Penny Auction Sites & Money

moneyIt is a well-known fact that penny auction sites have been created to make money. As part of a revenue-generating business, bidding sites need their clients to pay, not only for the products they purchase, but also for the service they get. How this is actually carried out may sound simple, but there are several aspects of the transactions that are far more complex. Let’s analyze the connection between these websites and your pocket.

Registration Process: Is money involved?

The answer to this question varies from site to site. Not all penny auction sites work the same way. Some of them offer free registration while others request users to sign up and buy bids as soon as the registration process is over. Within the “free” sign-up, first time users can come across several variations. These are the most common ones:

Free registration-free bids: In this type of registration, participants can sign up without disclosing any credit card information at all. Upon registration, they get a fixed amount of promotional bids to be used on the site. After some time, these bids become void and new ones must be purchased in order to take part in the different auctions available on the page. This second set of bids must, of course, be paid for. This is when a payment method must be chosen. The most widely-used methods are major credit cards, like Visa, Master card, Amex or Discover. Electronic payment methods like debit cards or Pay Pal are also valid although conditions may vary from one site to another.

Free registration- mandatory bid purchase: This is one of penny auction sites’ greatest tricks; they advertise “Free registration” but what good is being signed up for, if you can’t bid until you do some bid shopping? To get you started, some sites offer promotional bids to new members. Promotions, such as double your bids or get discounts on your first bid pack are common advertising methods used to tempt beginners.

Free trial period: Some sites request new members to give out their credit card information upon registration. Nonetheless, they will not be charged until a certain time has gone by. Sometimes, users are granted free bids to use in their first attempts and then the card will automatically recharge once these promotional bids have been used.
Swipe Auctions: Some online bidding sites fall under this category. In these sites, credit cards are charged $150 for 300 bids the very moment you sign up. This method has been questioned by many, since participants are not informed of this charge right away. In fact, some sites feature this information on the second page of the registration form where only few careful users are able to find the $150 charge in fine print.

How do I buy bids?

Once your promotional bids have been used, you will need to buy some more if you want to take part in further auctions. There are several methods through which participants get hold of bids. These are the most popular ones:

Winning Bid Packs: many popular sites offer bid packs as part of their prize inventory. For example, a gift card plus 50 promo bids. This enables winners to get hold of more highly-valued bids at great prices without spending any more money.

Purchasing Bid Packs: buying bid packs is a sure way of saving money on every bid purchase. Some special offers include major discounts on each individual bid. For example, a bid may cost about $0.75. If users purchase a $400 bid pack, they will end up paying as low as $0.30 for each bid.

Automatic Bid Recharge: This feature has earned itself a bad reputation mainly because it is as close as you can get to scam. Many of the most popular sites enable users to automatically “reload” their bid account, even if the participants are in the middle of an auction. This practice has been highly questioned for two major reasons:

a) Researchers have found this practice to be highly counterproductive for those penny auction site users who show some kind of addictive behavior in their bidding habits. In this sense, it would be like placing an ATM next to the Blackjack table.
b) There have been many complaints of angry participants who claim not to have been informed of this feature at all. Dozens of users have expressed their disgust by saying that they found out about the automatic recharge only when they got their credit card bills.

Shipping and Handling Charges

Penny auction sites have been blamed to use false advertising in more than one way. The shipping issue is one of the most sensitive aspects concerning shady charges. The “Free Shipping” which is advertised in most sites should be analyzed in depth before engaging. If users take the time to read the fine print found under the terms and conditions section, they will find that shipping of certain items is not free at all. Likewise, free shipping is generally not applicable whenever participants use the “buy now” feature.

Moreover, some winners are charged with extra costs which fall under the category or taxes or carrier insurance costs. Finally, the last category to generate extra charges is additional shipping costs when goods must be shipped to a region not listed in the “free shipping” section. Since these costs are automatically charged to users’ credit cards, unpleasant surprises are a common thing among penny auction site mongers.

Cancellation and Return Costs

When goods are found to be faulty or fail to meet the standards of 100% satisfaction guaranteed, they may be returned. However, in most cases, penny auction sites require members to pay for all shipping and handling costs that may occur during the process. Again, reading terms and conditions closely will better illuminated members on their rights and duties.

In all, finance experts do well in encouraging penny auction participants to be cautious when they engage in these kinds of shopping sites. Always read conditions carefully and if a site looks fishy, keep away.