Recently it was reported that the auction platform Hibid was a victim of a ransomware attack. We wanted to provide some insight on what to do if you are involved with an auction site that has been hacked.
At GoCollect, we believe in educating our readers on the state of affairs in the collectible industry. We also want to prepare our readers so that they can handle how these events impact the hobby. NONE OF WHAT IS WRITTEN HERE SHALL SERVE AS LEGAL ADVICE!!! You should always consult an attorney in your area with any legal issue.
I. Sellers Beware!!!
There are many different types of sellers in collectible markets. Some readers may sell part of their collections to buy other books. Other GoCollect readers may represent a business that sells comic books online as part of their business model. Still others may run auctions for third-party clients to generate revenue. The ransomware attack on Hibid impacts every seller. As a result, all sellers should be asking themselves these questions:
1. What does the auction platform contract say in regards to software issues?
In the contract, there is probably a section that spells out EVERY party’s obligations. Not many people read that section and yet it is very important. The contract protects the platform. It is very important that you know those rules in advance. The attorneys who drafted the contract represent the platform and not the users. That is important to know.
2. Will the platform suspend the auction or will it return with the same ending time?
Sellers never think of this issue until it is too late. I was a participant in an auction where this was happening and the auction house realized the issue too late. Books were selling well below the FMV. The auctioneer did not realize any problems. Bidders started to call in reporting the issues. The auction house suspended the auction to resolve the issue only after missing out on larger sales prices when the auction was almost over. The platform took no action.
3. Who is liable for the problem?
The seller of those items was probably very unhappy. Items were selling well below the FMV the whole auction. The bidders were probably also unhappy because they missed out on items they wanted. Someone had to pay a price for this software issue. The contract signed by the auctioneer and the platform company spells out who paid that price. The item’s owner does not care because someone will pay a price one way or another. The seller should know the party responsible and plan accordingly.
4. Where to a file a lawsuit?
Many sellers find out much too late that they will have to file a lawsuit against the platform where the platform’s corporate office is located. Travel costs and time away from a business may now prevent some sellers from filing a suit against the platform. In addition, your company’s long-time attorney may not be able to represent you in that lawsuit. These new costs may prevent you from filing a lawsuit against your auction platform because the costs do not justify potential recovery.
II. Buyer’s Remorse
Buyers think bidding on an auction is a simple process. Attorneys draft long contracts that spell out what a buyer can expect if a problem arises. Not many buyers ever bother to read these contracts because of the mistaken belief that their only dealing will be with the auction house. Buyers usually have to sign agreements with the auction platform to register for their site as well as an agreement with the auction house to bid at their auctions. Buyers should read both contracts to find out some of these key issues:
1. What information must you provide to bid?
Many auctions require you to provide a credit card to bid. Shill bidding is a problem in auctions. Shill bidding is an attempt to bid up an item by artificial bidders bidding on the item. Bidder registration using a credit card is a way auction houses believe eliminates this potential bad practice.
The problem is that now hackers could have the bidder’s personal information as well as a credit card. Bidders could be exposed to possible identity theft. Bidders must determine how much exposure they want to risk before bidding on an item.
2. What did the contract say will happen if something goes wrong?
Your personal information may potentially be exposed if a site is hacked. I get many calls from people who feel they are victims of a hacked site. These individuals believe they should recover big money damages as a result. Rarely will these people know what was in the contract they signed in order to bid. Contracts are important to all parties and yet we are trained just to click yes to anything put in front of us online. Read the contract because it is important in determining what your rights may be in the event of a problem.
III. General things buyers/sellers can do to protect themselves
I have provided a list of some general things to do in the event an auction goes sideways. It is a guide of what I do when something wrong occurs at an auction. This list is not legal advice, but…
Get Legal Advice!
The first thing I would do as a buyer or seller involved with a hacked site is to contact an attorney in my area to give me legal advice. Know your rights. Attorneys will give you actions to take to better protect you from harm. You may be advised to monitor your credit history using Experian, Equifax, Transunion, or another agency. The attorneys may also advise you to freeze your credit cards to prevent unauthorized usage. I have asked my bank to issue a new credit card when a company I used indicated that my information may have been compromised. Your attorney may advise you to do the same. Your attorney will be your best source of advice with a bad auction experience or a hacked auction site.
Use the Internet
You may want to monitor the internet now more than ever. Websites will provide news on what is happening with the attacks. These reports can let you know what actions you should take as soon as possible, as well as the extent of the hack. You should trust news agencies and those sites with reputable reporters.
Businesses can also monitor social media accounts to protect their reputation from upset clients. People will lash out and they will not care who is at fault. You must deal with them properly.
Avoid this mistake!!!
You should contact your attorney before you publish anything online about your auction experience because you may be exposing yourself to a lawsuit for a libelous statement. Your attempt to deal with a mad client or express your frustration with your auction platform provider may only make the situation worst. Attorneys can be swords to fight those that harmed you but also shields to protect you from more harm. Use them!!!
IV. GoCollect Commitment to Our Readers
GoCollect has always wanted to educate our readers on collecting. We are not a legal advice website. Instead, we are making you aware of questions you should be asking as both buyers and sellers of collectibles when using an auction house or site. We have always served as a vanguard to hobbyists, leading the way to educating people on collecting.
Here, we wanted to bring attention to what is happening with online auctions and how it could impact you. We want our readers to be proactive and prepared to better protect themselves one day too early rather than one day too late.
What advice do YOU have to add? Let us know in the comments!