Auction site Trade Me has had to beef up its policing efforts to stop rogue “fee avoiders” because outdated laws offer no help.
Trade Me has found some traders are getting out of paying “success” transaction fees - which are based on flat fees and transaction fees under 5% - by asking bidders to contact them outside the process, says managing director Sam Morgan.
“We don’t know how big the scale of the problem is,” he says, "but we are trying to get our business on as sound a base as possible.”
Morgan says he has staff members watching the listings all day to ensure their "quality", and has decided to warn offenders before removing their listings and discontinuing their customer accounts - which must be set up in order to trade.
Trade Me charges a minimal listing fee as well as the success fee, while US online auction site eBay charges a percentage fee after a sale and Yahoo charges for listings.
Morgan says one problem is that chasing and collecting debts of low value is not always viable, while Trade Me’s only form of authentication is by credit card ID. Trade Me may have some legal recourse after the passing of the Electronic Transactions Bill, which has still to be put through Parliament. But another problem is that Trade Me can not fall back on The Auctioneers Act 1928, as it doesn’t fit that act’s definitions of an auctioneer – one of which is that six people must be present at the time of auction.
That act is under review, and the review document specifically mentions online auctions, noting that once the technology performs live time auctions “the Act will need to be flexible enough to properly address the issue of Internet auctions, or other forms of electronic transactions”. The government has called for public submissions on whether online auctions should be included, their risk levels, cross-border issues and areas of inconsistency between offline and online.
Morgan says Trade Me's focus on quality listings will also include a crackdown on illegal goods. Morgan says Trade Me sees items such as fake Oakley sunglasses, pirated software and MP3’s “all the time”.
But these are hard to find and trace back to individuals as Trade Me’s model relies on people building up a trading history, he says. Like many other sites, Trade Me excepts itself from responsibilities in any transaction.