Penny Auctions: Real or Ripoffs?

If bidding against a computer isn't challenge enough, the FTC listed several other problem areas for penny auctions, including:

Time lags: Many complaints about penny auctions involved late shipments, no shipments or shipments of products that aren't the same quality as advertised.

Misleading Language: Terms like "bonus bids" might suggest that bids are free, but really aren't.

Hidden costs: In addition to bidding costs, many penny auction sites charge fees for membership, ongoing subscriptions or shipping. The FTC found that terms and conditions are often difficult to find on the websites.

In our research, On Your Side also discovered evidence that penny auction sites are targeting seniors via search engine optimization with special pages tagged "seniors-seniors-elderly" and "elderly-seniors." (Tip for website operators: Most of us aren't too pleased to be referred to as "elderly.")

Given the potential pitfalls, penny auction sites leave a lot to be desired as honest options for smart shoppers: for every "winner" there are multiple "losers." On the other hand, playing the bidding game can be entertaining — making them more akin to gaming sites or lotteries than legitimate online vendors. Our recommendation — be cautious, keep track of your real expenses and have a good time ... you might just win something.

Ron Burley is the author of Unscrewed: The Consumer's Guide to Getting What You Paid for.

Also of interest: A survey con can cost you big. >>