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Are Penny Auctions Sites Worth It? RIP-OFF Alert!

Penny auction sites are skyrocketing into the peripheral sites of digital users left and right. Steve recently wrote an article giving an inside look into one penny auction site: QuiBids.com.

If you’ve never used or seen a penny auction site, let me break it down for you: there are various items, some big ticket and some small ticket, that are offered up for auction for “only” pennies. Literally, $0.01 to $0.02 starting bid. Users then place bids to try and win the item, each bid is a penny. Sounds easy and cheap doesn’t it? Wrong!

What many don’t know is while each bid raises the price of the item only by $0.01 the cost of a bid can be up to $0.90 on some sites. – Source.

That means for every “penny” you bid you’re adding up a high bill in the cost of bids. Each time you bid a “countdown clock” is reset. Usually the clock resets at a low number, let’s say, 12 seconds. 12…11… For the final 10 seconds of the countdown the clock turns red which signals to bidders that time is running out, quick, bid! Ca-ching. $0.01. Another 12 seconds….

At first, bidders may ask to themselves, “Oh, what’s a few dollars, right?” What they don’t realize is these sites can become very addictive and they can find themselves running through thousands of dollars very quickly.

At first these websites reminded me of digital slot machines. “Oh, just one more pull… just one more….” Then I realized, slot machines actually pay out from time to time to different users at different amounts – not everybody gets the jackpot. But that’s what happens here, one jackpot, one winner, the rest are just throwing their money away. Losers can apply their failed bid credits toward purchasing the item auctioned at full retail price.

I realize now, it’s not about the product, it’s about the win. Human’s struggle and addiction for power and success can be found bundled into these websites.

I sat down today to watch an auction take place on Beezid.com. For 40 minutes I watched the price of a brand new iPad 2 go from around $18 to $90. In those 40 minutes alone, 7200 pennies had been bid. Let’s do some math, shall we? Beezid offers “bid packages” from $0.55 to $0.90 which means in those 40 minutes Beezid racked in between $3,960 to $6,480 in bids. – Source.

At the end of the bid the iPad “sold” for $90.76. Seem like a steal? Bizeed earned anywhere from $5,082.56 to $8,259.16 for that one iPad (including the final $90.76 due for the item). At a retail value of $499.00 that’s 10 to 16 iPads!!

Have a look for yourself. I captured video of the auction within the 40 minutes I watched it and sped it up to give you a quick glimpse of what these auctions look like.

http://www.youtube.com/watch?v=sQ1jGy9o4Z0

The psychology behind these sites fascinate and frustrate me all at the same time. While watching the auction I saw users bid continuously within 2 seconds, only restarting the clock to 12 seconds each time. For what? To jack up the price to scare off others? At one time I saw a battle between two users, unnecessarily jacking up the price …. by a penny at a time. This isn’t poker, you can’t raise them $20 and see if they’ll call. This.Is.A.Penny. I understand the want to be the last bidder but why not wait until the end of the countdown instead of mindlessly throwing away bids all in one fell swoop.

In the end many user’s bids equate to a price higher than actually buying the item. Which makes it obvious that the allure of these sites is not the products people are “winning” but the struggle to win, the struggle to be the best.

I can’t help but think if any of these users are working undercover for these sites trying to entice actual bidders.

Let’s say for the sake of argument that the winner swooped in and won this iPad on their first bid (which is false because the winner made many, many bids) and only paid $90.77 for it. There’s still $4,991.79 to $8,168.39 spent from other users who took home nothing. Nada. Zilch!

What I can’t seem to wrap my brain around is why some of these sites are actually accredited by the BBB. Penny auction sites such as BidCactus, SportsBiz and PackageForMe have actually been accredited with a rating of an A- and DealDash with a B+ rating. With the BBB accrediting these sites can one really “start with trust” (as the tagline of the BBB reads) when these sites are such a huge rip-off?

