Note : Les descriptions sont présentées dans la langue officielle dans laquelle elles ont été soumises.
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
METHOD AND SYSTEM FOR MANAGING AND CONDUCTING A
NETWORK AUCTION
CROSS-REFERENCE TO RELATED APPLICATIONS
This application claims priority to provisional application serial no.
60/143,021 filed July 9, 1999 which is incorporated herein by reference in its
entirety.
BACKGROUND OF THE INVENTION
FIELD OF THE INVENTION
The present invention relates generally to the field of electronic commerce
and more particularly to a method and system for managing auction transactions
over
a network, such as the Internet.
DESCRIPTION OF THE RELATED ART
Currently, a buyer participating in an auction, for example, over the
Internet,
does not really know if the purported seller actually exists, and neither does
a seller
in such an auction know whether the purported buyer actually exists.
Therefore, a
buyer who enters the winning bid takes a chance on the existence of the
purported
seller, as well as whether he or she will ever get the merchandise on which
the bid
was entered. Likewise, a seller who accepts the winning bid takes a chance on
the
existence of the buyer who purported to enter the winning bid.
1
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
Typically, in such an auction, a user at a terminal, such as the user's
personal
computer (PC) accesses an auction page on the Internet, such as E-BAY and goes
through a registration process. Registering basically means that the user at
the user's
PC enters the user's address, such as an e-mail address, and an e-mail is sent
to the
user, for example, at the user's PC, which tells the user that he or she is
allowed to
bid. The user is also given, for example, a bidding name, and the user sets up
a
password on the system.
It is well known that anyone, can set up an Internet account for an e-mail
address with a service provider, such as AOL or the like, and it is possible
for a party
to secure an e-mail address while concealing his or her true identity. It is
also
possible for someone to use another party's e-mail address on an unauthorized
basis,
and e-mail addresses are commonly stolen and used without the owner's
authorization. In short, there are no guarantees associated with an e-mail
address as
to any identifying characteristics (~, age, gender, status) of the user of the
e-mail
address.
When the user registers on the auction page with the user's e-mail address
and receives a bidding name, the user is ready to bid or list with the auction
site. In
the case of auction sites as with auction houses, at least one of the seller
and buyer
pays a fee for the opportunity to use the auction site. Usually the seller
pays for the
ability to list and sometimes pays an additional fee in the form of a
percentage of the
eventual selling price. The procedure varies for some auction houses, such as
SOTHEBY'S, in which the buyer pays the fees. However, as a general rule, it is
the
seller who pays the fees, and the auction house generally bills or invoices
the seller
2
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
once a month. Upon receipt of the invoice, the seller generally pays, for
example, by
writing a check, although sometimes sellers can pay by credit card In the case
of
Internet auction sites, most people selling at auction over the Internet are
not what we
typically think of as merchants. Rather, they are simply individuals, and when
they
sell something, they are not usually equipped to receive payment by any means
e(~. .,
credit card) other than by check, money order, or the like. This causes
inconveniences for both parties, since the buyer must actually write a check
or obtain
a money order and then the buyer must wait until the seller is satisfied that
the check
will clear, etc., before the goods) are transferred.
Internet auctions include, for example, normal auctions in which people enter
bids and the bid price goes up as people bid higher and higher, as well as
what are
called Dutch auctions. In a Dutch auction, the process begins at a certain
price, and
the price goes down until somebody makes an offer at the current price. In a
Dutch
auction, effectively, someone wins the bid, because there are time frames. In
other
words, the bids are scheduled to end at a certain time, so they do not go
continuously.
In any event, when the bidding ends, the seller notifies the buyer via e-mail
that the
buyer has won the bid and asks the buyer to send the seller payment, such as a
check
or a money order, for the purchase price plus, for example, a certain amount
for
shipping and handling.
Upon receipt of such e-mail, it is up to the buyer to either write a personal
check and/or get a certified check or a money order, which means a trip to the
Post
Office or the financial institution, and send the check or money order, for
example to
an address for the seller given in the e-mail. It is readily apparent that
when the
3
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
buyer sends the check or money order to the seller, the buyer takes a
substantial risk
that the seller actually exists and/or that the buyer will actually receive
the goods)
for which the buyer has paid. The buyer expects the seller to package and ship
the
goods) to the buyer when the seller receives a money order or a certified
check.
