Internet auctions sites give buyers a virtual flea market that offers new and used merchandise from around the world. Sellers get a global storefront from which to market their goods. However, online auctions can be quite risky. It is best to understand how Internet auctions work to help you avoid most problems.

Role of the auction site - Most Internet auction sites specialize in person-to-person activity where individual sellers or small businesses sell their items directly to consumers. In these auctions, the seller-not the site-has the merchandise.

More often than not, the site will not take responsibility for any problems that may arise between buyers and sellers. When using an Internet auction site for the first time, buyers and sellers should read the Terms of Use, and review any information the site offers.

Registration - Most online auction sites require buyers and sellers to register and obtain an account name and password before they can make bids or place items for bidding.

Remember to keep your password to yourself, as you don't want another person to buy or sell items on your behalf without your knowledge. It could also damage your online reputation, and eventually your bank account.

Fees - Some sites require sellers to agree to pay a fee every time they conduct an auction, whether the item is sold or not. Other sites charge a fee only when an item is sold.

The auction process - Many sellers set a time limit on bidding and, in some cases, a "reserve price" which is the lowest price they will accept for an item.

When the bidding closes at the scheduled time, the item is sold to the highest bidder. If no one bids at or above the lowest bid, the auction closes without the item being sold.

Payment and delivery arrangement - At the end of a successful auction, the buyer and seller communicate-usually by e-mail-to arrange for payment and delivery. Payment is usually accepted through PayPal, Xoom, or bank transfers.