The $999 MacBook for $53.73, the $500 iPad for $2.83, and the $400 PlayStation 3 for $8.40 are all unbelievable deals. But getting that kind of bargain might not be all it’s cracked up to be.
Growing in popularity, “penny auction” Websites like skoreit.com, quibids.com, and beezid.com offer a wide variety of items, from computers and video games, to golf clubs, to gift cards from popular retailers. The winning bids are often tiny fractions of the actual retail price. (For an example of a bid seen on Nov. 30 at QuiBids, see the photo to the right.)
But penny auctions can also be fraught with consumer peril. The rules vary from site to site, and losing out on an item can be an expensive proposition.
Basically, in penny auctions a participant buys a pack of bids to use on an item or various items. The bids cost 60 cents or more, depending on the site. During the auction, the price of an item increases by one cent every time a bid is made. The countdown clock resets a number of seconds when a bid is made. When time runs out and no more bids are made, the last, highest bid is the winner. Unlike a regular auction where you may pay an entrance fee but do not pay per bid and do not lose money on your bid price, you do not get your bids or the cost of your bids back in a penny auction (although may direct costs to buying the item at retail price in many cases).
Consumers who are interested in using penny-auction Websites for holiday shopping should take some time to get acquainted with the process and the rules at a particular site. A few things to watch for:
- What is the site’s reputation? Do an Internet search for the site and see what other users are saying about it. Also, check with the Better Business Bureau, which has information on many of these sites.
- How much do bids cost? Some sites charge a flat fee, others reduce the per-bid cost when you buy in bulk.
- What happens if you don’t win the auction? Some sites allow you to purchase the item, using the cost of your bids to pay a portion of the retail price. Some offer no refund or other chance to use those bids.
- Are you looking for a bargain, or a good price on a particular item? Just surfing for a great bargain can leave you burning through bids with no real desire to buy the item at full price. Go into the auction deciding to the buy item at full price if you lose.
- Is this what you really want? In some cases, such as computers, the information available might not tell you if the item provides what you need. Not all laptops are built the same and not all cameras offer the same features.
- Is that “retail price” legitimate – and a bargain? Check around and make sure the listed “buy it now” price is not inflated. Also, shop around and see if the item you are trying to find is discounted somewhere else.
- Are you being charged appropriately? At most sites, you need to buy bids with a credit or debit card. There have been some complaints that some hidden or very poorly-disclosed fees ended up on consumers’ credit cards. Keep an eye on your statement to make sure you aren’t being charged more than you expected.
Penny auctions are becoming more popular and drawing more potential users, but they can create pitfalls for consumers who are not careful. Before jumping into a penny auction, consumers should make sure they are fully educated, aware of the rules, and know the potential downside of participating in such an auction.
Car Buyer Beware: ”Buy Here Pay Here” Used Car Financing and Sales are Riddled with Pitfalls posted on Mar 23
Many consumers need a loan to purchase a used vehicle. Consumers with poor or no credit will often seek financing from the dealer they are buying a car from. This financing is commonly referred to as “Buy Here Pay Here,” and it lets dealers …Continue Reading Car Buyer Beware: ”Buy Here Pay Here” Used Car Financing and Sales are Riddled with Pitfalls
Apps – Access Denied posted on Mar 21
Almost everyone is guilty of passively downloading a new app for their mobile device. And why not? Apps are great. But consumers should recognize that there are risks in the marketplace. A woman from California used her debit card to buy a slot machine …Continue Reading Apps – Access Denied
Can You Hear Me? posted on Mar 20
Scammers are constantly inventing new ways to take advantage of consumers. The latest phone scam to keep your ears open for has made up the majority of the reports to Better Business Bureau’s scam tracker over the last several weeks across America and even Canada. …Continue Reading Can You Hear Me?