However, if the buyer pays by personal check, the seller typically waits
several
weeks for the check to clear before packaging and shipping the good(s). While
one
auction house has recently started a voluntary verification process in which
users can
have themselves "verified" by paying a fee and sending information to a credit
bureau, the process is voluntary and does not take place on both sides of a
transaction.
Accordingly, there is currently a tremendous amount of uncertainty in
Internet auction transactions, for example, as to whether buyers or sellers
really exist.
There is likewise also considerable uncertainty as to whether or not buyers
will pay,
and if they do pay, whether the payment funds are good. Further, if the funds
are
good, there is a tremendous amount of uncertainty about whether the buyer will
actually get the merchandise for which the funds were paid. The risk is a
seller's
risk, as well as a buyer's risk. The buyer risks not receiving the merchandise
for
which the buyer paid. The seller's risk lies, for example, in putting the
seller's
merchandise up for auction and receiving a winning bid, and waiting a month or
more to discover that the buyer does not exist or sent bad funds for payment.
SUMMARY OF THE INVENTION
4
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
Settlement of an Internet auction transaction occurs through the system of the
financial institution that is sponsoring the auction website. It is not
necessary, for
example, for a credit card settlement to go through a card association.
Rather, it is
simply a matter of running the settlement through the financial institution's
system
and, in effect, the buyer buys something, for example, for ten dollars, so the
financial
institution takes ten dollars from or charges the buyer's account ten dollars,
and the
seller sells something, for example, for ten dollars, so the financial
institution gives
the seller a credit on the seller's account for ten dollars. Thus, the
settlement is very
much like having the buyer and seller present together and exchanging the
funds
instantaneously. The settlement is reported as a transaction on the account
statements of both customers.
It is a feature and advantage of the present invention to provide a method and
system for managing auction transactions over the Internet which removes the
risk of
non-authentic buyers and sellers by authenticating the buyer and seller in a
transaction from the buyer's and seller's account information, respectively.
It is a further feature and advantage of the present invention to provide a
method and system for managing Internet auction transactions which avoids the
risk
of non-payment and delayed shipment of goods) by settling the transaction on
accounts of the buyer and seller in the transaction.
To achieve the stated and other features, advantages and objects, an
embodiment of the present invention provides a method and system for managing
Internet auction transactions by creating an auction website by, for example,
a
financial institution. The auction website is accessible by the financial
institution's
5
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
account holders e(~..., holders of checking, savings, credit card, and
investment
accounts). Thus, all buyers and sellers in auction transactions on the auction
site, for
example, have accounts with the financial institution, with settlements
occurring
between the accounts of the users at the financial institution. Payments are
debited
from the buyer's accounts) with a credit going to the account of the seller,
less any
fees. All charges occur internally, so no interchange is owed, for example, to
a card
association in connection with the transaction. Financial institution
customers
benefit from the system in that buyers and sellers are authenticated and
settlement
occurs virtually instantaneously.
Additional objects, advantages and novel features of the invention will be set
forth in part in the description which follows, and in part will become more
apparent
to those skilled in the art upon examination of the following, or may be
learned by
practice of the invention.
BRIEF DESCRIPTION OF THE FIGURES
In the drawings:
Figure 1 is a schematic of the parties to an auction transaction according to
an
embodiment of the present invention;
Figure 2 is a registration process according to an embodiment of the present
invention;
Figure 3 is a registration process according to an embodiment of the present
invention;
6
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
Figure 4 is an auction payment process according to an embodiment of the
present
invention;
Figure 5 is an auction payment process according to an embodiment of the
present
invention;
Figure 6 is an auction payment process according to an embodiment of the
present
invention; and
Figure 7 is an auction payment process according to an embodiment of the
present
invention.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
Referring to Figure 1 an embodiment of the present invention enables
authentication of counterparties to an Internet auction transaction wherein
both
parties hold financial accounts with the provider of the auction website. An
Internet
auction transaction for an embodiment of the present invention involves, for
example, a seller 10 at the seller's PC 12 and a buyer 14 at the buyer's PC
16, each
accessing the auction page of the website server 18, for example, of a
financial
institution, over the Internet 20 or any other public or private network.