The auctions are exciting. Watching that clock countdown. Being so close, on the edge of winning. Adrenaline starts racing. “This could be mine!!!” … But for what? For what price? For the low-low price of a few pennies? No. Aside from the one “winner”, the rest of the users loose, sometimes thousands of dollars.

If you know what’s good for your mental well-being and your wallet’s contentment, stay far, far, far away from these money pits.

Have you ever engaged in a penny auction site? Have you ever actually won an auction? How much have you spent on worthless bids? I’d like to hear your thoughts and stories on this matter. Please leave a comment below!

Are Penny Auctions Sites Worth It? RIP-OFF Alert! by

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About Amanda Miller

Amanda Miller
  • Iwasstupid

    Yes a total rip-off! I thought I was safe, because I was willing to pay the retail price. So, I thought the worst that could happen after I did not win would be that I ended up buying the product and getting back what I spend on bids. BUT NO. There was no buy it now option! If this was a reputable website they should at least make it clear that the buy it now option is not (always) available, before you start bidding.

  • Amanda_Miller

    Original “slot machine” comment: “At first these websites reminded me of digital slot machines. “Oh, just one more pull… just one more….” Then I realized, slot machines actually pay out from time to time to different users at different amounts – not everybody gets the jackpot. But that’s what happens here, one jackpot, one winner, the rest are just throwing their money away.” Please note: I do not compare these sites to slot machines. I said at first I was reminded of a slot machine – I personally find these sites worse than slot machines. Slot machines actually have the potential to pay out to more than one user. If you want to blow through some cash you may have a higher chance of “winning” something via a slot machine than one of these sites. Any form of gambling chance or “skill” is not an advised way to spend money.

  • Anonymous

    Original “slot machine” comment: “At first these websites reminded me of digital slot machines. “Oh, just one more pull… just one more….” Then I realized, slot machines actually pay out from time to time to different users at different amounts – not everybody gets the jackpot. But that’s what happens here, one jackpot, one winner, the rest are just throwing their money away.” Please note: I do not compare these sites to slot machines. I said at first I was reminded of a slot machine – I personally find these sites worse than slot machines. Slot machines actually have the potential to pay out to more than one user. If you want to blow through some cash you may have a higher chance of “winning” something via a slot machine than one of these sites. Any form of gambling chance or “skill” is not an advised way to spend money.

    • http://www.bidhere.com/ Bidhere

      Some sites offer the “buy now” option (for example http://www.bidhere.com )which definitely makes such auctions completely different from slot machines.

  • Amanda_Miller

    I respectfully disagree. I find your comment to be “very misleading”. First of all, there’s no way to tell that this was a promotional auction – you do not even know when I recorded this so unless all of their auctions are promotional and “free” I feel this is a false statement.

    We do not endorse this type of practice to our readers – essentially members of these sites are throwing away good money when they could use that money and buy the item they want out right.If you win every auction you enter that’s good for you but bad for the others that are throwing away money that could be used to purchase said item. For people that are trying to stay solvent, get out of debt or be mindful about their money this “type” of shopping is not advised! These sites are bound to create more bad than good for users’ wallets.

  • Steve Rhode

    So are there more winners than losers? If so the company goes under and it’s not sustainable.

  • SteveinPhx

    It is easy to tell when the auction occurred, because of the closing price.  This week, Beezid is running a ton of promotions, so anyone who wants to try the site can essentially bid for free, as essentially what the bidders in this iPad auction most likely did.  And there is no connection whatsoever to slot machines.  That is luck and random.  A penny auction is based on skill.  With respect to auctions in which I was committed with paid bids, with two exceptions, I have won every auction I entered from March forward.

  • Katie Tuccelli

    As the image says, we are currently working on PennyBurners 2.0. We have been live since April of 2010, and have over 2,000 members. If you’d like, email me, and I can give you the username and password of a test account so that you can see the forum, posts, articles, and members for yourself. Or, you can check the Google cache of the site/articles/forum posts.

