New York (CNN/Money) - For many, online auctions provide a great way to purchase almost any item they may have a hankering for, often at a great price.

But there's a downside to auctions too: fraud.

According to the Federal Trade Commission and other law enforcement agencies, more than 49,000 complaints were lodged last year regarding online auction fraud. In some cases, merchandise never arrived or products were not as they were described. Con artists have also "spammed" victims to obtain personal information, such as credit card and bank numbers. In some cases they have hijacked legitimate sellers' auction site account names and used them to rip off unsuspecting customers. Or they advertise bogus payment services. (For more about the FTC findings, click here.)

There are steps buyers and sellers can take to protect themselves. Here's how:

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Many times buyers are disappointed because the merchandise they bought doesn't live up to their expectations. Minimize risk by reading product descriptions closely before you bid on an item. Words like "refurbished" or "wear and tear" should tip you off that you're not getting something that's pristine. Likewise, examine any photographs of the item. If you have questions about a product, or if a photograph is blurry, don't hesitate to e-mail the seller and ask questions. Needless to say, it's a bad sign if a seller is reluctant to provide additional information.

It's vital find out as much about a seller as possible before making a bid. That's why sites like the No. 1 online auction site, eBay, provide feedback ratings on sellers (and buyers). Don't ignore those ratings! If someone has a great reputation then you're more likely to be satisfied with your transaction. Likewise, steer clear of sellers with negative transactions.

Feedback comments may also tip you off if someone's seller profile has been "hijacked." Specifically, recent negative remark on a seller's profile may provide a clue that something may be amiss with the account, particularly if that seller has an otherwise spotless reputation, said eBay spokesman Kevin Pursglov.

Again, e-mail a question to a seller. If someone doesn't respond, don't bid. (At the very least you want to do business with someone who's responsive.) If a business is selling goods on the auction site, find out more about it. Get its address and consider checking with the local Better Business Bureau to see if any complaints have been lodged against it.

Paying for items you buy online with cash is both risky and just plain stupid. Likewise, mailing a check can be hazardous because you may not be able to stop payment before you realize you've been victimized. (It's also expensive to cancel a check.)

One good bet? Credit cards. Thanks to their "zero liability" policies, you won't be on the hook if you're a victim of fraud, but be aware that you usually have to follow certain dispute guidelines to get your money back. For example, you are expected to file complaints in a timely manner -- usually 30 to 60 days. Contact your card to find out what your rights and dispute resolution guidelines are.

If you don't want to use your credit card, don't have one, or are doing business with a seller who doesn't accept them, consider using an online payment service like PayPal. Like credit cards, payment services enable buyers and sellers to instantly send and receive payment for items, thus expediting sales transactions. Both seller and buyer must have their own payment service account to use such services. That said, when you bid on an item, consider doing business only with sellers who accept online payment service transactions.

Online escrow services, such as Escrow.com, work somewhat differently and they often are the best option if you're making a big purchase. That's because they act as a middle man to protect both buyer and seller from fraud. Escrow services hold auction payments until merchandise is safely delivered and approved by the buyer, at which point, funds are released to the seller. If the buyer isn't happy with the merchandise, the buyer gets his or her money back after they return goods to a seller. Typically buyers pay the escrow service fees, which can range up to 6 percent depending on the price of the item you're buying.

You know the adage: If something sounds too good to be true, then it probably is. That's true with online auctions, too. One way con artists have been scamming buyers is by luring them away from auctions with the promise of selling them the same item for far less money. These fraudsters can do this easily by simply looking at e-mail addresses for individuals competing for a particular item. If you get an unsolicited e-mail offering goods on the cheap, be extremely skeptical.

In most cases, Internet scams involve some sort of false e-mail. With that in mind, make it a policy to be leery of any unsolicited offer you may get -- either for cheap goods or, say, an advertisement for an escrow or payment service you've never heard of. Some con artists are also mailing false notices from eBay informing individuals that they need to enter their personal information in order to update their accounts or because security has been compromised. eBay never asks users for their personal account data, so if you receive such an e-mail it's likely to be fraudulent, said Pursglov.

Whether it's a bogus e-mail purportedly from eBay or any other service asking for your personal data, the rule is clear: Don't respond. Giving away your password, credit card number or other sensitive financial data because you've been asked for it in an e-mail is no different from blurting it out to a stranger on the sidewalk. Likewise, don't make it easy for someone to obtain sensitive information. Change your auction password at least once a month and choose one that's not obvious. (Individuals who tend to get ripped off have, for example, used the same word for their User I.D. as well as their password.)