Furthermore, with support by some critics, the feedback mechanism is also believed to contribute benefits to the user on the online auction website. The first benefit that has been argued is that feedback system provides an inexpensive, flexible, and easy to use way of getting information about a potential transaction partner. The reason for this argument is that feedback provides much lower costs and is more flexible than the other channels in obtaining important information in respect to creditability of the business partner in the online auction website. For example, comparing with other channels such as obtaining a credit report, the user have to concerned large amounts of personal and financial information, which is strictly protected by the privacy laws and also involves cost in paying fees to view a report or verify the credit card. Then, another argument is that the feedback system also benefits users in respect of provide user with psychological benefits, making user feel more comfortable and in control of the transaction.⁴² In other words, users get a chance to leave their honest expression to the past transaction and users can also use their past transaction rating to control their further transaction.

For the above reasons, unsurprisingly, the feedback system nowadays has become a key mechanism in order to prevent the occurrences of fraud in online auction transactions.

Other fraud prevention schemes by the online auction website

Apart from the feedback system, there are many voluntary programs arising from the online auction website in order to prevent fraud. First, the online auction user may select to purchase insurance for certain auction transactions. For example "eBay's Fraud Protection Program" which is the insurance scheme that covers offered items. This kind of insurance typically covers failure to receive merchandise paid for and receipt of merchandise that is materially different than represented.⁴³ Another prevention program is that some online auction websites allow a third party service provider to be active on their sites in order to offer services helpful for fraud prevention. The first group of third party in prevention fraud is a third party that provides verification service (ID verify) on the identity of the user on the online auction website. A good examples can be seen in ID verify services such as Equifax. Equifax provides ID verification by confirms the accuracy of information, given by users to online auction website. This service is believed to prevent the occurrence of fraud by adding confidence in buyer or seller identity.⁴⁴ Another group of third party service is concerned with the service called escrow-service.⁴⁵ Escrow-service is the service that holds the payment until the contract is performed.⁴⁶ With this service, the user in online auction can be confident to prevent fraud that occurs from misrepresentation or failure to perform the contract by one party.

2) Legal prevention on fraud in online auction environment
Existing of legal remedies in online auction can argued to be insufficient in dealing with the legal rights of participants in online auctions. The reason is that the C2C environment does not consist with sufficient regulation in dealing particularly with fraud in online auctions and also online auctions attempt to get away from any responsibility in fraud that occur on their websites.

Lack of specific legislation in dealing with fraud in online auction
Even though there is much arising in number of the fraud problem in this online auction environment (C2C), there is still absence of regulation attribute to online auction fraud. In other words, there is absence of any meaningful fraud protection for online auction participants. This lack of sufficient regulation of online auction come form two main factors. The first factor may be that the lawmakers around the world are not intend to get involved in regulation. This is because these lawmakers around the world believe that regulation does not relieve any fraud problems that occur from online auctions and the current trend towards internet law approaches to libertarian ideology. As we can be seen, there are many critic approaches to this belief.⁴⁷ For example, in ALA v Patak.⁴⁸ Court characterizes the internet as "one of those areas of commerce that must be marked off as a national preserve to protect users from inconsistent legislation, that taken to its most  extreme, could paralyze the development of the Internet together".

Another factor is the slow reaction of lawmakers themselves in dealing with the rapid pace of technological development. This is because the online auction is a function of relative newness of the internet. In other words, the online auction is a new channel of the retail electronic commerce and uses a new technology in operating their business. Like other new mediums, Lawmakers around the world are still hesitant to construct a new legislation if they do not yet fully understand the new invention.

Lack of liability from auction website
Currently, the matter of fact is that online auction website attempts to avoid liability for any consequential matter that occurs in its website. The online auctions state clearly in their user agreements that they work only as venue or facilitator in transactions on their website. For example eBay UK state that;

"eBay is not an auctioneer. Although, we are commonly referred to as an online auction website, it is important to realize that we are not a traditional auctioneer. eBay acts as a venue which allows registered users to offer sell and buy just about anything, at anytime, from anywhere in a variety of formats including fixed price and auction -style."⁴⁹

Because they clearly state their status as venue or facilitator, eBay claims to operate with the low responsibility in, any action between its users. As can be seen, e-Bay limit its liability in its user agreement term that;

"In the event that you have any right, claim or action against any other use arising from that user's use of the site, you agree to pursuer such right claim or action independently of and without recourse to us, and you release eBay from all claims. Liability, damages, loss, costs and expenses including legal fees known and unknown, arising from of in anyway connected to such right, claim or action".⁵⁰

With this term of user agreement, it can not be possible to claim the right against fraud that occurs from another user with eBay.

Enforcement with ,current legal right to fraudster
With the reason above, the victims of fraud apparently cannot enforce their right against wrongdoers with specific legislation and also cannot enforce their damage or consequential loss from fraud against online auction providers according to the limitation clause in the user agreement. Therefore, the only right left to the victim of fraud is the usual right against fraud as right in the physical world, which is the right in common law and statutory right.

(1) Common law Contractual liability
Contractual liability is the one action that the online auction participant may take against wrongdoer in their consequential loss and damage arising from fraud concerned with the breaching of the contract. In the United Kingdom, the recoverable right in damage and loss that flow from a breaching of contract has long been recognized in many dictum. However, not every loss and damage from breach of contract can be enforced. In enforcing the right, claimants have to pass the test that common law call `usual course of thing' lest from the case of Hadley v Baxendale.⁵¹ In online auction fraud, fraudsters usually fail to perform the purchase contract whether it be the failure to delivery goods or fail to complete payments of transactions. Of course, this will cost damage to the victims of fraud in undelivered goods or undelivered payments. It can be argued that all damage and loss arising from fraud in online auctions is the ‘usual course of thing' in breaching of selling-purchasing contract by the fraudster. Therefore, under the rule in Hadley v Baxendale, the victim of fraud in online auction can recover any loss and damage arising from the breaching contract of the fraudster. In other words, the victim can enforce contractual claim against the fraudster.

47.example, in ALA v  Pataki Court characterizes the internet as "one of those areas of commerce that must be marked off as a national preserve to protect users from inconsisten legislation. See also Zeran v America Online Inc. 129 F.3d 327 (4th Cir. 19 97).
48.Am. Libraries Ass’n (ALA) v. Pataki, 969 F. Supp. 160, 181 (S.D.N.Y. 1997). See also Perry Barlow Declaration of Independence cyberspace at <http://homes.eff.org/-barlow/Declaration-Final.html> access on 1 1/7/2005.
49.. eBay user agreement para 3.1.
50. eBay user agreement para 3.5.
51. (1854) 9 Exch. 341.