    We went down on June 20th and expect to be up again within the next few days. Unfortunately, we encountered some problems with our new 2-click log-in module, but we believe we’ve finally fixed it  :)

    My email address is [email protected]. If you’d like to speak on the phone, we can make that happen that as soon as tonight.

  • Steve Rhode

    The BBB has just issued a couple of warnings about penny auctions. WPXI is reporting:

    “PITTSBURGH — The Better Business Bureau has issued a warning about penny auctions. According to the BBB, thousands of unsatisfied customers have reported penny auction websites for misleading tactics.

    Channel 11′s Robin Taylor reported that the websites offer things like iPads for $80 and Xbox gaming systems for $15. But unlike traditional auctions, consumers are charged for each bid made.

    Taylor reported that even though they are called penny auctions, each bid usually costs anywhere between 25 cents to a $1 and customers are often required to purchase a package of bids for $50 to $100.

    The rules are different for penny auctions as well, Taylor reported. She said instead of an auction ending at a set time, each bid add 10 seconds to the clock, which increases the odds of not winning the item.

    One website was recently sued. The class-action lawsuit alleged that the auctions are like gambling because the overwhelming majority of customers end up losing money.” – Source

    Another BBB is providing this additional warning:

    “Over the last couple years, BBB has seen a sharp increase of the number of pay-to-bid auction websites that have come into existence. 

    This is a concern to us, primarily because it appears that many consumers are being left in the lurch with nothing to show for it. 

    “Penny auction” websites typically work like this: consumers see that they could win an auction for a product they’re looking for at an exceptionally cheap price, like an iPad for $80 or a Playstation 3 for $50.  They then buy “packets” of bids at a particular rate—let’s say $1 per bid.  If a consumer buys 100 bids, then they’re looking at $100 that they’re paying the website straight away.  Here’s the thing—these bids ONLY provide the consumer the right to bid on an item.  If I bid on an item more than once, those bids add up—and I pay whether they win or not.  So, if I win an $80 iPad and I’ve bid 20 times for that item, the true cost is $100, not including shipping costs. 

    What if I don’t win the auction, though?  I’d still be out the $20 for the bids I’ve placed, that’s what.  And that’s exactly what the rub is.  For every $80 iPad that gets auctioned off, there have been about 8,000 bids.  At the $1 per bid level, that’s $8000 the Penny Auction site receives.” – Source

  • Steve Rhode

    What is the URL of your public site with the thousands of reviews. I went to what Google said your URL is and only got a coming soon page. See image.

  • Steve Rhode

    When you say “entertainment shopping” do you mean like the entertainment people may experience from the rush of playing slot machines? Slot machines have an entertainment vaue as well. How can you tell the auction taped for this story used promotional bids? All bidders had unique usernames.

  • Katie Tuccelli

    Penny auction sites are known as “entertainment” and “competitive shopping” venues. They were never meant to take the place of your typical mall, Amazon, or even eBay. There are several sites that offer a “Buy It Now” option, such as Beezid, SkoreIt!, and QuiBids, which consumers can utilize to buy the desired item at a price near, but still below, retail.

    You made a comparison of penny auctions to slot machines… The penny auction bids spent, and their value, are not being
    wagered, bet, staked, or pooled cumulatively for the purposes of
    winning the sum total therein. These are merely the price for playing
    the game. Legally, bids are defined as a participation fee. These are
    allowed, by law, as other games of “American Tradition” such as horseshoe tournaments, basketball games, or hole-in-one events; all of which have
    prizes and entrance/participation fees, and were ruled not to be gambling by varying courts.

