Lawsuit Filed Against 5 Big Penny Auctions Alleges Illegal Gambling

A lawsuit against 5 big players in the penny auction industry was recently filed in Illinois. Entertainment Shopping, Inc. (Swoopo & oohilove), Bidcactus, BigDeal, Quibids and Beezid are listed as defendants. The complaint alleges that penny auctions break gambling laws in all 50 states.
Read the complaint.

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12 comments… add one
  • Bonnie Mcdonough December 31, 2011, 4:35 pm

    What was the outcome of these lawsuits since I notice they are still in business. How did they defend the gambling charges.

    Reply
  • Joan Capps June 26, 2012, 12:17 pm

    Don’t give them a dime not matter what your opinion of gambling. If you do then you need to go to Alabama and give everyone who ever entered a bingo game room their money back plus damages. This is why our Insurance and medical cost are so high. If it is illegal shut them down but to give people their money back plus damages after the fact the nuts!!!!!!!!!!!!!!!!!!!!!!!!!! If I buy illegal drugs and get sick can I sue the drug dealer or should I go to jail? LOL This is a set up by someone who wants to shut down penny auctions or by an attorney who want a big law suit. But which ever, someone needs to send them a message that this is not the way.

    Reply
  • john August 13, 2012, 9:32 pm

    why do you advertise them sites in yours ads….. seems idiotic

    Reply
    • Amanda Lee August 14, 2012, 6:35 pm

      Yeah, well I’m an idiot thank you very much. Take care.

      Reply
  • MS January 25, 2014, 1:10 pm

    I noticed ” Qbids ” use’s auto robot bidders, not real people that keep bidding and bidding over you to drive the price up . You will run out of bids before the computer does . Then after they take your money and bids ,they will offer it to you at a smaller reduced price not the 1 cent you was thinking about . But I have won at under 50 cents and they give it to free ,but you still are paying for the bids they never lose .

    Reply
  • Mike Taylor August 26, 2014, 5:26 am

    After reading QUIBIDS 101 on explaining the site is not a gambling site, I posted the below…

    Covering off the gambling argument with the ability to buy it now is woefully inadequate explanation of this not being gambling. Casinos have members benefits that the provide to their gamblers in “free spins”, drinks, meals etc.. Does this make their business a non gambling institution? NO.

    Both your business model and that of the gambling institutions prey on addictive personality traits by using a Skinner’s box style site or environment to keep their customers engaged. The prey of their susceptibility to partial reinforcement conditioning by using a variable reward schedule.

    Gambling uses it with small wins but provides the subject with a constant reminder that the next bet could win them the large prize.

    QuiBids is no different. They offer the same reward system by allowing subjects to pick their prize and bid(bet) on it for a chance to win. As with gambling, there is always a chance of winning the items for a cheap amount. However, you reinforce the belief that prizes are cheap by using the misleading sale cost. If an item goes for $10.50 (retails for $80), it has actually been bid on 1050 times. The actual cost of the auction is $630. This means you have made a minimum of $550 profit while claiming it was a bargain.

    The main reason this is misleading is that QUIBIDS sells bids for 60cents each. A bid on your system equates to 1cent. So you are constantly reinforcing the same psychological conditioning as gambling with these methods. Claiming items are cheap when they’re not. Offering chances for further free bids (free spins) just like poker machines.

    You also attempt to claim that your business model is the same as Zynga’s and have coinded a new phrase to explain as Gamification. Penny Auctions & Gambling all use the same psychology to lure people in and prey on their finances.The difference in Gamification and Penny Auctions is that gamification is entertainment and centered around a game. An auction site is not a game. It’s allegedly offering products at cheap prices while making 100s of times the products value with their misleading business model.. The only game that’s being played in the case of penny auctions sites such as QUIBIDS, is the game the company’s owners are playing with their customers'(victims) money.

