Are Penny Auction Sites Just Frauds and Scams?

If you stumbled across this article, you were probably searching for legitimate penny auction sites or spotted an ad online and you became curious. Are these many penny auction sites simply scams to get your money, or are they legitimate sites where you can have great deals? As with all “it seems too good to be true” subjects, you have to do your homework. Luckily for you, I have taken the time out to do some for you.

How a Penny Auction works:

Like any company or business, they are in it to make money. They won’t make money selling you a $500 tablet for $23 on face value. They will if they charge per bid, which is exactly what they do. Say for example the bid starts at $1 and people are bidding on the tablet and each bid costs $.50. Every bid you make the price goes up by one penny. By the time the price has gone to $23, there have been over 2 thousand bids. If you do the math that means on a tablet they sell for $23 they are making over $1,000 which is a 100% investment/profit on their original purchase price of $500.

Things to watch out for:

One of the biggest scams out there by some penny auction sites has been to bid on their own items. Say the above item was from testfakeauction.com, and employees from testfakeauction.com placed bids on the item and won. They would have profited the one thousand, as well as kept the item and all other bids would have been futile and never had a chance of actually winning. You can’t even guarantee that testfakeautcion.com ever actually had a tablet to begin with!

The only way to get around this is to only use established well reviewed sites. If you see a new penny auction site and want to try it, buyers beware.

All Penny Auction Sites are not created equal:

There are many different auction sites, and with them come different rules and advantages/disadvantages. Some of the different rules consist of shipping/handling rates from free to flat fees, some give you a “win limit” and others will credit you for losing bides. The win limit is up to your discretion, a positive of the limit is one person can not win a large amount of items on the site; a disadvantage is of course neither can you. Losing bids being credited back to you is a big advantage, as you can use those credits for other bids. This Comparison Chart gives you a general overview of many of the more well known online sites. I would suggest a site with phone support, and a low cost per bid.

Have Fun!

Penny auctions can be a very exciting and fun experience. Winning that tablet or 42-Inch TV for pennies on the dollar will make you wonder why you haven’t been bidding all your life. Just be careful to avoid the scams and you’ll be just fine. If you would like to narrow it down, I have previously done a review on the Top Five Penny Auction Sites online today. Good luck and happy bidding!