In an embodiment of the present invention, the seller is known to the
financial institution as the holder of an account with the financial
institution, and the
buyer is likewise known to the financial institution as the holder of an
account with
the financial institution. Thus, there is a known financial institution
account holder
on both ends of the Internet auction transaction. The financial institution
knows that
both the seller and the buyer actually exist. When the transaction occurs, the
7
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
payment is very simple, because the payment is made by the financial
institution
debiting the account of the buyer who bought the item at auction and crediting
the
account of the seller who sold it through a settlement system 22. Therefore,
it is
known that the parties are dealing with actual people, or at the very least,
viable
accounts and that once the transaction occurs, the seller will receive his or
her funds.
In a first preferred embodiment of the present invention, the funds transfer
is
virtually instantaneous, allowing the seller to have the benefit of the
payment almost
immediately. While in a second preferred embodiment of the present invention,
the
funds are held in escrow until the goods) are received by the buyer, as
discussed
below.
Referring to Figure 2, in an embodiment of the present invention, a process
for participating in the Internet auction website of the current invention
begins with
the potential seller and the potential buyer each registering with the
financial
institution's auction website S2, S12 by providing at least an e-mail address
and
payment account information. In prompting the seller and buyer for payment
account information, the financial institution queries whether or not the
seller or
buyer holds an account with the financial institution S4, S14. When a seller
or buyer
asserts that they have an account with the financial institution, the
financial
institution then verifies that the seller and buyer are in fact financial
institution
account holders, that the account numbers for each are valid, and that each is
in good
standing S6, 516. If the selected account is not found or is not in good
standing,
registration is denied under that selected account S8, S18. This may be
accomplished by, for example, an application on the website server which
accesses
8
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
financial institution account data stored, for example, in a financial
institution
database. In the verification process, the financial institution confirms, for
example,
that the credit cards are not stolen, that the cards are good, that the credit
card
accounts are paid on time or that the selected accounts e(~. ., checking,
savings,
brokerage) are in good standing. In other words, the financial institution
confirms
that the accounts are viable and in good standing for purposes of financial
transacting.
In an alternate embodiment, the buyer or seller may be prompted to select an
alternate account under which to register. In this case, the system will again
check
the viability of the selected account prior to allowing registration. Though
the
verification is done over the Internet, a public network, account numbers are
sent
securely using, for example, encryption. Data transmission encryption
techniques
are well known in the Internet art and will not be discussed further within
this
application.
Once a viable account is selected, the website issues the buyer or seller a
registration ID S10, S20. This >D may take many forms, including a
username/password combination selected by the buyer and seller or it may be an
alphanumeric code/personal identification number (PIN) assigned randomly by
the
financial institution, wherein the financial institution associates the
selected
user/password combination or the assigned code with the buyer or seller's
selected
account number.
Once issued a registration ID, the seller and buyer may gain access to the
auction portion of the website and sell or bid on good(s). A seller lists
goods) on the
9
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
website under his/her registration ID S22. Similarly, a buyer bids on listed
goods)
using his/her registration ID S24. Eventually, a buyer will win the bidding
for a
listed goods) S26. In the embodiment described above, both the buyer and
seller
hold accounts with the financial institution running the auction website. This
need
not necessarily be the case.
Referring to Figure 3, non-account holders may also participate in the
auction website if they hold credit cards from member associations or have
other
approved accounts with member financial institutions. Member associations and
member financial institutions are pre-approved by the auction sponsoring
financial
institution. Similar to the registration process for the account holders, non-
account
holder sellers and buyers are prompted for payment account information and the
financial institution queries whether or not the seller or buyer holds an
account with a
member association or member financial institution S30, S40. If no such
account is
held, then the buyer or seller is denied registration S32, S42. When a seller
or buyer
asserts that they have such an account with a member association or member
financial institution, the sponsoring financial institution then verifies that
the seller
and buyer are in fact account holders with the member association or member
financial institution, that the account numbers for each are valid, and that
each is in
good standing S34, 544. If the selected account is not found or is not in good
standing, registration is denied under the selected account S36, S46.
Once a viable account is selected, the website issues the buyer or seller a
registration ID S38, S48 wherein the sponsoring financial institution
associates the
assigned code with the buyer's or seller's selected account number held
through a
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
member association or member financial institution. When in possession of a
registration ID, the seller and buyer may access the auction portion of the
website
and sell or bid on good(s). A seller lists goods) on the website under his/her
registration ID S50. Similarly, a buyer bids on listed goods) using his/her
registration ID S52. Eventually, a single buyer will win the bidding for a
listed
goods) S56 assuming the bid requirements, if any, set by the seller are met
e(~. .,
minimum acceptable bid is met).
