Bargain hunters beware. According to the Federal Trade Commission and Better Business Bureau, some deceitful companies are trying to take advantage of your desire for discount products. Recently, one relatively new penny auction site called PennyGrab.com issued a press release promoting itself as a leader in customer service and quality prizes; unfortunately, some are already complaining about a PennyGrab scam.
The Federal Trade Commission's Take
According to the FTC, the penny auction model is usually a bad deal for consumers, because it forces them to put money at risk each time they bid on an item. In the end, participants lose money whether they win or lose a particular auction, and the federal agency warns that even winners may end up paying much more than they expected.
While penny auction sites, such as DealDash and QuiBids use aggressive television and online marketing tactics, PennyGrab is relying on promotional programs to lure in new customers. Recently, the company issued a press release touting what it calls "Penny Punting." According to the website’s release, this new feature will allow members to collect bonus credits by "punting" a virtual coin through a pair of goal posts.
Promotional programs such as this one aren't new to the penny auction world. Several companies already use promo codes to entice consumers, and many consumer advocates are worried that the aggressive television, radio and promotional marketing campaigns are exposing less savvy consumers to an auction model they do not understand.
Is PennyGrab a Scam?
Some have accused sites like PennyGrab.com of using automated bots to make fake bids that make it difficult or impossible for users to win auctions. While it's not known whether this particular site employs this type of deceitful tactic, it's clear that it isn't being straightforward with its customers.
At the bottom of its index page, the company includes a graphic which promotes the fact that the website is accredited by the Better Business Bureau; however, as of the date this article was published, PennyGrab.com is not accredited with the BBB. What's more, the BBB has given the website a C- rating and asserts that it revoked accreditation because the company failed to honor its agreement.
What Consumers Should Know
Although websites like Penny Grab may provide consumers with a form of high-risk entertainment, they aren't suited for bargain hunters looking for consistent deals. If you choose to participate, follow the Federal Trade Commission's advice and thoroughly read over each individual company's terms of service, beforehand.