Consumers issue warning about penny auction websites

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by Andrew Horansky / KHOU 11 News

khou.com

Posted on October 1, 2012 at 11:40 PM

HOUSTON—A new Internet business model allows customers to bid on products and, in some cases, win them for just pennies.

But unlike traditional auction sites your bids cost you money.  They come with big promises, and small price tags.

With a little effort, shopper David Morefield says it is possible to win on those so-called penny auction websites.

“You have to do your homework. It isn’t going to work unless you really, really study,” he said.

Sites like Quibids and Happy Bid Day now offer everything from gadgets to gift cards for pennies. But here’s the catch -- you have to pay for each bid and that money isn’t refunded.

“There’s a guarantee that you’re going to be spending money, but there’s no guarantee that you’re going to receive the product that you see advertised on the website,” said Monica Russo, with the Better Business Bureau.

Russo said she sees complaints all the time. Last year, one of those complaints came from Jeremy Craft, a college student.

“I registered, thinking it was free,” he said.  

He said a site charged him just for joining and that he lost nearly $100 bidding on a phone he never won.

“You get excited and you go for it, not thinking about it until it’s too late and they already have your $99,” he said.

Amanda Lee lost too, which is why she now runs a site called Penny Auction Watch.

Her advice is to stick to sites with a "buy it now" option.

“I’ve won and bid on items from sites and then the site shuts down and they never even ship the item out,” she said.

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