In the following embodiments, the procedure for finalizing the auction
transaction is the embodiment where both the buyer and the seller have
registration
IDs under accounts of the sponsoring financial institution. These steps are
similarly
applicable, in most instances, to embodiments wherein either the buyer or
seller or
both have registered with the Internet auction website using accounts from
other than
the sponsoring financial institution i.e., from a member association or member
financial institution. Differences in the process due to non-sponsoring
financial
institution account holders are addressed below.
Once the buyer has won the bidding for a seller's good(s), the auction site
has
a data packet which includes the goods) associated with the seller's
registration ID
which is in turn associated with an account that the seller used to register
with the
auction website. Further, the data packet includes the buyer's registration ID
which
is in turn associated with an account that the buyer used to register with the
auction
website. Finally, the data packet includes the final price bid for the
good(s). At this
point, settlement of the transaction may begin.
11
CA 02378546 2002-O1-04
WO 01/04816 PCT/~JS00/18582
Referring to Figure 4, in an embodiment of the present invention, the buyers
and sellers having accounts with the sponsoring financial institution are
prompted to
select which account with the financial institution they wish to access for
settling the
transaction 560, S62. The buyer and seller in this embodiment are not required
to
settle the transaction with the same account under which they registered with
the
auction website. For any number of reasons (e.~., amount of funds, newly
opened
account), the buyer or seller may wish to debit or credit an account separate
from the
registering account. In the specific embodiment of Figure 4, once both the
buyer
and seller have selected their respective accounts/bills, there are at least
two payment
scenarios, the first is an immediate transferal of the payment from buyer to
seller, the
second is a transferal of the payment into an escrow account wherein the money
is
only transferred to the seller upon the occurrence of certain events e(~. .,
buyer
communicates receipt of goods) to the financial institution). The methods and
systems of the embodiments of the current invention may utilize one or both of
these
payment scenarios.
In a first particular embodiment of Figure 4, selecting an exemplary amount
for illustration purposes, if the final bid price is less than or equal to
$500, the first,
immediate payment scenario occurs. If the final bid price is greater than
$500, the
second escrow payment scenario is instituted. Consequently, after the buyer
and
seller select their respective accounts S60, S62, the system internally
queries the bid
price and compares it to the pre-determined threshold of $500 564. If the
final bid
price is less than or equal to $500 than the buyer's selected account is
immediately
debited and the seller's selected account is immediately credited S66. Both
parties
12
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
are notified immediately via, for example, e-mail, that this transaction has
been
completed S68. The parties will also see the transaction on their monthly
statements
or on-line if the financial.institution offers on-line interim statements for
the selected
accounts.
Following the method to Figure 5, once the financial portion of the
transaction has been completed for a bid price less than or equal to $500, a
first time
period is set for the seller to deliver the purchased goods) to the buyer S80.
The
system queries whether or not the seller has delivered the goods) within the
first
time period S82 e(~. ., buyer notifies of receipt or lack of receipt). If the
seller has
not delivered the goods) within the first time period, the financial
institution
performs a charge-back or similar transaction, wherein the bid price is taken
back
from the seller's selected account and credited to the buyer's selected
account S84.
This type of transaction is well known in the financial arts. The auction
system may
be structured such that the financial institution may charge-back the payment
from an
alternate account of the seller should the selected account not having the
required
funds.
Alternately, if the buyer has received the goods) within the first time
period,
a second time period may be set for the buyer to inspect the goods) to
determine if
they are conforming S86. The system queries whether or not the buyer responds
within the second time period S88. If there is no response, then the
transaction is
considered to be complete 590. If the buyer does respond within the second
time
period regarding the good(s), the system queries whether or not the goods) are
in
acceptable condition S92. If the goods) are acceptable, the transaction is
complete
13
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
S94. If the goods) are not acceptable, the auction system of the current
embodiment
offers the buyer one of two choice for completion of the transaction. The
buyer may
return the goods) to the seller or the buyer may request a bargaining session
with the
seller via the auction system S96.
If the buyer chooses to return the good(s), a third time period is set for the
buyer to return the goods) to the seller S98. The system queries whether or
not the
goods) have been returned within the third time period S100. If the goods) are
not
returned within the third time period, the transaction is considered to be
complete,
since the payment has been made to the seller and the buyer presumably has the
goods) S102. If the goods) are returned to the seller within the third time
period, a
fourth time period is set for the seller to inspect the returned goods) to
make sure
they are in the original condition S104. The transaction is considered
complete if the
financial institution does not hear from the seller in the fourth time period
or the
seller notifies the financial institution that the goods) are acceptable S106.