    It does not take just blind luck to win a penny auction; it takes strategy, patience, and skill. In fact, Beezid bidder and PennyBurners member, muchomaas, did an interview with us on PennyTalkRadio on June 10th. He told us about his experiences on Beezid, including a massive loss on an Amazon Kindle that wound up turning into a good thing: http://www.pennytalkradio.com/

    Penny auctions like Beezid employ no strategies to ensure the odds are in the “house’s” favor. All strategies are employed solely by the participants of the auctions, where users with more skill and experience have a historical and demonstrable advantage over new players. Penny auction bids are not wagers to begin with, but this case is made even more strong when penny auction sites, such as Beezid, employ a “Buy It Now” system. This nullifies any argument that penny auction bids are “bets” or “wagers,” as such items become worthless upon losing.

    Penny auctions do not have a “random” or “element” of chance that is beyond the player’s control. If a new bidder comes in and places a bid, the current players can out bid them. Penny auction players who are more experienced and more skilled win much more frequently. You may practice rolling dice, picking lottery numbers, or playing slot machines for your whole life and not develop any predictive utility from your time spent doing so.

    So, if bidders will exercise some due diligence before diving in, I think they will find that their time spent on a penny auction site is much more profitable.

    1. Watch the auctions. What time of day is best for bidding? Which bidders are bidding to win at all costs? How do the timers and auto-bidders work?

    2. Develop a strategy. Watch other successful bidders. What are their patterns?

    3. Start small. Don’t go straight for that iPad or Nikon camera. Try going for a gift card first, or some other lesser-valued item.

    4. If you don’t win, re-evaluate your strategy – and your opponents.

    5. Chat with your fellow bidders. Many of them are happy to offer tips. For example, on the PennyBurners Penny Auction Forum, member “muchomaas”, started a thread called “Beezid Beginner Tips” that has helped many other bidders transition from “newbies” to seasoned, successful bidders.

    In regard to the iPad auction you referenced above, Amanda, there
    is a good chance that most of the bidders were using free bids because of
    recent promotions. Beezid gives away bids on their FaceBook page every day, and they run insane promotions, usually around the holidays, such as the one they did for Easter, and the one they’re doing for July 4th. Those bidders did not necessarily pay per bid, and Beezid did not necessarily make that kind of profit.

    Amanda, if you’d like to talk further about Beezid, or the penny auction industry in general, our doors are open :)

    For anyone else reading that is interested to learn more about the penny auction industry, please visit the
    PennyBurners Penny Auction Forum. We have thousands of members who are
    happy to share their experiences with the various sites on which they
    bid, and we have a lot of great resources to make your time spent in the
    industry productive and successful.

  • http://www.pennyburners.com Katie Tuccelli

    Penny auction sites are known as “entertainment” and “competitive shopping” venues. They were never meant to take the place of your typical mall, Amazon, or even eBay. There are several sites that offer a “Buy It Now” option, such as Beezid, SkoreIt!, and QuiBids, which consumers can utilize to buy the desired item at a price near, but still below, retail.

    You made a comparison of penny auctions to slot machines… The penny auction bids spent, and their value, are not being
    wagered, bet, staked, or pooled cumulatively for the purposes of
    winning the sum total therein. These are merely the price for playing
    the game. Legally, bids are defined as a participation fee. These are
    allowed, by law, as other games of “American Tradition” such as horseshoe tournaments, basketball games, or hole-in-one events; all of which have
    prizes and entrance/participation fees, and were ruled not to be gambling by varying courts.

    It does not take just blind luck to win a penny auction; it takes strategy, patience, and skill. In fact, Beezid bidder and PennyBurners member, muchomaas, did an interview with us on PennyTalkRadio on June 10th. He told us about his experiences on Beezid, including a massive loss on an Amazon Kindle that wound up turning into a good thing: http://www.pennytalkradio.com/podcasts/2011-June-10.mp3

    Penny auctions like Beezid employ no strategies to ensure the odds are in the “house’s” favor. All strategies are employed solely by the participants of the auctions, where users with more skill and experience have a historical and demonstrable advantage over new players. Penny auction bids are not wagers to begin with, but this case is made even more strong when penny auction sites, such as Beezid, employ a “Buy It Now” system. This nullifies any argument that penny auction bids are “bets” or “wagers,” as such items become worthless upon losing.

