Online “Penny Auctions” are gaining popularity, and while claiming to offer opportunities to win quality merchandise at low prices, BBB reminds people purchasing bids only provides the right to bid; it does not guarantee any product in return.
Even the most recent penny auction, bidsthatgive.com, entices bidders with the thought part of each bid goes to helping the needy.
Typically, penny auctions work like this: consumers visit websites where they’re told they can win auctions and receive products at exceptionally cheap prices, like a new iPad for $80. They then buy “packets” of bids at a specified rate – $1 per bid. If a bidder buys 100 bids – then $100 is paid, which gives him/her an opportunity to bid 100 times. It does not guarantee any product.
Bidders must pay a fee of 50 cents to $1 each bid, depending on the site, and each new bid extends the auction 15 seconds, according to Moneywatch.com,. So while an eBay auction with two minutes left will end in exactly 120 seconds, a penny auction with 15 seconds left could go on for several hours.
Better Business Bureau and Federal Trade Commission advise caution:
• Always refer directly to www.bbb.org
for legitimate business ratings. Click on any website’s BBB Accreditation logo to view their BBB profile; if you are not directed to a BBB profile, the business is claiming false accreditation. Also, verify the seller’s identity and check on their reputation. Some sellers may use a forged e-mail header, making it impossible to contact them if you need to.
• When you find a site that you feel comfortable doing business with, watch several auctions without bidding as a way to give yourself a frame of reference about how the site works. It’s important to pay close attention to what you’re bidding on and how much time is left – every time a bid enters, several seconds gets added to the end of the auction, so save your bids until it’s close to the end.
• Remember bids ONLY give the bidder the right to bid on an item, and do not guarantee any product in return.
• Do not accept any offers to “free” trials that need a credit card number or personal information.
• Be cautious if the seller asks you to pay by check or money order. Some online sellers have put items up for auction, taken the highest bidder’s money and never delivered the merchandise. What’s more, bidders that have paid by certified check or money order have had little recourse when it came to getting their money back.
• Try to pay by credit card. If you don’t get the merchandise, you can challenge the charges with your credit card issuer.
• Ask about using an escrow agent, or paying by COD. Most escrow services charge a fee, so you may want to consider this option only for larger purchases.
• Ask how you’ll get follow-up service, if you need it. Many sellers don’t have the expertise or facilities to give service for the goods they sell. Is this important to you?
• Avoid impulse bids and purchases. Online auctions may be enticing, but always research the product before bidding to understand a fair price.
• Ask about return policies. Returning merchandise to an online seller may be difficult.
For more information about online auctions, visit www.ftc.gov