If you've watched television or listened to the radio lately, you've probably heard commercials for sites, such as QuiBids and Skoreit, which claim to offer consumers the chance to acquire brand name merchandise for just a few dollars or cents. In response to the growing popularity of these auction sites, many reputable organizations have begun publishing reports informing consumers about potential problems. According to our in-house technology expert, although a few penny auctions scam consumers outright; all of them tend to fleece their customers in one way or another.

"Multiple organizations have spoken out against these websites, including the Better Business Bureau, Federal Trade Commission and American Association of Retired Persons," said Sarah McDaniels, a technology expert who recently wrote a series of investigative features looking into popular bargain websites.

McDaniels says that both the BBB and FTC have warned consumers about particular ways these sites trick customers.

"According to the BBB and FTC, many penny auctions scam their customers by using automated software to make fake bids," she said. "These bots automatically place bids on behalf of the company, which lengthens time-limits and allows more bidders to enter the competitions. Additionally, these bots work to drive up prices; and sometimes, they actually win the auction, which allows the website to keep the merchandise and all the money bidders spent while competing."

According to McDaniels, a few penny auctions have taken steps to try to prove they don't scam their customers.

"Recently, QuiBids.com hired a reputable third-party auditing firm to test the way it operated its auction platform," she said. "Ultimately, the audit turned up no shady activity, and this has enhanced the company's rating with the BBB."

Although sites, such as QuiBids may have taken steps to clear their names, McDaniels says they still pose a risk to consumers.

"Since you're forced to pay each time you place a bid, you aren't likely to win at these websites," she said. "In the end, only one user can win an individual contest, and even these people often end up paying more than the item is actually worth."

For consumers who are interested in participating, McDaniels has some recommendations.

"It's clear that some people view these sites as a form of high-risk entertainment," she said. "That being said, anyone who thinks about signing up at one of these penny sites needs to take the time to read the terms of service. It may also be beneficial to check with the BBB to see if the company is rated and if there are an inordinate amount of complaints associated with the brand."

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