    Penny auctions do not have a “random” or “element” of chance that is beyond the player’s control. If a new bidder comes in and places a bid, the current players can out bid them. Penny auction players who are more experienced and more skilled win much more frequently. You may practice rolling dice, picking lottery numbers, or playing slot machines for your whole life and not develop any predictive utility from your time spent doing so.

    So, if bidders will exercise some due diligence before diving in, I think they will find that their time spent on a penny auction site is much more profitable.

    1. Watch the auctions. What time of day is best for bidding? Which bidders are bidding to win at all costs? How do the timers and auto-bidders work?

    2. Develop a strategy. Watch other successful bidders. What are their patterns?

    3. Start small. Don’t go straight for that iPad or Nikon camera. Try going for a gift card first, or some other lesser-valued item.

    4. If you don’t win, re-evaluate your strategy – and your opponents.

    5. Chat with your fellow bidders. Many of them are happy to offer tips. For example, on the PennyBurners Penny Auction Forum, member “muchomaas”, started a thread called “Beezid Beginner Tips” that has helped many other bidders transition from “newbies” to seasoned, successful bidders.

    In regard to the iPad auction you referenced above, Amanda, there
    is a good chance that most of the bidders were using free bids because of
    recent promotions. Beezid gives away bids on their FaceBook page every day, and they run insane promotions, usually around the holidays, such as the one they did for Easter, and the one they’re doing for July 4th. Those bidders did not necessarily pay per bid, and Beezid did not necessarily make that kind of profit.

    Amanda, if you’d like to talk further about Beezid, or the penny auction industry in general, our doors are open :)

    For anyone else reading that is interested to learn more about the penny auction industry, please visit the
    PennyBurners Penny Auction Forum. We have thousands of members who are
    happy to share their experiences with the various sites on which they
    bid, and we have a lot of great resources to make your time spent in the
    industry productive and successful.

  • SteveinPhx

    I play on Beezid, and your article is very misleading.  First, the auction you reference in particular was, for the most part, played with “promotional” bids (read: free!).  Second, you fail to mention that many iPads sell for less than $10.  Your omission is everything you accuse Beezid of being.  Third,  it is “entertainment shopping.”   Sure, it is not for everyone, but plenty of us have fun with it, know what we are doing, play within our limits, and get good deals.  People who have questions about Beezid should get the straight scoop from their facebook page (http://www.facebook.com/thebeezid).  This, well, this was not the straight scoop.

  • SteveinPhx

    I play on Beezid, and your article is very misleading.  First, the auction you reference in particular was, for the most part, played with “promotional” bids (read: free!).  Second, you fail to mention that many iPads sell for less than $10.  Your omission is everything you accuse Beezid of being.  Third,  it is “entertainment shopping.”   Sure, it is not for everyone, but plenty of us have fun with it, know what we are doing, play within our limits, and get good deals.  People who have questions about Beezid should get the straight scoop from their facebook page (www.facebook.com/thebeezid).  This, well, this was not the straight scoop. 

    • http://GetOutOfDebt.org Steve Rhode

      When you say “entertainment shopping” do you mean like the entertainment people may experience from the rush of playing slot machines? Slot machines have an entertainment vaue as well. How can you tell the auction taped for this story used promotional bids? All bidders had unique usernames.

      • SteveinPhx

        It is easy to tell when the auction occurred, because of the closing price.  This week, Beezid is running a ton of promotions, so anyone who wants to try the site can essentially bid for free, as essentially what the bidders in this iPad auction most likely did.  And there is no connection whatsoever to slot machines.  That is luck and random.  A penny auction is based on skill.  With respect to auctions in which I was committed with paid bids, with two exceptions, I have won every auction I entered from March forward.

      • http://GetOutOfDebt.org Steve Rhode

        So are there more winners than losers? If so the company goes under and it’s not sustainable.

