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ATG Media director Richard Lewis flagged up the measures after hearing of the problems faced by Fernhurst, Surrey auctioneer John Nicholson in dealing with an unpaid bill of £200,000.

Mr Lewis explained that those signing up to bid via the-saleroom.com must agree to information on them being collected and used to prevent defaults in payment at auction. This meets the terms of the Data Protection Act for the sharing of such information.

Under the Privacy Policy section of the-saleroom.com, those registering are informed of the following:

"Sometimes bidders breach the terms of their auction contract with an auctioneer, fail to conclude a purchase and 'default'. This has a detrimental impact on all parties involved from the auctioneer and the seller to the other potential buyers of the item subject to the transaction. It prevents us from providing a timely and efficient service to all our users.

"We therefore now collect and store additional personal data regarding defaulted transactions and we may share this personal data with auctioneers on an ongoing basis to ensure the integrity and reputation of our services and to protect auctioneers and sellers from future default."

They are also advised to read the sections on "Information Regarding Default" and "Uses Made of Default Information" carefully. The latter section includes the advice: "In addition, Default Information may be shared with auctioneers who may rely on it when deciding whether to enter into a transaction with you in the future."

Mr Lewis explained that while the identity of a defaulting bidder might be divulged under this system, the-saleroom.com would not identify or share the details of auctioneers who had fallen victim to them.

Improved Security

Other measures the website has adopted to improve security and reduce fraud include the introduction of 3D verification security and systems that help identify banned fraudsters when they attempt to register again using new contact details.

In Mr Nicholson's case, the problem arose with a phone bidder registering at the eleventh hour before the sale, but from a practical standpoint making it compulsory for bidders to sign up to similar terms and conditions as those adopted by the-saleroom.com on the collection and dissemination of personal information would be possible offline as well under such circumstances.

"As we explain, our priority is to be able to provide a timely and efficient service to all our users, so it is important that all parties can rely on the integrity of others," said Mr Lewis.

"We have been operating this policy since the early part of last year and have found it works very well. We are also continuously looking at ways of improving security and confidence in the system and have adopted a number of other measures that have helped with this."