Online Auctions Sites (A Warning)

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PostPosted: Thu Jan 05, 2012 12:21 pm

Beware: '$24 iPad' penny auction deals could leave you penniless
Asher Moses
January 5, 2012 - 10:50AM

Online auction websites advertising on TV in Australia are offering iPads for $24, 50-inch Samsung TVs for $85 and even a Honda Civic car for $1800, but be careful, you could end up spending way more than you bargained for.

Some users of the sites, which claim to offer up to 95 per cent off the retail price, have reported that they maxed out their credit cards within minutes, while another user said they churned through $50,000 in a fruitless effort to grab a bargain.

But NSW Fair Trading, Consumer Affairs Victoria and the Australian Communications and Media Authority (ACMA) all say that people who feel cheated have themselves to blame for not reading the small print.

These "penny auction" sites aren't your run-of-the-mill auction platforms like eBay, the key difference being that you have to pay about $0.60 per bid and while the last bidder at the end gets the impossibly low price, everyone else loses money. The higher value the item, the more frenetic the bidding.

There are a slew of penny auction sites including quibids.com.au, bidking.com.au, bidrivals.com.au, and pennyauctiononline.com. Many of the overseas sites have Australian portals.

The internet is littered with reports from consumers who believe the sites are elaborate scams, while others say it is essentially an unlicensed form of online gambling.

"It is a gambling site and as much as I wanted to stop, I kept on going back. I am $50,000 in credit card debt after having perfect credit," one Quibits customer wrote on the scamadvocates.com site, which contains hundreds of similar reports.

NSW Fair Trading said it was keeping a close eye on the sites but was not formally investigating any.

"NSW Fair Trading is aware of the Quibids website and a number of similar online businesses and is monitoring a number of these sites for compliance with Australian Consumer Law," a NSW Fair Trading spokesman said.

"The businesses (and the industry itself) are relatively new to Australia, and some of the confusion in the minds of consumers appear to be arising from failing to understand how the Quibids 'auction' works."

On Quibids, for instance, each bid costs $0.60 and users are able to buy packs of 45 to even 800 bids. Users then bid on the items and the last person to place a bid before the auction expires gets to buy it at the listed price.

Every time a person bids the auction price goes up in small increments but only one person gets to buy the item for that cheap price, and everyone else who has bid loses their money.

Quibids allows people who miss out on the item to purchase it at full retail price minus the amount they have spent on bidding so far. But most don't do this, and Quibids is able to make thousands of dollars from one relatively low value item just by tallying up all the losing bids.

"Although the successful bidder will often gain an otherwise expensive item for a fraction of its retail value, potentially thousands of bidders will gain nothing while the auction site retains their spent bid credits," Consumer Affairs Victoria said.

Some of the penny auction sites are more upfront about the terms and conditions than others. Consumers have complained that they were enticed with "free" registration only to have their credit card immediately deducted for the cost of a bid pack.

"They say we can join for free. I had to pay to get in one bid. I had my credit card maxed out in less than two minutes, plus I had to pay an extra service fee just so I could join," reported one Quibids user.

NSW Fair Trading said it had received a "low level of complaints" about the penny auction sites but acknowledged that they were relatively new in Australia.

It said people who wish to use the sites needed to understand all the terms and conditions applying to participation, including up-front fees and the costs of losing bids. These terms are displayed on their websites.

NSW Fair Trading said those who are dissatisfied with the penny auction sites should take it up directly with the sites in the first instance and if the complaint remains unresolved, contact Fair Trading on 13 32 20.

Consumer Affairs Victoria said it received around 11 calls about penny auction sites in 2011.

It said the enquiries included issues of not reading or misunderstanding the websites' terms and conditions, goods not being supplied until personal identification information is provided, refunds and allegations of false bidding.

"Penny auctions are not misleading to consumers if they disclose the terms and conditions and are transparent about the costs involved," Consumer Affairs Victoria said.

The Australian Competition and Consumer Commission refused to comment on penny auction sites and responded to queries from this website with generic information about safe online shopping.

ACMA said it had only investigated complaints for "a few" penny auction sites. It said that, like eBay, they are essentially an "auction" and not a game-based gambling service, so were permitted as long as the bidding process was transparent.

"Despite the urgency of the penny auction process and its game-like feel, there is a high likelihood that the ACMA would assess this kind of auction process as being markedly the same as other online auction processes such as those employed by eBay," an ACMA spokesman said.

http://www.smh.com.au/digital-life/digital-life-news/beware-24-ipad-penny-auction-deals-could-leave-you-penniless-20120105-1plxc.html



Having seen the TV ad for QuiBids I could barely see the onscreen fine print which basically says the items shown and quoted were in US dollars.

This is not a site I would even consider joining because of the old adage '...if it sounds too good to be true then it is not worth it...'
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PostPosted: Thu Jan 05, 2012 3:10 pm
I've seen the ads for Quibids and when I saw that you have to pay to bid I thought it would be a scam :evil: 50 inch TVs for under $100? HA if you fall for that you deserve to lose your money!
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PostPosted: Thu Jan 05, 2012 9:07 pm
Rayne wrote:I've seen the ads for Quibids and when I saw that you have to pay to bid I thought it would be a scam :evil: 50 inch TVs for under $100? HA if you fall for that you deserve to lose your money!


Just imagine how many people there will be that will fall for the scam.
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PostPosted: Fri Jan 06, 2012 4:11 am
"If something looks too good to be true..."
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PostPosted: Fri Jan 06, 2012 8:11 am
Also: " A fool and his money ..."

If people weren't so greedy scams wouldn't work.

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PostPosted: Mon Jan 09, 2012 11:25 am
People who bid on items on that site are idiots.

Think of it as an auction for a house. When the item is down to it's final seconds, someone puts another bid in (probably the site doing it) which then adds more time to the auction. So if the auction has 10 seconds left, and then another bid is made the auction goes to say 20-30 seconds left.

Also, what that article failed to mention is that every $0.60 bid only increases the auction by 1 cent. So an IPod might sell for $52, however, there have been 5200 bids placed ($3120 for the site) . So the winning buyer bought this Ipod $52, but placed 300 bids, so $180, then there's a fee for joining the auction which could cost you $50. So really you could spend $300 + what you've bought the item for. The article says the winning bidder buys the item for that price, but that person doesn't get the money spent on bids back.

As for the other people who spent $400-500 on bids + the joining fee? Bad luck.

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