Penny Auction Sites: Scam Watch

scamFor better or worse, penny auction sites are here to stay. Having been in the market for the past nine years or so, these half shopping, half entertainment sites provide hours of thrill and enjoyment while giving users the chance to save huge pennies on massive discounts.

Part of the penny auction history includes long pages of complaints presented by customers who claim to have been conned along the way. Since many of the sites are legit and will keep live for some time, still, and since so many users claim to actually get something from them, it is wise to find a way to engage without getting scammed. Here is a quick practical guide to help penny auction mongers detect fraud.

Why Scam?

It may be a simple question to answer, but when it comes to penny auction sites, the response is not so obvious. Although most sites work on a pretty similar basis, the truth is that not all of them provide users with all the necessary information. This is how scam is begun. If a penny auction site gives away all terms and conditions in a clear and easy to understand fashion, giving potential members the chance to decide whether they will go on with the registration process or not, then the site is transparent and honest in its dealings with you.

If, on the other hand, the site lacks a help or FAQ section, makes promises they can’t keep or changes the rules, that’s the first warning sign on the road to scam. The reasons behind some of these shady practices are varied. Sometimes unscrupulous businesspeople use the penny auction site façade in order to make huge profits by prying on unaware victims. Other times, unscrupulous business people resort to the bidding site angle in order to cash huge monetary revenues, in short; it is always about the money.

Actually, what happens is that some so-called entrepreneurs seem to think the use of internet to set up business is an open door to the American dream: getting rich overnight without actually breaking a sweat. It is in this false belief that some business ventures are set up in order to make money fast, and everybody knows that the only way to do this is by bending a rule here and there.

What are the most common scams?

When it comes to breaching a contract between a website and a client; anything is possible. There are so many loopholes, so much in small print, so many items listed under the Terms and Conditions section that anxious users just won’t see. So actually adapting a site’s policy in agreement with a fraud is just a matter of semantics. Nonetheless, legal technicalities or not, these are some of the many faces penny auction sites fraud can take:

  • False Advertising: There are hundreds of users who continue to express their outrage at the huge differences between what some sites feature on their product inventory, and what they actually get shipped to their homes. All kinds of alternatives take place within this scam range: the real items look like nothing on the pictures, the items are much smaller than the ones featured on the site, the items are older or more generic or else, they are used, come unwrapped, with no factory sealing or warranty whatsoever. Also, and as part of the false pretences some penny auction sites use, there are promises regarding free shipping or monetary refunds for non-winners that are never fulfilled in the end.
  • Shill Bids: This is by far the number one reason that caused many penny auction sites to be put out of business. It consists in forcing bids in order to drive prices up. This way, winners end up paying incredibly overpriced amounts for items they were supposed to strike a deal with. This is a form of fraudulent playing and the most widely-used techniques are: resorting to employees to bid online and the second one involves the use of automated robots. Either way, it is a blatant disruption to the natural law of supply and demand.

There were several notorious cases that made headlines and warned future scammers against further fraud. In recent years, many well-meaning penny auction sites have resorted to audits that certify that none of these practices are being carried out. Furthermore, penny auction sites are encouraged to seek safety seals and to show them in their sites for everybody to see. You should, however, check that the seals are real. There have been cases in which the safety seals or certificates where ghost links that actually led nowhere. As you see, there is no end to creativity when it comes to conning users.

Shipping Issues

This is probably one of the least considered items on the checklist of scam alert, but should however, be followed closely. There are all kinds of borderline scams regarding delivery. The most common ones are:

  • Highly expensive free shipping: If you think this is a paradox, then you haven’t done penny auctioning that much. Advertising may say free shipping, but then again, you should always read the fine print. Many sites have been reported to promise free shipping on their landing page, but then when players got their goods found out that all kinds of charges had been applied to their credit cards. For on thing, most free shipping occurs only if you have been the lucky winner in a bidding process. This benefit does not apply if you use the “buy now” option –fine print, again- Also, some restrictions are considered depending on which state you live in, not to mention applicable taxes.
  • Failure to Deliver: In addition to these, there are other cases of ill-proceedings with shipping issues, like not delivering a product at all. There are dozens of unhappy users who claim to have been billed even twice on their credit cards, and still, yet, not have gotten the goods.
  • Credit Card Billing: This is probably the most sensitive of all cases, as it involves monetary issues. There have been cases of users who have been charged unauthorized automatic purchases on their cards. Once you have given out your card info you never know what they can do with it.

To conclude, it takes all kinds to make the world go round and in the world of penny auctions sites, all kinds can be found. Stay alert and avoid fraud and this way, you may have fun and who knows, may save some money.