The Dire State of Penny Auctions

Today’s featured article, a guest blog post on the current state of penny auctions and why there’s a big problem, was sent in to us by a penny auction site employee. We couldn’t agree more with the words that are written.

“Anyone involved in the penny auction industry has heard over and over about scams, dishonest site owners, shills, bots, and companies running auctions they have no intentions of fulfilling. What most have not heard however, is the other side of the equation. Dishonesty has no place in this industry and it cannot and should not be tolerated in any form. I would like to shed some light on this topic from a point of view not often published.

While the majority of penny auction users seem to be your average, honest, hard working person, there is a small group of people that have made it their mission to rob, cheat and steal new penny auctions blind. They are experts in this field and will stop at nothing to accomplish their goals and once they are uncovered they implore threats and scare tactics that would raise eyebrows everywhere.

In the last six months I have come to realize the breadth of the brutality and dishonesty of the inner circle of penny auction world. These people know exactly how to work the system and work it well, often leading to the downfall of perfectly legitimate penny auction sites. To add insult to injury they then smear the sites and use their sway in forums and similar places to accomplish this goal. They run in groups, and collusion is normally their first move. Once they have effectively scared off the average bidder, they then rack up auction after auction using different accounts to try to stay under the radar. They hide their IP addresses and even hack in to site in order to make certain they are winning every auction possible. They know it is extremely hard to amass any evidence against them and these cheaters steal thousands of dollars preying on honest small businesses in order to profit themselves.

The irony of the whole thing is that once a site has collected enough evidence to prove they are cheating, they go in to smear mode and blog and post anywhere and everywhere they can about how horrible the site is. What is the site to do? Do you ship the wins to a person who has cheated you and the other users out of thousands of dollars? Do you not ship the wins and deal with charge backs and the smear campaign? This may seem like an easy choice however they have already thought of this too. They generally wait until they have received $10,000-$15,000 worth of product and then do charge backs for every penny spent, effectively leaving them with product that they never paid for. As you can imagine paying out $15,000 nine or ten times over can greatly affect a site getting the legitimate customers wins out in a timely manner.

What these people do is criminal, yet they are the first to make the same claim against the sites they victimize. They befriend the average penny auction user in order to build their credibility so when they speak, people listen. They then use this sway to

threaten PA owners that get in their way. Often it is these people who cause the average users not to receive products in a timely manner because they keep owners and their money locked up in battle after battle. My hope is that these people will be seen for what they really are and that the average penny auction user would not enable them to monopolize the industry.

If things do not change, these few bad apples will ruin it for everyone and eventually they will effectively put the entire penny auction industry out of business.”

A Thank You goes out to the penny auction site who sent in this article. We see everything that you see happening, your concerns are ours and we wish you and all penny auction sites who are running, and seek to maintain, an honest penny auction business based on integrity, those who value user’s privacy and exhibit a high degree of professionalism, the very best. Penny Auction Watch® applauds you and can understand what you’re going through.

“When one person makes an accusation, check to be sure he himself is not the guilty one. Sometimes it is those whose case is weak who make the most clamour.” – Piers Anthony

To learn more about penny auctions and to discuss this article, click here.

Photo Credits – Via Artamir used under Creative Commons license

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22 comments… add one
  • biddiimon June 9, 2011, 9:00 am

    i completely agree with it, i use quibids, and everytime i see these things happen, i tell quibids, yet the probably consists of proxys and ip’s being blocked. So all i can do is complain and lose bids sometimes they give them back because there support is actually really good

  • Tres June 9, 2011, 11:29 am

    What can be done and how can the legitmate bidder help the legitmate site? There is a new site I play on that has had the greatest customer service and delivery within days. I honestly would love to mention them in the forum but I’m afraid this will happen to them. So far it hasn’t.
    If you can give us novice what we are to look for, like biddimon said, I will report it as well.

  • bradjar June 9, 2011, 3:25 pm

    Such interesting and informative reading, and to PennyAuctionWatch and the site that submitted thanks for caring!

  • David June 9, 2011, 4:38 pm

    But one of the first places the cheating consumer will go and compain to is this website?

    I have read through your Forum and I see one post about how Flutteroo is a scam and it’s in your “Red Flag” section. If I was a new customer thinking about purchasing from Flutteroo, that would probably put me off spending any money there.

    You allow people to post baseless allegations and you usually write about any complaint someone posts. I would like to know how many genuine PA’s you’ve put out of business?

    • Watching PA June 11, 2011, 1:04 pm

      I have to agree with David. Both of my parents were journalists and the posting of unverified information is criminal. One definition of “libel” is a statement or representation published without just cause and tending to expose another to public contempt. Many of the PA you have put out of business probably do not have the resources to file suit against you. I would worry that someone may fund a suit. You need to check your facts before you write your articles.

