Bidder Beware: Avoid Auction Scams

I did a story last week for "Good Morning America" about grocery auctions. And I'm heading out this week to shoot another auction story, this time about people who are making some cash in this tough economy by selling unneeded belongings at auctions. The two topics reminded me that there are some tips and tricks -- and warnings -- I can share about shopping at auctions. So here goes.

There's something about an auction that gets people's blood flowing. Gets their cash flowing, too. People part with thousands of dollars because they feel like they've "won" something rather than "bought" something. They often overpay. You can bid your way to a bargain at an auction, as long as you remember an old warning with a new twist: bidder beware.

First, let me tell you about government auctions, almost a form of legal revenge. The government busts bad guys and then sells their belongings to make money for law enforcement. I covered a government auction once and was dazzled by the dizzying array of merchandise. Luxury cars. Diamonds. Gold bars. Persian rugs. Golf clubs. Ramen noodles. Yes, several tons of ramen noodles. If the government seizes it, the government can sell it. And you can buy it. Contrary to legend, you won't find a sports car for 50 bucks or a vacation home for $500. Government auctioneers set minimums and withdraw items from the auction if they fail to fetch a reasonable price.

Click Here to Ask Elisabeth Your Consumer Questions About This Topic or Any Other Consumer Issue

The feds publish lists of government sales and auctions for free or for a small charge to cover postage. If you'd like to find out about government auctions, go to www.pueblo.gsa.gov and click on "Federal Programs." There are several brochures you can print out about government auctions. The Treasury Department holds auctions every nine weeks. For information on those, call (703) 273-7373 or go to www.ustreas.gov.

Be aware that opportunists will try to sell you information about government auctions that you can get yourself for free. The scam works like this. You see an ad about government auctions or other glamorous auctions. You call the number. The operator asks you for your credit card or checking account number. The company charges you $50 to $75 for a list of auctions. Maybe the operator offers to "throw in" a couple extra auction books. You end up being charged for those as well.

Beware Fake Government Auctions

Government auctions are so popular that copycats try to make their auctions seem like government auctions to lure customers. This is just one of many sleazy tactics used by travelling auctions held in hotel rooms and other rotating sites. Travelling auctions usually advertise in newspapers or send out direct mail. Beware of ads with statements like this: "AUCTION of goods previously held, sold and released by GOVERNMENT AGENCIES and POLICE DEPARTMENTS!" Unschooled readers may miss the fine print and mistake this for a government auction. It's a ploy. All it means is that the travelling auctioneer himself attended a government auction and bought one or two things that he's now going to try to re-sell at a huge mark up. That's if he attended a government auction at all.

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