tribunal if your dispute is with a seller or buyer living in
New Zealand. The Tribunal deals with contractual disputes over
goods and services.
- If your transaction is with an overseas buyer or seller, you
may be able to use an online disputes resolution service to
resolve the problem. For more information about these services
check out
www.econsumer.gov – an international e-commerce complaints
site.
Other resources
If you are selling or buying on an overseas online auction
service, you might like to check out these resources:
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