Category Archives: Financial
Penny Auctions have grown in popularity over the past year, thanks to widespread radio and television promotion. Unfortunately, they’ve also come under plenty of fire for bilking unsuspecting consumers out of their hard-earned money. Sites such as UBid, Happybidday, and PennyGrab pit users against one another in auction-style online formats that promise to deliver bargain prices on brand name products. That said, although these sites seem quite similar at first glance; they aren’t necessarily the same.
AARP Issues Warning
Recently the AARP issued a warning to its members regarding penny auction sites that take advantage of unsuspecting consumers. According to the organization, many people don’t realize that many of these sites are unlike traditional online auctions, such as eBay, because they require consumers to pay for the right to bid. Ultimately, it doesn’t matter whether bidders win an individual action or not; they must pay to participate. This means that any time an auction ends; numerous people have lost money, allowing the auction company to reap large profits at the expense of its customers.
Are They All the Same?
While most penny auctions work the same way, not all maintain the same level of credibility. For instance, while Penny Grab and U Bid are accredited by the Better Business Bureau; Happy Bid Day is not. Likewise, while pennygrab.com and happybidday.com require customers to pay money for the right to bid, ubid.com says it only charges a consumer’s credit card if he or she actually wins. Ultimately, this characteristic makes uBid a traditional auction site, which sets it apart from typical pay-to-play auction sites that force consumers to put money at risk just for the right to participate.
FTC Urges Caution
Like the AARP, the Federal Trade Commission has expressed concern about the way some of these bid-and-buy websites work. According to the federal agency, even when participants win a penny auction auction; the vast majority end up paying more than they expected. Additionally, the FTC warns that some sites use automated bots to make false bids on products, which helps drive up prices to encourage higher profits for the company.