Penny auctions have recently come under fire from the Federal government and reputable consumer advocates for what many are calling deceptive practices. Unfortunately, this hasn't stopped many people from participating, thanks to aggressive television and online marketing campaigns aimed at luring in new customers.

Recently, the American Association of Retired Persons joined the battle to warn unwary consumers about the potential pitfalls associated with these bargain websites. Before you punch in your credit card number, learn what the AARP is saying.

Shaping Public Opinion

In 2011, the Better Business Bureau listed penny auctions in its yearly list of top ten scams. Unfortunately, this appears to have had little effect on the industry, thanks mostly to an influx of television commercials that paint the websites in a positive light.

While some sites, such as Skoreit and Quibids, have invested heavily in television commercials, others have hired celebrities to endorse their products. Recently, Beezid hired Lindsay Lohan to film an YouTube video touting the website as a fun way to acquire discount products. Many consumer advocates are worried that these marketing tactics artificially enhance the reputation of the companies by making them seem more trustworthy.

The FTC Speaks Out

Recently, the Federal Trade Commission issued a report warning Americans about the potential pitfalls associated with these auctions. According to the federal agency, most of the people who use these bargain sites ultimately lose out, because they're forced to risk money each time they bid.

The AARP Criticizes Penny Auctions

Recently, the AARP published an article on its website warning seniors about the potential risks associated with these penny auction sites. According to the organization, many companies use automated bid bots to cheat consumers, while others have been guilty of assessing hidden costs, time lags and using misleading language.

According to the AARP, its research suggests that more and more of these sites are targeting seniors by creating special search engine optimized pages focusing on phrases, such as "elderly-seniors" and "seniors-seniors-elderly."

The Other Side of the Coin

Although the AARP, FTC and BBB have spoken against these bargain sites, some consumers value them as a source of high-risk, high-reward entertainment. Additionally, although the BBB has warned consumers about some auction sites, it has also awarded A to A+ ratings to a select few.