      • AuctionWatcher June 11, 2011, 3:12 pm

        I do check my facts and this was a guest article. Thanks

        • AuctionWatcher June 11, 2011, 3:12 pm

          BTW I don’t believe I’ve ever put anyone out of business. Whoever feels they have been wronged, they are free to send and post the proof.

        • AuctionWatcher June 11, 2011, 3:13 pm

          BTW WatchingPA why are you anonymous with an IP from Germany under ? Host

    • AuctionWatcher June 11, 2011, 3:20 pm

      I never said anything about Flutteroo and will see where it’s at in the red flags section & move it possibly, after review.

  • lovemenot June 10, 2011, 12:58 pm

    Irony in this story and doesnt make sense. I commend you on writing this article however I have seen this site in itself destroy penny auctions and blast unproven allegations or even a simple “What if” against penny auctions that may have been good but were destroyed by the simple articles you wrote about them. Consumers in general have not been fair with dealings when it comes to penny auctions.

    This site has pushed for people to make complaints against new penny auctions, by pushing them to the BBB or FTC when in fact the bidder was the problem.

    The industry is flawed in nature, and as long as people lose they will complain, they will chargeback and sites like this will write articles without regard to the damage it causes or actual facts. I agree with the poster above.

    • AuctionWatcher June 10, 2011, 2:52 pm


      I’m sorry you feel that way, but it is not our intention to “blast unproven allegations,” but allegations are just that – unproven, we post our opinions & experiences here. Did we happen to write something about a site you owned that wasn’t true? If so, please let us know and we’d be happy to post a follow up with your response.

  • PA Site Owner June 10, 2011, 1:50 pm

    Thanks for the good read. I am a PA owner who is dealing with much of this myself. Fortunately I did not have massive chargeback issues, but I can see it happening as my site grows and I have more auctions.
    For all the site owners out there…I am working on a way to combat this problem with “winning by intimidation” – A username randomizer that will change their bidder name EACH time they login. Just a thought, hope it helps!

    • AuctionWatcher June 10, 2011, 2:52 pm

      That’s a super idea PA Site Owner, let us know how it goes? Feel free to contact us, as I’d be willing to share this with our readers!

  • Ron June 13, 2011, 12:25 pm

    This is a very scary article. What is the industry doing to combat this band of crooks?
    Can we get some comments from some of the honest sites on how they are dealing with this problem.

    Any further info would be greatly appreciated.


    • Amanda Lee June 13, 2011, 1:00 pm

      Hello Ron! Welcome, I see you’re starting a penny auction site – we’d love it if you checked out our forum & joined (if you’re not yet a member) I agree, this is a serious issue and would love to hear from others on this as well. Let’s see.

      Best to you!

      Thanks for stopping by.

  • Cheetahbids June 13, 2011, 9:48 pm

    The only way we felt we could level the playing field was with our paddle style auctions. If you think about it, every time you go to a regular brick and mortar auction you are assigned a paddle and you hold it up. No one at the auction knows who you are. We have done the same thing on our site. When you want to bid on an item, you have to grab a “random” paddle number for that auction, and we only reveal the winners username after the auction is over. It’s not a perfect system, but it’s our best attempt at keeping it fair.

    • Amanda Lee June 13, 2011, 11:50 pm

      Hey Cheetahbids! I think that’s a good idea – hidden username auctions, I’ve blogged about this in the past, but not many sites have tried this. BargainsandFun was the first, then BidOction (now gone), is it working well?

  • Zellax July 17, 2011, 9:02 am

    Thanks a lot for the wonderful post.
    I would say I agree to every word there.
    but most penny auctions are greedy @ the start.
    they need to understand the importance of adding limits and stuff at the very beginning.
    By the time they decide to do it they have already been scammed.
    Iv tried to reason with a few site admins but my words fell on deaf ears….
    whats the point in complaining when you yourself have given the abusers a reason to abuse you.

  • Info July 26, 2011, 3:21 am

    There definitively should be a database/site that weeds out those fraudulent consumers that all penny auction sites share just like there are sites that have a database of penny auctions that are scam.


  • RP December 3, 2011, 8:53 pm

    I wish that the penny auction pennies2win would find a way to credit the bid packs purchased by the BUY IT NOW feature without the member having to wait for a week. I even send in support tickets when I do a purchase of a bid pack using the BUY IT NOW system so that I might be able to have the use of the bids just like I would if I had won the auction. May be they are trying to get us to purchase more bids because we won’t have the use of the BUY IT NOW bid pack that we purchased since they won’t add the bids to our accounts after payment is made. I hope that they are not trying to force members into doing that.
    This has happened to me several times now and I keep thinking that the owner will figure out that if he is going to have the bid pack available for BUY IT NOW… They need to make sure that if it is paid for at the time of the auction just like a winner would…. That the bid points will be available for immediate use for the member that used the BUY IT NOW to get the bid pack..


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