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Can you trust a penny auction? aka can I really get an Ipad for $23.58

November 1, 2010

Am I worth more than you thought?

Every time I open my e-mail I always notice an ad in the corner of people who have bought a new iPad for $16.32 or some strange amount similar to that. It takes me back to a phrase I heard in my high school economics class, “caveat emptor” which means “let the buyer beware.”

      During the current economic recession the amount of money lost to fraud has increased. When people are down a little, they may be tempted to try to nab a tremendous deal. However, as we have often heard, if it sounds too good to be true, it probably is. It is important to consider opportunities available and research them to see if they are legit or not.

      Investing in opportunities that turn out to be scams can seriously hurt your financial situation. It amazes me how much money con artists can steal from smart, honest people who want to make or save a buck. The advertisement for the $16.32 iPad I referenced earlier is for an online penny auction — websites where you can make bids, one penny at a time, to score an unbelievable deal. Sometimes they are legitimate, but there are many sites claiming to be penny auctions that are frauds.

      The Better Business Bureau warns us about penny auctions. Recently the BBB issued this statement:  “Online ads, often designed to look like news reports, are cropping up on popular websites claiming that you can get great deals on iPads and other electronics with online penny auctions.

      “BBB has received hundreds of complaints from consumers about penny auctions so far this year and we’re encouraging online bargain hunters to do their research,” said Alison Southwick, BBB spokesperson. “Unlike typical auctions, unsuccessfully bidding on an item through a penny auction will still cost you and BBB has heard from people who lost thousands of dollars bidding on items and have nothing to show for it.”

      “The BBB is advising users to research with the BBB first, read the fine print, know what you’re buying, watch your credit card statement and mentions the unexpected $150 charge that many, many consumers are getting from a few particular sites. They also tell consumers to file a report with the BBB, they may be able to assist in obtaining refunds.

      “Many people have complained to BBB about being automatically charged $150 just for signing up for what was supposed to be a free trial. Others complainants have voiced their concerns that some sites use phony bidders and “bots” to drive up the prices on items. Customer support is also a major concern as many complainants explain they had a very difficult time receiving refunds or resolving other issues with the company.” 

      Thanks to technology, it is easy for people to set up a site looking like a penny auction, fraud money from people and then shut the site down and move on. It is enticing, and if an individual wins a legitimate penny auction, it can be very addictive. It is important to remember that for every bid an individual makes, that money is spent, win or lose. So even though your top bid may be around $10, you may have made a total of 15 bids, which can add up.

            There are a lot of fraudulent companies out there who want you to hand over your money without question. Be sure to listen to your gut. If something does not feel right, it probably is not. Also, do your research. If in doubt, contact the Better Business Bureau.

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