The New York Times on Losing Auctions


In today’s The New York Times article Losing Out After Winning an Online Auction, Alina Tugend warns readers of auction fraud and even mentions penny auctions Swoopo and GoBid:

“There’s a lot of ways to lose money with online auctions,” said Sally Greenberg, executive director of the National Consumers League, a nonprofit group. … To make matters more complicated, some sites are putting a twist on traditional auctions. For example, and offer low starting prices, but charge to place each bid. For example, every item starts at zero on, but every bid costs $1 and can be raised only in 1-cent increments. At, each item starts at 12 cents and each bid costs 60 cents.

On both sites, the auction is timed, with the clock restarting with every bid. It’s exciting and you can get great deals, but it’s also easy to run up your costs and end up empty-handed.

With all the possible ways of losing money, it’s no wonder that online auction fraud was ranked as the 13th biggest concern of consumers in the 2008 Consumer Sentinel, which is compiled by the Federal Trade Commission from a variety of sources. No. 1 was identity theft.

While “there are enormous benefits to Internet auctions — you can find things you can’t find anywhere else — the possibility of fraud is overwhelming,” said Lois Greisman, associate director in the division of marketing practices for the commission. The key, she said, is to do business only with merchants you trust.

That may not seem easy, but she suggests doing basic research.

“There are lots of blogs out there,” and a fraudulent seller will often be outed online. In addition, she said, check with your Better Business Bureau if you have any doubts about a company.”

The Federal Trade Commission, on its Web site, offers some good tips on what to look for when using an online auction. They include these suggestions:

-Become familiar with how the auction works. Never assume that the rules of one auction site apply to another.

-Know exactly what you are bidding on. Look for words like “refurbished, “discontinued” or “off-brand,” especially if you are buying electronic equipment.

-Check feedback, but be aware that positive comments can sometimes be planted by the seller, and negative comments placed by a competitor.

-Find out if there is any follow-up service or warranties and check the seller’s return policy.

-Establish a top price and stick to it. Remember, you can easily get caught up in the bidding. And although you may be competing against a genuine buyer, there are many cases of bidding by shills whose sole aim is to drive up the price.

-Make sure you’re very clear about what types of payment the seller accepts and what protection you have.”

Thank you The New York Times and Ms. Tugend for this article, as well as the FTC for your auction tips.  We know how easy it is for scams to occur and go almost undedected on bid-fee/penny auctions. Penny Auction Watch will continue to keep an eye on online entertainment shopping. Please feel free to join our forum to discuss your experiences with penny auctions.

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1 comment… add one
  • Steve October 27, 2009, 4:40 am

    Very Interesting in deed. I do believe that this 'swoopo' penny auction model is short lived. Too many scammers, and it will be regulated within a couple years.


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