As you step outside one early October morning feeling the cool breeze of Fall on your face, that familiar mix of excitement and dread hits you: holiday season is just around the corner. As your thoughts of lights and laughter fade, you think of your dwindling bank account and wonder, how am I going to pay for all those gifts this year? [http://www.scambook.com/report/view/19149/zBiddy-False-Advertising-for-$60.00-on-09-07-2011] You get to work, open up your laptop and glance at your inbox. To your surprise, you’ve received an intriguing e-mail advertizing the just-released version of the iPad at 90% off. You think, well that would be an awesome gift for my boyfriend! Curious, you open the email, and it leads you to an online penny auction website.
How Penny Auctions Work
You learn that users can purchase bids and take part in the auction of very expensive items from flat screen TVs to digital cameras and more. Every time a bid is placed, the total cost of sale of the item bid on increases by one cent. Also, the auction does not have a set ending time; the bidding could go on for days.
In order to make a bid, you have to buy the right to do so. Bids usually cost between $0.60 and $1. There’s a timer that counts down toward zero and the last user to make a bid before the time runs out wins the item; however, each time a bid is placed, the timer is reset to as little as 10 seconds, allowing more bids to be placed. This sets users up for a game of chicken. [http://abclocal.go.com/kabc/story?section=news/consumer&id=7706313]
Users are told the number of others that are bidding on an item; so as each user continues to bid, he or she is betting on the notion that other bidders either run out of purchased bids or decide to bow out of the bidding war. In this competitive bidding environment, users may place hundreds – even thousands – of bids on an item worth a small fraction of what was spent to bid on it… and usually end up empty handed, out the money spent on those bids. Since the initial price of an item up for auction typically starts at $0.00, the prospect of winning that very pricey iPad for just a few bucks seems likely. However, penny auction sites are often plagued by unscrupulous schemes, which have deprived consumers out of their hard earned cash.
Learn to Recognize Potential Scams
While some penny auction sites are legitimate, the industry is not regulated. So, even though you can actually win and receive items for a fraction of their retail price, this outcome seems to be rare.
1. Fraudulent Bidding: There are two common types of fraudulent bidding that occur on penny auction sites: shill bidding and bidding bots. [http://tomuse.com/penny-auction-fraud-scam-cheat-bidders/]
Shill bidding occurs when anyone, usually those that run the penny auction site, bid on an item with the intent to artificially increase the price of the item. This not only increases the end cost of the item, but also results in users spending more money bidding on that item, due to a seemingly increased desirability for that item.
With bidding bots, fake user profiles are created and run by the penny auction site owners, and those accounts are used to place phony bids in order to cover the cost of running the penny auction site. A real bidder can’t tell the difference, and may continue to spend money bidding on an item against a fake bidder.
2. Items Won Never Delivered: Often times when users win items, they will receive a tracking number for each item being shipped; however, all too frequently, days turn into weeks and weeks turn into months. The item won is never delivered, and customer service has no useful information to convey. When this happens, disgruntled users might eventually be refunded the money they paid for the item won and never received; however, this amount is usually only a fraction of the money spent bidding on that item. Many times, the amount spent purchasing bids is not refunded, or it will be refunded in the form of bid credits to your account with the penny auction site – the site that by that time you want nothing to do with, ever again.
Also, many new penny auction sites shut down after a short run. Rarely, sites will make sure users receive the items they won and are refunded for unused bids before they shut down the site. Yet, more likely, sites are not that generous and end up depriving consumers of their unused bids and items won.
Scambook has received a large amount of reports about penny auction sites, many conveying common grievances. Consumers have complained about the following: 1) confusion about having to pay in order sign up for the site and/or bid on items
2) being told that due to a glitch in the system, the user did not actually win [http://www.scambook.com/report/view/290/Backyardbidder-Penny-Auction-Site-Other-for-4795.00-on-04-20-2011]; 3) items won were not delivered [http://www.scambook.com/report/view/16289/Bidsauce-Penny-Auction-False-Advertising-for-$600.00-on-10-06-2010]; 4) the site was shut down before the user was able to draw on all of his or her bid credits; http://www.scambook.com/report/view/19720/Flutteroo-Bait—Switch-for-17.50-on-08-19-2011; 5) there was not a customer service phone number listed on the site [http://www.scambook.com/report/view/19720/Flutteroo-Bait—Switch-for-17.50-on-08-19-2011]; 6) bidding bots were being used to place bids [http://www.scambook.com/report/view/7739/BidRack-Other-for-$100.01-on-07-28-2011]
What should you do if you are the victim of a penny auction site’s shady tactics?
1. File a report with the Federal Trade Commission, the nation’s consumer protection agency. You can file a complaint with the FTC by clicking here: https://www.ftccomplaintassistant.gov/
2. File a report with your local Better Business Bureau.
3. Help yourself and others by reporting your experience to Scambook and commenting on similar posts!! When you share your story, others will feel compelled to share theirs, and we will all take part in cleaning up the penny auction industry! And if you’re wondering if you should take part in a penny auction, but sure to search Scambook for complaints first!
Penny Auction Fraud Alert: How You Can Lose by Winning
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