When Will the Bots Stop?

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http://www.flickr.com/photos/timsamoff/ / CC BY-ND 2.0

Today, The Dominion Post, New Zealand published the article  Penny Auctions Trouble Watchdogs, raising the question of legality and questioning whether penny auctions are akin to gambling.

A Consumer Affairs Victoria spokesman said that they had reservations about penny auctions,

“In a traditional online auction transaction, the losing bidder is not out of pocket.” According to the article, “The spokesman suggested the penny auction model fell under the auspices of the Victorian Commission for Gambling Regulation, which said it would investigate those in Australia. Some online commentators say the sites are gambling sites, while others say they are above board but concede that all bidders are ‘players’.”

There really seems to be a fine line, some argue that there is strategy to win penny auctions. There are certain bidding patterns & strategies that bidders hold to, but we all know that the winning bidder is the person to place the last bid. When it comes down to it the real strategy to winning is to simply bid and bid until you win, sometimes this can cause the bidder to lose a significant amount of money, but they were aware of this risk when they purchased bids. In some situations a bidder may be better off waiting until an auction has lasted a long time, others may be able to start in the beginning and only place a small amount of bids.

Knowing when and with how many bids you have to spend to win any penny auction can really be unpredictable.

With bidding, strategy and gambling aside, (we are interested in hearing what Australia decides) what we have been especially concerned with for many months (the reason for the creation of Penny Auction Watch) is the stark fact that there are many developers, and site owners that think bidding bots are totally acceptable for use in these new online auction businesses. There are, however, penny auction sites that do not use bots, where some consumers are getting real deals. Rightfully so The Dominion Post also brings the question of the use of bots and shills by penny auctions to light:

“But any webmaster can set up a similar site using software available online from bpowerhouse.info for US$48.90, which advertises that it lets people “build your own penny auction site in minutes”. There have been accusations that some penny auction sites do not act fairly, using techniques such as shill bidding, “bot” bidders and hidden reserves to dupe or cheat bidders. Shill bids are bids arranged by the auctioneer to push up the final sale price.”

We have proof that there are developers selling and promoting penny auction scripts with bot bidders to hold reserves, they cannot hide the fact that they have been promoting this. A reader recently commented on our post “Bidding Bots-Illegal” Only to tell us that if we do not have a law license we should not make those claims. The use of bot bidders and shill bidders in online auctions (especially penny auctions) should be a punishable offense, after all people are getting robbed!  If penny auctions cannot be regulated the least we can do is warn consumers of the possibility that they may not get a good deal and on purpose. We hope that both the developers, which we believe are in effect promoters of shill bidding, perhaps to “get rich quick?” by telling buyers they can go into business for themselves with minimal loss.

Can the developers that are selling and the penny auction site owners that are using the bot scripts really sleep at night? When, if ever, will they stop? We hope soon.

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