Alternately, if the seller notifies the financial institution within the
fourth time period
that the goods) are not acceptable S108, the financial institution may refer
the seller
to legal services to consider the sellers options at his point S109. As a
service to the
client, the financial institution may offer to reimburse the seller for the
nonconformance, up to a set amount. The financial institution may also offer
insurance for this sort of occurrence at a reasonable price as an option
during the
registration process.
Alternately, the buyer may elect to request a bargaining session with the
seller due to the fact, for example, that although the goods) are not in
conformance,
14
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
the buyer wishes to keep the goods) but at a reduced price S110. In this case,
a
message is sent from the financial institution to the seller, notifying the
seller that the
goods) were non-conforming, but that the buyer would like to request a
bargaining
session with the seller to further discuss the price. At this time, the seller
may
choose to engage in the bargaining session or the seller may request that the
goods)
be returned S112. If the seller does not wish to engage in the bargaining
session, the
buyer may choose to keep the goods) in which case the transaction is complete
or
the buyer may return the goods) to the seller, in which case the steps S98-
S109 are
applicable.
Assuming the seller agrees to the bargaining session, referring to Figure 7,
the buyer is notified of the sellers agreement to participate in a bargaining
session
and a time period is set within which a new price must be agreed upon or the
goods)
must be returned to the seller in order to qualify for a charge-back S150. The
Internet auction website provides a page for "BARGAINING SESSIONS," wherein
the buyer and seller enter their respective registration IDs into the ID box
and they
are linked to a page containing the details of their original transaction
5152.
Additionally, a space is provided for a recitation as to the status of the
goods) as
received and the reason for the request to lower the initially agreed upon
price, as
well as a new suggested payment price 5154. This bargaining session may be
limited to x number of messages between buyer and seller, or there may be an
unlimited number of messages allowed between the buyer and seller. If the
buyer
and seller agree on a new price for the good(s), a page is provided to the
buyer and
seller for submitting the newly agreed upon price S156. The financial
institution
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
must receive the same price quote from both the buyer and the seller before,
in this
particular embodiment, a charge-back is performed, debiting the seller's
account for
the difference between the original bid price and the newly agreed upon price,
and
crediting the buyer's account for the difference S168. In the event that no
new price
quote is received from both the buyer and seller within the pre-established
time
period or the buyer does not inform the financial institution that the goods)
have
indeed been returned to the seller within the pre-established time period
S158, the
transaction is considered to be complete in this embodiment S160. Assuming the
goods) are returned to the seller S164, presumably after an unsuccessful
bargaining
session, steps S104-S109 are followed.
In a second particular embodiment of Figure 4, in the case where the final
bid price exceeds $500, the system in this embodiment does not automatically
transfer funds from a buyers account to a sellers account. In this embodiment,
the
buyer has a chance to inspect and accept the goods) before the seller is
credited from
the buyer's account or accounts. The bid amount is deducted from the buyer's
selected account and entered into an escrow account 570. This escrow account
may
take on various forms, but should be managed such that if the goods) fail to
meet the
necessary requirements, the buyer is at the very least reimbursed for the
original
amount debited from his/her account. There are other management scenarios for
the
financial institutions escrow account, such as where the buyer actually
receives
interest back on the principle, in addition to the principle, in the case of
non-
conforming goods) from the seller. This escrow account may take on various
forms,
but should be managed such that if the goods) fail to meet the necessary
16
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
requirements, the buyer is at the very least reimbursed for the original
amount
debited from his/her account. There are other management scenarios for the
financial institution's escrow account, such as where the buyer actually
receives
interest back on the principle, in addition to the principle, in the case of
non-
conforming goods) from the seller. This escrow system may be a requirement of
the
financial institution's Internet auction system, it may be instituted on a
transaction by
transaction basis (~,, all transactions over a pre-defined price as in Figure
4), or it
may be instituted at the request of either the buyer or seller as a
prerequisite to
engaging in business with a particular buyer or seller.
