What you need to know about penny auction sitesPenny auctions online are catching on like wildfire. The prices start at zero, and you only have to raise the previous bid by one cent, hence the name.
The sites tout as much as 90 percent savings off the retail price for electronics, gift cards and other products. But state investigators say look before you leap.
Penny auctions consistently generate complaints at the state attorney general's office. In fact, several, including one operating out of Oregon, have been shut down.
"I think there's a lot to be careful of, out there," said Assistant Attorney General Jake Bernstein. "It's a business. It's an entertainment shopping business. And I think it's important to understand what that word means. It can be fun. It can be safe. But a lot of time there are situations that crop up that make it very easy to get scammed or ripped off, or just be confused."
Common penny auction complaints include unexplained or unauthorized charges, delivery delays, no response to complaints, some bidders even feel they're being lured to spend more money.
According to Bernstein, you can get deals, but you're not going to get the deal you think you can get.
The penny auction concept is simple enough- find something you like and start bidding. The price goes up by just one penny for each bid. But here's the catch: each time a bid is made, the clock resets. So the bidding can go on for days.
Most sites make you pay in advance for each bid you make. Bids typically cost from 60 cents to a dollar apiece. And you must buy the bids in blocks in packages of 20, 60, or sometimes 100 bids or more. So it's important to remember, you're not just paying a penny.
You might win that $400 xBox 360 for only $200, but you might also have spent another $200, for the chance to make those "penny" bids.
"So before you enter your credit card, check what the site's going to do with that information," said Bernstein.
Here's something else the AG's office says you need to know. Some penny auction sites may program their computers to beat your bid at the last minute, in an effort to force you and other bidders to keep bidding. That's what took down a site operated out of Federal Way last year.
Bernstein says many, if not most penny auction sites are run by people at home who invest little or no money. They simply set up the site and keep the bidding open, with the goal of collecting considerably more than the value of the item in question. In many cases, once the bidding is over, they order the item on Amazon.com. and have it shipped to the winning bidder.
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KPIC.com
June 11, 2009, 11:44:43 PM