    • Anonymous

      I respectfully disagree. I find your comment to be “very misleading”. First of all, there’s no way to tell that this was a promotional auction – you do not even know when I recorded this so unless all of their auctions are promotional and “free” I feel this is a false statement.

      We do not endorse this type of practice to our readers – essentially members of these sites are throwing away good money when they could use that money and buy the item they want out right.If you win every auction you enter that’s good for you but bad for the others that are throwing away money that could be used to purchase said item. For people that are trying to stay solvent, get out of debt or be mindful about their money this “type” of shopping is not advised! These sites are bound to create more bad than good for users’ wallets.

  • Lisabeth Rosenberg

    @Amanda “What I can’t seem to wrap my brain around is why some of these sites are actually accredited by the BBB.”

    We were approached by an acquaintance about starting a penny auction site but using foreclosed real estate as the item to be bid on.  Not being familiar with this type of business model, on the surface it sounded scammy but intriguing for creating a revenue stream. Upon further investigations it seemed downright unethical and what struck us was how in practice tons of people would be throwing their money away and getting nothing – many of the elements of gambling but without the benefits and the illusion of being a “smart” consumer. Your statement above sticks out in my mind.

  • http://www.arrelle.com Lisabeth Rosenberg

    @Amanda “What I can’t seem to wrap my brain around is why some of these sites are actually accredited by the BBB.”

    We were approached by an acquaintance about starting a penny auction site but using foreclosed real estate as the item to be bid on.  Not being familiar with this type of business model, on the surface it sounded scammy but intriguing for creating a revenue stream. Upon further investigations it seemed downright unethical and what struck us was how in practice tons of people would be throwing their money away and getting nothing – many of the elements of gambling but without the benefits and the illusion of being a “smart” consumer. Your statement above sticks out in my mind.

    • http://GetOutOfDebt.org Steve Rhode

      The BBB has just issued a couple of warnings about penny auctions. WPXI is reporting:

      “PITTSBURGH — The Better Business Bureau has issued a warning about penny auctions. According to the BBB, thousands of unsatisfied customers have reported penny auction websites for misleading tactics.

      Channel 11′s Robin Taylor reported that the websites offer things like iPads for $80 and Xbox gaming systems for $15. But unlike traditional auctions, consumers are charged for each bid made.

      Taylor reported that even though they are called penny auctions, each bid usually costs anywhere between 25 cents to a $1 and customers are often required to purchase a package of bids for $50 to $100.

      The rules are different for penny auctions as well, Taylor reported. She said instead of an auction ending at a set time, each bid add 10 seconds to the clock, which increases the odds of not winning the item.

      One website was recently sued. The class-action lawsuit alleged that the auctions are like gambling because the overwhelming majority of customers end up losing money.” – Source

      Another BBB is providing this additional warning:

      “Over the last couple years, BBB has seen a sharp increase of the number of pay-to-bid auction websites that have come into existence. 

      This is a concern to us, primarily because it appears that many consumers are being left in the lurch with nothing to show for it. 

      “Penny auction” websites typically work like this: consumers see that they could win an auction for a product they’re looking for at an exceptionally cheap price, like an iPad for $80 or a Playstation 3 for $50.  They then buy “packets” of bids at a particular rate—let’s say $1 per bid.  If a consumer buys 100 bids, then they’re looking at $100 that they’re paying the website straight away.  Here’s the thing—these bids ONLY provide the consumer the right to bid on an item.  If I bid on an item more than once, those bids add up—and I pay whether they win or not.  So, if I win an $80 iPad and I’ve bid 20 times for that item, the true cost is $100, not including shipping costs. 

      What if I don’t win the auction, though?  I’d still be out the $20 for the bids I’ve placed, that’s what.  And that’s exactly what the rub is.  For every $80 iPad that gets auctioned off, there have been about 8,000 bids.  At the $1 per bid level, that’s $8000 the Penny Auction site receives.” – Source

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