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Educational Consumer Tips

Penny Auctions

Author: Rachel Gelb
Category: Scams

Online penny auctions can offer great deals, but can also pose problems for users. BBB warns consumers to do their research before making any bids. Users of online penny auctions typically set up an account and purchase bids with a debit or credit card. Each bid may cost less than a dollar and are often sold in bundles of 100 or more. Every item in the auction has a countdown clock and as people place bids, the cost of the item goes up and more time is added to the clock. Each bid costs money, and even if you don’t win the product, you still have to pay for those bids placed. 

Many people have complained to BBB about being automatically charged $150 just for signing up for what was supposed to be a "free" trial. Others complainants have voiced their concerns that some sites use phony bidders and “bots” to drive up the prices on items. Customer support is also a major concern as many customers complain that experience problems with refunds, late shipments, no shipments and issues with the quality of the products they receive. 

Before making your first bid on a penny auction:

  • Research the penny auction with BBB first. Not all penny auctions are created equal and BBB ratings on various sites range from A- to F. Always research the penny auction site with your BBB at before signing up.
  • Read the fine print carefully. Before providing any personal information or signing up for any “free” trial with a penny auction, read all of the fine print carefully on the website. Pay close attention to details on signup and annual fees, minimum bidding requirements, maximum prize amounts and what options you have if things go wrong.
  • Know what you’re buying. Before bidding on an item, research how much it costs elsewhere and keep track of how much you’re spending on bids overall to see if you really are getting a good deal.
  • Keep a close eye on your credit card statement. Many have complained to BBB about being unexpectedly charged more than $150 just for signing up. Some complaints were also automatically charged for more bids when they ran out or for a yearly registration fee, not realizing this would be the case. Keep in mind that you are paying for every bid you make.
  • Complain to BBB if you feel you’ve been ripped off.  If you feel you’ve been misled by a penny auction site, file a complaint with your BBB. BBB has assisted customers in resolving their issues, including getting refunds. You can also file a complaint with the FTC or your State Attorney General's Office.

About the Author: Rachel Gelb is Communications and Marketing Manager for BBB serving Eastern Massachusetts, Maine, Rhode Island and Vermont. Find Rachel on Google +.

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