Once the buyer's account or accounts have been debited for the auctioned
amount and deposited into the escrow account 570, the buyer and seller are
notified
of this transaction by the financial institution and the seller transfers the
purchased
goods) to the buyer through an appropriate medium 572. This notification may
be
through any suitable means, such as e-mail, telephone, or mail, to name a few
examples. After notification, the financial institution may start a time
period for
completion of the transaction (e~, S, 10, 15 days). If the seller does not
deliver the
goods) within the first time period 574, the buyer's payment is returned to
the
buyer's account S76. Alternatively, referring to Figure 6, if the buyer has
received
the goods) within the first time period, a second time period may be set for
the buyer
to inspect the goods) to determine if they are conforming S120. The system
queries
whether or not the buyer responds within the second time period S122. If there
is no
response, then the seller is credited with the buyer's payment from the escrow
account 5124. If the buyer does respond within the second time period
regarding the
17
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
good(s), the system queries whether or not the goods) are in acceptable
condition
S126. If the goods) are acceptable, then the seller is credited with the
buyer's
payment from the escrow account 5128. If the goods) are not acceptable, the
auction system of the current embodiment offers the buyer one of two choice
for
completion of the transaction. The buyer may return the goods) to the seller
or the
buyer may request a bargaining session with the seller via the auction system
S130.
If the buyer chooses to return the good(s), a third time period is set for the
buyer to return the goods) to the seller S132. The system queries whether or
not the
goods) have been returned within the third time period S134. If the goods) are
not
returned within the third time period, then the seller is credited with the
buyer's
payment from the escrow account since the buyer presumably has the goods)
S136.
If the goods) are returned to the seller within the third time period, a
fourth time
period is set for the seller to inspect the returned goods) to make sure they
are in the
original condition S138. The seller is credited with the buyer's payment from
the
escrow account if the financial institution does not hear from the seller in
the fourth
time period or the seller notifies the financial institution that the goods)
are
acceptable S140. Alternately, if the seller notifies the financial institution
within the
fourth time period that the goods) are not acceptable S142, the financial
institution
may refer the seller to legal services to consider the sellers options at his
point 5143.
As a service to the client, the financial institution may offer to reimburse
the seller
for the nonconformance, up to a set amount. The financial institution may also
offer
insurance for this sort of occurrence at a reasonable price as an option
during the
registration process.
18
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
Alternately, the buyer may elect to request a bargaining session with the
seller due to the fact, for example, that although the goods) are not in
conformance,
the buyer wishes to keep the goods) but at a reduced price S144. In this case,
a
message is sent from the financial institution to the seller, notifying the
seller that the
goods) were non-conforming, but that the buyer would like to request a
bargaining
session with the seller to further discuss the price. At this time, the seller
may
choose to engage in the bargaining session or the seller may request that the
goods)
be returned S146. If the seller does not wish to engage in the bargaining
session, the
buyer may choose to keep the goods) in which case the seller is credited with
the
buyer's payment from the escrow account or the buyer may return the goods) to
the
seller, in which case the steps S132-S143 may be applicable.
Assuming the seller agrees to the bargaining session, refernng to Figure 7,
the buyer is notified of the sellers agreement to participate in a bargaining
session
and a time period is set within which a new price must be agreed upon or the
goods)
must be returned to the seller in order to qualify for a charge-back S150. The
Internet auction website provides a page for "BARGAINING SESSIONS," wherein
the buyer and seller enter their respective registration IDs into the ID box
and they
are linked to a page containing the details of their original transaction
S152.
Additionally, a space is provided for a recitation as to the status of the
goods) as
received and the reason for the request to lower the initially agreed upon
price, as
well as a new suggested payment price S154. This bargaining session may be
limited to x number of messages between buyer and seller, or there may be an
unlimited number of messages allowed between the buyer and seller. If the
buyer
19
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
and seller agree on a new price for the good(s), a page is provided to the
buyer and
seller for submitting the newly agreed upon price S156. The financial
institution
must receive the same price quote from both the buyer and the seller before,
in this
particular embodiment, the seller's account is credited with the new price
from the
escrow account and the buyer's account is credited from the escrow account for
the
difference S170. In the event that no new price quote is received from both
the buyer
and seller within the pre-established time period or the buyer does not inform
the
financial institution that the goods) have indeed been returned to the seller
within
the pre-established time period S158, the seller's account is credited with
the original
amount from escrow in this embodiment S162. Assuming the goods) are returned
to
the seller S166, presumably after an unsuccessful bargaining session, steps
S138-
S143, respectively, may be followed.
