According to an article posted today by Jan Vermeulen for MyBroadband.co.za News, Smokoo may become illegal gambling: DTI, South Africa may soon put all penny auctions operating in the country under gambling regulations and ban their operation.
“Earlier this year one of South Africa’s top information and communications technology (ICT) lawyers said that penny-auction sites could run themselves afoul of consumer protection regulations and South Africa’s gambling laws.”-MyBroadband.co.za
According to South Africa’s proposed consumer protection regulations, if enacted into law penny auctions would be in violation. From the South African Department of Trade and Industry’s Draft Regulations – Consumer Protection Act – November, 2010, (7)”No fee may be charged for participation in an auction, but this does not apply to refundable deposits.”
Penny auctions may also fall under a the category of a “Mock Auction” -which states, “A mock auction is an auction in which – goods are sold for less than the highest bid, or part of the purchase price is repaid or credited to the purchaser, the right to bid for goods is restricted to persons who have bought or have agreed to buy other goods; or any goods are given away as gifts. (2) No person may promote, take part or conduct a mock auction.”
We contacted authorities in South Africa about a week ago, but have not yet received a response. The period for public comment may have already past. We’ll keep you up to date.
Currently South African penny auctions include Smokoo, Bidchaser, Kooldeals and ViaZiz. Smokoo has introduced themselves on our forum and states on their site that they are independently audited by an international auditing firm.
Smokoo.co.za recently auctioned off a Mercedes and has a BMW queued to end in 13 days. The site seems to be quite popular in South Africa (and controversial) with 43 pages of ended penny auctions, Smokoo currently holds an Alexa ranking of 26,243, 174 in ZA.
What’s you opinion? Do you think penny auctions run afoul of gambling laws?
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