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EcommerceBytes-NewsFlash, Number 2653 - October 17, 2011 - ISSN 1539-5065    5 of 6

Consumer Reports Investigates Penny Auctions

By Ina Steiner
October 17, 2011

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The discounts offered on online penny-auction sites might be tempting, but Consumer Reports said an investigation of online penny-auction sites revealed that most users end up spending a lot of cash only to end up empty handed.

On sites like Bidcactus, Bid Rivals, HappyBidDay and QuiBids, which sell items such as an $1,800 high-definition television for $73, "actually winning a big-ticket item for pennies on the dollar from one of these sites can take an extraordinary amount of effort and is hardly a given."

Unlike traditional auctions, bidding isn't free. Consumer Reports explains, you must buy bids up front - typically for 50 cents to $1 each. To get bids, you register a credit or debit card or use PayPal. Bids are sold in packs, with the minimum pack costing around $25 to $60, depending on the site. Unused bids are refundable on some sites though sometimes within only 30 days of when you buy them. One key difference between traditional and penny auctions is that any bids you make are gone, whether or not you win.

Critics say the penny auction sites is gambling - Consumer Reports writes that, whether it's technically gambling or not, it's easy to get hooked. It references the Federal Trade Commission report, which says in many ways, "penny auctions are more like lotteries than traditional online auction sites. In a penny auction, you have to pay to bid."

The full story, Penny-Auction Sites Offer the Thrill of the Bid, is available on Consumer Reports.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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