A further advantage of the preferred embodiment is the ability of the seller
to
apply the payment from the buyer to any account or bill currently available
for
payment through the financial institution. For example, many financial
institutions
offer services, on-line or otherwise, for automatically paying bills for their
customer's from the accounts of the customer's managed by the financial
institution.
In a preferred embodiment of the present invention, the seller may
specifically
request that the profit from the on-line auction be directed to, for example,
their
mortgage payment, car loan, student loan, etc. instead of first going to the
seller's
checking account and then later being debited therefrom to pay these types of
bills.
As discussed with reference to Figure 3 another aspect of an embodiment of
the present invention relates to verification in an Internet auction
transaction for a
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
financial account holder who is not a sponsoring financial institution account
holder.
Such an aspect involves, for example, an arrangement with the certain credit
card
associations (~, Visa~, MasterCard~) or non-sponsoring financial institutions
(~, Chase, First Union) in connection with authentication of non-sponsoring
financial institution account holders. Such non-sponsoring financial
institution
account holders are allowed to participate in the auction system in an
embodiment of
the present invention and are allowed to buy on the system and to use their
non-
sponsoring financial institution accounts to charge the bid price of the
good(s).
However, non-sponsoring financial institution account holders and/or the non-
sponsoring financial institutions or associations may be charged a fee.
As discussed above, the non-sponsoring financial institutions or associations
may become member associations and member financial institutions through
arrangements with the sponsoring financial institution. Upon becoming a member
association or member financial institution, account holders with these member
associations and/or member financial institutions may use the auction website,
subject to the registration and verification processes described above.
In an embodiment of the present invention, for a buyer who is an account
holder with a member association and/or member financial institution, the
sponsoring
financial institution, for example, charges the member association and/or
member
financial institution account holder for the bid price and issues a check to
the seller.
Thus, the sponsoring financial institution basically guarantees that the buyer
is real,
and the sponsoring financial institution looks to the buyer for payment of the
money
charged on the member association and/or member financial institution account.
In
21
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
other words, the sponsoring financial institution takes the collection risk
like it does
on any other transaction.
As part of the verification and settlement proceedings with member
associations and/or member financial institutions, the sponsoring institution
may
S check on the available credit of the member association account holders
through
conventional credit card authorization lines. Further, the sponsoring
institution may,
for example, check the availability of funds through the pre-established ATM
lines,
prior to allowing sellers and buyers to register with the Internet auction
website. The
sponsoring financial institution may also use the ATM lines to check the
availability
of a buyer's funds at the member financial institution, prior to releasing
funds to a
seller after a bid price has been reached. The sponsoring financial
institution would
then release the funds to the seller and begin external settlement proceedings
with the
member financial institution.
A further feature of the Internet auction website is the ability of the
sponsoring financial institution to track auction performance histories of
buyers and
sellers who utilize the system. These performance histories include payment
and
delivery histories of the buyers and sellers as well as purchasing histories
of
particular buyers and product conformance histories of particular sellers.
Using this
information, the financial institution may provide information on the
reputation of a
particular buyer or seller to other prospective buyers and sellers to help
facilitate use
of the system by trustworthy individuals. Further, by tracking the purchasing
habits
of buyers, the financial institution may offer as a service to its buyers,
notification
that certain types of goods have been listed on the auction website. For
example, if
22
CA 02378546 2002-O1-04
WO 01/04816 PCT/US00/18582
the financial institution establishes through tracking that a particular buyer
frequently
purchases antiques, when an antique is listed on the auction website, the
financial
institution would notify the particular buyer of this new antique listing.
This
notification could be in the form of, for example, an e-mail, or even a page
depending on the arrangement between the buyer and the financial institution.
Finally, in a similar alternate embodiment, the financial institution may
offer
a service to potential buyers, wherein the potential buyers specifically
request to be
alerted when a particular type of good is listed on the website. For example,
a
potential buyer may be interested in purchasing a computer. The potential
buyer
requests that the financial institution alert the buyer whenever a computer is
listed on
the auction website. The alert may be provided through any available media,
i.e., e-
mail, pager, etc.
Various preferred embodiments of the invention have been described in
fulfillment of the various objects of the invention. It should be recognized
that these
embodiments are merely illustrative of the principles of the present
invention.
Numerous modifications and adaptations thereof will be readily apparent to
those
skilled in the art without departing from the spirit and scope of the present
invention.
23
