Lately we have seen a rise in the number of new penny auction sites. We don’t have a problem with any new penny auction that is legit, however upon further inspection of these new sites, we noticed that the majority of them all look very similar.
We believe this is possibly due to a penny auction script/template. We have been looking at some of these scripts and all of them allow the web master to control the auctions. Which is illegal as doing so would be considered fraud.
This, of course. Is very bad because it allows literally anybody to create a penny auction site, if one of these scripts falls into the wrong hands then scamming will occur. Many people are attracted to less known penny auction sites because they believe that there is a better chance of winning because of less competition. Which… in theory is 100% correct. The only problem is the risk of being scammed, so it’s very important you know everything about a site before you consider signing up.
There are a few ways to find out if a site is legit and here is our recommendations:
- First impression, if a penny auction site doesn’t look very professional then don’t bother, it’s as simple as that. For example, the interface might seem very basic and there could be website coding errors. Which just raises a red flag.
- Find out how old the website is, there are many websites available that you can use to find out the ‘whois‘ details of any website, here you should find out when the domain was registered and details about the company if it isn’t private.
- Look for consumer advice websites or anti-scam websites that may have the website you are thinking of signing up to, most of these reviews are legit, although not always. This can still give you a very good idea of how trustworthy the website is.
On the flip side of this, these scripts can be used 100% legitimately. We have tested a few out and some of them are very customizable and gives the web master plenty of options to create a successful penny auction site. The problem is that new penny auction sites will almost always make a lost simply because there won’t be enough users to bid on the items, the result? this usually leads to the web masters rigging the auctions.
We see many people assume that penny auction sites make tons of money because of the way the auctions work, but clearly this isn’t always the case. Unless these guys have a ton of money to market their new site like Madbid did:
MadBid, a fast growing “pay-to-bid” auction site has secured £4 million in a Series A funding from Atomico Ventures. Launched in 2008, MadBid is one of a number of pay-to-bid auction sites which have appeared in the last couple of years, with Swoopo among them. CEO Juha Koski says the Atomico investment will be spent on technology and expanding in Europe. Mattias Ljungman of Atomico has joined the board.
MadBid is claiming 1 million users since launch and says customers are attracted by brand products with the possibility of saving of 80% on the RRP of an item. That drives people to bid of course and so the site makes its money off the customers who are not successful, not unlike a casino.
If a penny auction site can survive the first year legitimately then the chances are that they will be around for quite a while. If a site gets financial backing like Madbid did then that site will almost always do well. A penny auction site can’t survive without a healthy userbase. Otherwise auctions will be ending at $0.01.
Heres an interesting post from NBC -
It’s hard to win an auction when you’re competing against shill bidders.
An ongoing investigation by the Washington state attorney general’s office has found that some online penny auctions use robots to place bogus bids. This drives up prices and can make it impossible for legitimate bidders to win the auction.
“These bidbots are used by penny auction sites that don’t have a lot of users to make sure they’re profitable,” said Assistant Attorney General Jake Bernstein, who handled these cases. “It creates a very unfair situation, because in order to participate in these penny auctions, customers have to pay for every bid.”
Many of these scripts have built in bid bots included. It’s important to know however that the top penny auction sites do not participate in any such activities as they would be investigated and shut down. New sites aren’t regulated as tightly as sites such as Beezid, Dealdash, Quibids etc.
This is why it is highly risky to sign up to less known penny auction sites, if you are adamant that you want to sign up then we highly recommend that you at the very least choose a site that has been around for 6 months. This will allow time for any users to post their feedback on the site.
We can understand why many people want to sign up to these sites, who wouldn’t want to win an auction for $0.01? the problem is you will never be able to beat a rigged script. So in our view, it just isn’t worth the risk, it’s better to sign up to more common penny auction sites where you know your money is safe and you are bidding fairly.