    I doubt that you will approve this to be posted on your site as you will be too scared to have a negative opinion on your “shonky” business model. I hope that you will rethink what you are doing to people’s lives and start looking at new methods of generating revenue besides preying on the people who are your customers.

    Reply
    • Amanda Lee September 6, 2014, 11:58 am

      Umm not true, I approved it and I am not really making any revenue from this site right now?

      Reply
      • Andres October 20, 2015, 2:23 pm

        Hahahah, great response Amanda =D

        Reply
  • Tmiller July 6, 2015, 1:25 am

    I think it is just like gambling. On EBay, or even at real auctions, if you don’t win, you haven’t spent any money. With these penny auctions….if you don’t win, you still ended up spending money in the form of the money you spent to buy your bids. You paid for a chance to win something. The “jackpot” if you will…..and hope that you win it by spending the least amount of money (like in a casino). How is that not like gambling? I will stick to eBay. Maybe not “penny” auctions, but if I don’t win, I am out ZERO dollars.

    Reply
  • Travis September 20, 2015, 1:30 am

    The way a Penny Auction Site functions is very simple in practice and concept. The reason they do not qualify for Gambling, especially in other regions, including the United Kingdom Gambling Commission, is because the participation in a Penny Auction does not constitute the following have been qualified for; (1) prize, (2) consideration, (3) chance.

    (1) Prize
    A prize would be considered an award for completing a task. However, in a Penny Auction, no person is actually awarded any prize. They’re given the chance to buy the product at a greatly discounted price, which this qualifies as retail / e-commerce.

    (2) Consideration
    To participate in an Auction on a legitimate Penny Auction Site, you will come across “no purchase necessary to participate”, which is true to its statement. You don’t have to make a purchase if you do not want to and can get the bids through alternative means. But, when you DO purchase a bid pack, you’re awarded for your purchase the store currency, “bids”. But you were never forced to buy anything to register, join the site or read the Terms and Conditions of the Site, you were always given the opportunity to make said purchase, never forced.

    (3) Chance
    Now, with Chance, it’s a bit tougher argument. However, I still think I can win this. When you take a “chance” in something, you proceed with not knowing what could happen. Some say you take a chance you could win the Auction, I argue that it’s still not “chance”. When you take a chance in its cleared defined form, you are doing so with uncertainty with the possibility of something happening.

    An Auction on a Penny Auction Site thankfully clears this up by stating the very rules of the “Game”, if you don’t read these rules, that’s your own fault, ignorance is not an excuse. You will go into the Auction and place a bid, knowing the following: (1) The Auction will have one winner, that winner is the last bidding, player; (2) You will be given the opportunity to get your token value spent back, by utilizing the Buy Now option, with the applied rebate discount, that rebate will always be the approximate close value of what you spent on those tokens; (3) You have the choice to decline this opportunity given, if you so choose to decline, you are forfeiting your right to getting anything in return, by choice. (4) all unspent auction bids should be given the option to be refunded if so chosen by the player.

    Further, an Auction is not determined by chance, because the winner is not considered with the factor of chance, it will always be the last bidder, who that person is, makes no difference. The Auction is controlled by the Players and not the House/Site, and the Player has the choice to stop bidding and when to resume, or even when to participate.

    While some argue that using the Bids in an Auction could be considered a Bet or Wager. However, the Auction is not dealing with money, it is dealing with goods. There is no prize pool, that is awarded to the winner as they’re not awarded a prize, simply they are given the opportunity to buy the product at a discounted price, of which they can so happily decline, and the next winner will be the next unique bidder before the last winner.

    I feel that this problem is a Consumer Issue, and not an Illegal Gambling Issue. The Gambling Commission in the United Kingdom seems to agree with this observation, in the sense they do not consider it gambling, as there is always a clear winner in an Auction, the last bidder.

    I do not know of any Penny Auction Sites being shut down due to illegal gambling, and they have all been shut down due to Consumer Issues, lack of support, no shipped products and not honoring refunds or purchases, etc.

    Reply

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