Penny Auction Scams

penny auctions scamsIn the short history of online penny auctions, there have already been many legitimate penny auction scams and plenty of people thinking that they got scammed but what really happened was that they did not understand how penny auctions work.

Popular Penny Auctions

A typical scenario that leads one to believe that a penny auction site is a scam is seeing list upon list of high quality items selling for dollars or tens of dollars. We are talking iPads closing at auction for a few bucks or even LCD TV’s being sold for $10 bucks.

You are probably saying to yourself, it looks to good to be true, it looks like a scam. Just look at the front page of Beezid, doesn’t it look like beezid is a scam? I mean who wouldn’t pay $1.37 for a $100 gift card or $4.20 for a laptop?

The real answer is that the low auction price is only a small part of the amount people paid to win that item. Penny auction sites use a model called a pay-per bid where bidders compete with one another to win items in a game of brinkmanship called penny auctions.

In a nutshell, every time you bid on an item you spend 1 of your bids that costs anywhere from $0.50-$1.00. The final auction ending price of the item increases by 1 penny. If the timer reaches zero you win the right to purchase that item for the ending auction price. If someone outbids you then you have still spent money and have nothing to show for it.

Penny auctions are a game. A very competitive game.

For a more detailed look, see how penny auctions work.

Penny Auction Scams vs Legit Penny Auctions

Now that you understand how penny auctions work there are certainly some penny auction sites that are scams compared to some that are legitimate, safe and trustworthy. The difference as to whether or not a site is doing a scam is if the penny auction site is cheating or playing fairly.

Here is how we identify a scam penny auction site.

  • Any site that uses shill bidders to inflate the price of the auction. A shill bidder is either a ‘bot’ computer program that bids right before the auction concludes so legit bidders have to pay more or lose the auction, or shill bidders who are real people who are employed are compensated by the site themselves to keep the auction running – clearly cheating
  • Any site that uses software that programs in a minimum amount of real bids that must be spent before the auction can end (similar to shill bidders above). Some software has a built in feature that will let you create fake accounts that will bid against real bidders
  • Any site that does not ship items that are won

Here is what does not indicate that a penny auction is a scam.

  • Auctions that are hard to win – remember you are choosing to play a competitive game that costs money by bidding in an auction
  • When you lose an auction they will not refund your bids – remember, you lost them that is part of the game
  • They charge your credit card for a bid pack purchase when you thought you wouldn’t be charged until you won an auction – that is not how it works, you buy bids first!
  • They have retail prices that you can find cheaper at amazon or ebay – it is the bidders job to know what the true value of the item is before they bid on it. Just because a watch says a retail price of $400 does not mean you can not buy that watch online for $40
  • A site that has bidders are bidding way more than the item is worth. This does not mean that they are ‘raising the price’ or shill bidding, instead they are trying to develop a reputation of someone who will not back down and who should not be bid against. You can learn about different penny auction bidding styles and why sometimes bidders will way overpay for an auction in order to win it

Warning Signs to Watch For w/ Bidding Sites

  • Sites that use the fake news ‘advertorials’ in their marketing. You know, those ‘newspaper’ ads that look like they are news stories telling about how some mom won an ipad for a few bucks or how taking some acai berries and a colon cleanse together caused someone to lose weight magically. If you see a PA site advertised heavily on these types of advertisements then buyer beware
  • Sites that have tons of high quality merchandise but have extremly weak alexa.com rankings in terms of overall traffic (lower ranking is better). Anything above six figures in ranking that has tons of items should raise a red flag. For example the larger sites, like Beezid alexa or Skoreit have alexa rankings of 25k and 85k respectively. The smaller penny auction sites like happybidday have six figure alexa yet are totally legit so you have to compare their estimated traffic to the kinds of auctions they are running
  • Sites that are brand new and have a ton of high dollar items up for auction. The honest fact of the matter is that for these penny auction sites to be profitable they have to have a large active player base and new sites simply have not had time to gain critical mass. Learn what to look for with new penny auction sites.
  • Sites that are not rated highly at penny auction review sites.

Trusted Penny Auction Sites – Reputable & Highly Rated Penny Auctions

We strive to list the best penny auction sites here at best penny auctions and only work with sites that have a positive reputation among the trusted penny auction communities. These bidding sites should have a clean history, a reputation of delivering the items won in auction to the bidders in a reasonable time frame and be well respected in the industry. We keep a list of reputable penny auction sites for you to bid at. We can not guarantee a win but if you do win you can fully expect to get your items!

As our site grows and more users submit ratings and reviews from their personal experiences at other sites we will add more for you judge from. Sites that would open up and sell bid packs and use shill bidders world of online penny auctions. Or even worse the penny auction sites that make you buy bids just for signing up to get your ‘free bids’! We strive to help players avoid scam penny auctions by first explaining clearly how penny auctions work and also listing safe penny auction sites.

Famous Penny Auction Scams of History

I am working on a list of sites who have closed down due to scams.