Reporting Paula Ebben
BOSTON (CBS) – Penny auction websites are more popular than ever, offering a chance to by new electronics and designer goods at wildly discounted prices.
But some people claim the sites may actually be breaking the law, luring you into spending money with no guarantee of getting any product at all.
Penny auctions promote great deals on hot merchandise. For example: brand new iPhones for $15, digital cameras for $3, and Prada sunglasses for $46.
But as the number of these websites increases, so has the number of consumer investigations, lawsuits and complaints.
The Better Business Bureau has gotten more than 1,500 complaints in the last year.
WBZ-TV’s Paula Ebben reports.
“We urge extreme caution with consumers,” says Becky Maier of the BBB. “We urge that consumers understand that it’s very hard to actually win the products.”
Two class action lawsuits have already been filed in federal court. One of them is against Quibids and other penny auction sites, claiming they are engaging in illegal gambling and operating a lottery. Quibids strongly denies those charges.
“I know for a fact this is not gambling or any illegal lottery,” says Jill Farrand of Quibids. “What I would call it is entertainment shopping.”
Quibids points to satisfied customer Pat Brown, who got an iPad for $150, an iMac computer for $1.60, a flat screen TV, and many other products, all by bidding on the Quibids site.
Here’s how it works: The starting price of an auction is zero and bidders up the ante a penny at a time. Each time they bid, they’re charged about 60 to 75 cents.
So you can win the items for a cheap price, but you could shell out thousands of dollars for bids.
“I probably spent $4,000 in bids in the past five months, but on the other hand I’ve won probably double that in merchandise value,” says Brown.
But the Better Business Bureau says complaints keep pouring in. They include getting charged more than $50 for a “free” trial offer, not being able to get ahold of anybody at a company to dispute charges, and being lured into spending a lot of money.
“They’re just sucking dollars out of your wallet,” says penny auction shopper Bill Larson.
Larson spent $200 dollars to win two $50 gift cards and says he never even received the cards. “You don’t realize it until that money is gone how much you’ve lost,” he says.
The better Business Bureau says some penny auction sites operate well and recommends that before you get started, do your research and play frugally.
If you think you got ripped off by an online penny auction, contact the Better Business Bureau, which may be able to get you a refund.
6 Comments
This is a great article that describes the penny auction industry very well.
It is true, many people have lost money bidding on penny auction sites, but this is due to the lack of knowledge about the pay-per-bid auction system. People tend to only look at the auction price and think that is the only amount they are paying, when in reality every time they click that “bid” button, they are spending more money. So for the people that get bid crazy and just click away, yes, you are going to end up spending more than what the item is worth.
That being said, there are definitely bargains to be had out there as well, but it requires research and strategy. The consumer needs to know which sites are legitimate penny auctions, how much they are spending on bids, and who they are bidding against. There is something to be said for the person who recognizes the name of the person they are bidding against and knows to stay away. Or if the roles are reversed, if the bidder is a beginner and could easily be out-smarted.
The BBB had it right when cautioning the consumers about penny auction sites. But as an experienced bidder, I know that if you find the right penny auction site, do some research on it, find reviews, and maintain a bidding strategy, you can end up walking away with some great deals on merchandise. Maybe not for pennies, but definitely less than the retail price.
July 1, 2011 at 10:08 am | | Report comment
It is important to do some research before choosing to bid on a penny auction, there are many legitimate penny auctions out there. We love to invite everyone to try http://Sellmoo.com, we have be around since 2009 and have great reviews.
July 1, 2011 at 5:52 pm | | Report comment
I’ve read about this in http://www.pennyauctionstrategyguide.com/ as well. A case where one bad apple spoils the whole damn bunch. This is good news apparently for multiple industries tainted.
July 31, 2011 at 11:06 pm | | Report comment
I enjoy your blog, I stumbled across penny auctions about a month ago and have been hooked ever since!
August 11, 2011 at 1:22 am | | Report comment
Pingback: Are all penny auction websites a rip off? | 1pennybid.co
Don’t forget to contact the BBB when you have good experience with Penny Auctions as well. There are many of those as well. Yes, for every winner in an auction, there are one or more losers; but that in itself does not constitute gambling or illegal activity. Caution and Homework are words used by many experienced bidders. Start small. Go after smaller value giftcards, DVD’s and items such as that, and work your way up to the higher end electronics. Many sites offer buy-it-now so that you don’t go home empty handed. You are bidding in a GAME, which could land you a good deal. Sometimes though, you lose at the game.
October 29, 2011 at 4:07 pm | | Report comment