TABLE: DOs AND DON'Ts OF BUYING AND SELLING AT ONLINE AUCTIONS

DO:

--Get to Know the Other Party
Online auction sites such as eBay and City Auction often have feedback areas where individuals can "rate" other members based on past transactions. Avoid sellers with low ratings, but be wary of extremely positive ratings, too. Some unscrupulous sellers can stack their own ratings by writing glowing endorsements for themselves using online aliases.

--Know What You're Buying
Read the description of the item carefully. Is it refurbished? New? Discontinued? Try to get a specific make, model number, or even serial number so you can check with the original manufacturer to verify an item's authenticity. If possible, ask to see a picture of the item.

--Use a Secure Payment System
Credit cards that limit your liability to $50 or less are your best bet. But read the fine print in your bank's credit-card agreement. Some banks won't honor this clause if the sale involves an interstate transaction. If you're dealing with an individual who can't accept (or doesn't have) credit cards, ask the person to agree to use an online escrow service such as TradeSafe or i-Escrow. There will be a small fee, but the resulting protection for both sides is most likely worth it. For the seller, it means fewer worries over bounced checks, and for the buyer it often means a chance to inspect the item before releasing the payment.

DON'T:

--Fall for the Hype
Know what the offered item (or something reasonably similar) would sell for in a store and set yourself a ceiling on what you're willing to pay. Be aware of shills who may come in toward the end of an auction and place a higher bid in the hopes of getting you to bid even more. If there's no activity in an auction for days and then the action is fast and furious minutes before the close of the auction, it could be the seller and a few friends trying to jack up the price. For sellers, the danger in shill bids is that your shill may win -- leaving you with no sale.

--Feel Pressured to Buy or Sell
Most auctions are held for only a set time, but don't give in to the notion that you've just got to have it. Also be aware of the attitude of the other party after the auction is over and it comes time to work out the nitty-gritty details. If the other party refuses to meet your final sales conditions -- if the person insists upon COD rather than using a credit card or escrow service, for instance -- or makes other demands that are uncomfortable to you, just say no and walk away from the deal.

--Overlook the Nitty-Gritty Details
Keep track of the other party's contact information (E-mail addresses, street addresses, telephone numbers, etc.), printouts of the E-mail between you and the other person outlining the final transaction details, air-freight-bill or other package-tracking numbers, and other details -- including shipping receipts and canceled checks. A seller may have made an honest mistake in neglecting to send an oft-overlooked part, such as a power cord. Also, be open to discussing ways to work out problems between the two of you. The best time for that is before any money or items change hands.

By Stefani Eads, Staff Reporter, and Paul M. Eng, Senior Correspondent, Business Week Online