Consumers are always looking for big bargains, and many have turned to penny auctions for discount merchandise. One company called claims to offer hot deals on laptops and gift cards; however, there are numerous complaints regarding an Arrow Outlet scam. Before you sign up, be aware of the Federal Trade Commission's recent warning.

FTC warns consumers

Recently, the FTC issued a warning to consumers regarding penny auctions like DealDash, QuiBids and ArrowOutlet. According to the agency, these auctions usually charge big fees just to register, with consumers having to pay every single time they place a bid. The agency also warns that many consumers have complained of bait-and-switch tactics, late shipments and no shipments.

The FTC also warns that winning bidders tend to end up paying much more for items than they expected. For instance, the agency says a $50 winning bid for a camera might end up costing $250 if the member placed 200 bids to win the auction.

Is ArrowOutlet legit?

There are many online complaints regarding an Arrow Outlet scam in which some accuse the company of using automated bots to place fake bids on behalf of the auctioneer. If true, this would set bidders up for failure and ultimately help the company profit. One group claims to have demonstrated that enjoys less traffic than bidders, which may indicate that not all of the bids you see at their auctions originate from human beings.

What you should know

Although there's no way to know if the supposed ArrowOutlet scam described by some online reviewers actually exists; there can be no doubt that the FTC has clearly warned consumers to stay away from sites like Arrow Outlet. If consumers do choose to participate, the agency encourages them to learn how these auctions work and recognize the potential pitfalls before investing too much money.

In the end, although penny auctions may offer consumers a chance at high-risk, high reward excitement, they aren't suited to those looking for consistent bargains. If you're looking to get good deals on quality merchandise, you'd be better served using a site, such as LivingSocial, which offers coupons from local brick-and-mortar merchants that tend to be more trustworthy than mysterious entities on the Internet.