Internet Vane

Penny Auctions

Have you ever used Penny auctions?
I have heard a lot about this from friends.
It sounds like another scam.....................................................
A bidding fee auction, also called a penny auction, is a type of auction in which all participants must pay a non-refundable fee to place a small bid. The auction ends after a period of time. The last participant to have placed a bid wins the item and also pays the final bid price, which may be much lower than the retail price of the item. The auctioneer makes money in two ways: the fees for each bid paid by several bidders and the payment for the winning bid, totaling much more than the value of the item. Such auctions are usually held over the internet.

It's hard to win an auction when you’re competing against skilled bidders. some online penny auctions use robots to place bogus bids. This drives up prices and can make it impossible for legitimate bidders to win the auction. Penny auctions are not like traditional auctions on eBay, where you find an item and decide how much you’re willing to pay for it. If no one bids higher, you get the item. If you lose, you don’t pay anything.

You must pay to play the penny auction game. Most people get caught up in the bidding frenzy, and you can easily spend more than the value of the item. Some companies purchase software packages for running their penny auction sites. The software allowed them to set a “reserve price” that is not displayed to bidders.The software would generate fake names that would show up as bidders, and the item wouldn’t sell for less than the reserve price – the software would make sure of that.The software is simple to implement, very hard to notice and completely unfair and deceptive.

In cases where real people stopped bidding before the reserve was hit, the bot would win the auction.In these cases, where no merchandise was purchased or shipped, the auction was pure profit for the site.

Most penny auction sites offer free bids to new members, which can be very enticing.
You’re not going to win anything with those free bids.You’ll need to spend $50 to $100 on a beginner’s bid pack before you’re really going to get anywhere. So the ad that says you can get an iPad for $50 is simply not true.

How Penny Auctions Work:
To sign up, you have to buy bid packs. The more you buy at a time, the lower per-bid price you pay.  Then you find an item you want to bid on, and start bidding. Each time you bid, you up the ante by one cent — bidding a penny actually costs you at least 55 cents.
Bidding can be done manually, or you can set up auto-bidding, which will program the site to bid for you, usually at the last second.

In a traditional auction, if you don't "win", you don't lose either;even if someone outbids you, you don't pay anything. With most of these penny auction sites, the opposite is true.Whether you win or not you still have to pay to bid.
 For example the auction site probably made over $3000 (most of the money is coming from a line of bidders) on an item that cost them $400.

The FTC has offered warnings on penny auctions, state consumer protection agencies have filed complaints, and there are class action lawsuits pending against many of these sites.
 Penny Auctions are just another form of online gambling and the odds are NOT in your favor. I believe there are still sites that are using skilled bidders and getting away with it.It is nearly impossible for the average person to know if a site is cheating.You could spend money and get nothing.. People who’ve been ripped off say it’s very hard to contact the company.

A Penny for your Thoughts....