These days, online auctions are all the rage, and consumers are flocking to the Internet looking to nab valuable merchandise for pennies on the dollar. Unfortunately, many unscrupulous companies have positioned themselves to take advantage. There are several online complaints regarding a Listia scam; but are they valid? Before you sign up, read this review.

What is it?

An online marketplace allowing people to trade goods to one another, Listia uses virtual credit instead of actual money. Similar to penny auction sites, such as Beezid and QuiBids, this business model forces users to purchase bid credits, which they must risk each time they make a claim on any one item featured in an auction.

How it works

To participate in one of these auctions, members are required to purchase credits they can use to bid on items. The bidder who offers the most credits wins the auction; while those who come up short, ultimately lose their credits. Contrary to most online auctions, sellers do not receive cash at the conclusion of an auction; instead, they get all of the high bidder's credits, which they can only use to buy items available on Listia.

The cost

Currently, credits come in bundles of 150 to 4000, with bulk discounts available to those who buy more at one time. For instance, if you opt to buy 150; you'll be required to pay $5, which averages out to about 3 cents per credit. On the other hand, 4000 credits will cost you $40, which averages out to a penny per credit. Members can also earn credits by referring friends or by participating in promotional offers.

Is it legitimate?

Because it profits off failed bidders, this site is similar to a penny auction; however, it differs in that it does not own the items placed at auction. Instead, it allows consumers to place merchandise up for auction and then gets out of the way. That said, there are numerous online complaints regarding a Listia scam; however, most of these are centered on the sellers more than the company, and the site provides clear recommendations on how its members should go about avoiding scams. Mostly, the site puts the onus onto consumers by suggesting that they review seller feedback prior to placing bids.

In the end, I don't like to recommend online auctions that force members to risk their money without any guarantee that they'll win; and I'm not overly impressed with the way this company seems to police sellers. In the end, these types of auctions are suited for people who enjoy high-risk, high-reward entertainment; if you're looking for consistent deals on name-brand items, look elsewhere.