The Industry Needs a Gate Keeper

The following article is a guest contribution submitted to us by a reader. 

14921251631_057b159c33_kThe Penny Auction Industry will always be suspected of shady dealings. In the history of penny auctions never once has any site owner said, “My site runs shills and bots.” (Editor’s note, except for our “Shillo site” and the few penny auction owners who admitted it behind the scenes), yet in the past 10 years hundreds of sites have been found guilty of exactly that.

It has gotten to the point that no matter what the site whenever you get run-up on an auction you have to wonder if you were actually bested by another bidder or a bot. How do we know if a “Timer” site is not shilling or running bots. We don’t. We just have to trust the site owner. How do we know if a “Random Reserve Auction” site isn’t really just setting the price in the backend and just claiming to be “Random”. You don’t. We just have to trust the site owner. I am not saying “trust” is a bad thing. Everyday consumers make choices based on “trust.”

However, Ronald Reagan once said, “Trust, but verify.” Never have truer words been said in regards to the penny auction industry. The question is, who should be the gatekeeper? Obviously, it can’t be anyone who is bidder. In almost all cases I believe the best type of government is the government that governs lease. In this case, I believe it makes sense for the Department of Commerce and Consumer Affairs to set up a gatekeeper where all penny auctions would legally be required to grant the DCCA access to the sites data where they can personally check all transactions and information on bidders.

How likely is it that the DCCA will ever set up such a gatekeeper? Better odds of winning the lottery. In Brooklyn the saying goes, “How do you know you are going to get screwed over by someone in business? They say ‘Trust me.”

Photo by Keith Cuddeback,  used under creative commons licensing.

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12 comments… add one
  • Bobby James June 2, 2015, 12:41 pm

    I hate to think that, “The Penny Auction industry will always be suspected of shady dealings.” Hopefully, it will grow beyond the damage that has been done by putting cheap software in the hands of people who have no clue how to run a penny auction site or any other business for that matter.

    In respect to the author’s statement, “In the history of penny auctions never once has any site owner said, “My site runs shills and bots.”” That is an inaccurate statement. Miko Lasso admitted it when he ran Bidstick and he continues to admit it and cite it as one of the reasons for his ridiculous prefunded auction model. InfinityBids.com also admitted it (http://www.pennyauctionwatch.com/2012/03/review-scam-penny-auction-infinitybids/). I am sure if I did a little research, which the author does not seem to have done, I will find others.

    The author goes on to compound his error by stating that, “in the past 10 years hundreds of sites have been found guilty of exactly that.” I’m sorry, but I am unaware of any site other than ArrowOutlet.com who “have been found guilty”. As the author himself points out, without access to the backend of the website, it is virtually impossible, except as was done in the case of ArrowOutlet.com, to prove that any timer site is using bots or shills. Classic Timer Auctions will always be subject to reasonable worry on the part of bidders that bots or shills are being used because of the inherent flaws in the financial model associated with Classic Timer Auctions. The Classic Timer sites will always be financially motivated to use bots and shills.

    Now on to the author’s next misstatement, “How do we know if a “Random Reserve Auction” site isn’t really just setting the price in the backend and just claiming to be “Random”. You don’t. We just have to trust the site owner.” I have to assume that either the author’s university education was limited or his understanding/retention from Statistics 101 was severely limited. The concept of randomness and the ability to prove or disprove it is a fairly simple concept. If a site publishes the ending prices of their “Random Reserve Auctions”, a 5th grader could determine whether or not the auctions were actually random given a large enough data sample. It is simple math. So few reserve sites make the claim that they are random since it is so easy to prove or disprove. I can only think of one off the top of my head that does provide Random Reserve Auctions and they do provide all of their data. Why not? So, the only time “trust” is required in respect to Random Reserve Auctions is when a site does not provide all of the data back to the day they opened their doors.

    In conclusion, I find it gutless to not place your name on an article. If you are too embarrassed to put your name on your words, don’t waste the time of potential readers. One of the first things that we are taught is to look at the author to place the words in context and reveal whatever the author’s hidden agenda or motivations might be. You sound like a failed/failing site owner suffering from “sour grapes”. I am sure that legitimate penny auctions would welcome a way to ferret out the riff raff and would be more than happy to have a “Gatekeeper”. Fewer bidders would hear the “it was a glitch” excuse every time they are caught out screwing with the auction on the backend.

    Reply
  • Anonymous author June 3, 2015, 4:36 pm

    Bobby James (and I am sure that is not your real name). Your rambling is not worth a reply, but since I am sitting on the toilet and have nothing better to do I might as well quickly respond. On the whole, no site owner has ever publicly stated they shill or run bots. Siting one example does not refute the expressed idea of the statement. In the 10 year history there have been more than one penny auction site shut down by the District Attorneys office for shill bidding and running bots so get your facts straight on that one.
    Finally, read the following link http://www.cs.princeton.edu/courses/archive/spr10/cos444/papers/L-R-Katkar-Public00.pdf
    I am sure an academic such as yourself after reading this can understand the infered principals I am taking from this article in my assumptions that reserve auctions do not make sense from a seller’s point of view. As for “Random Reserves” I need not bother to explain how the same logic applies. “Random Reserve” site owners are just using psychology to make bidders feel more secure.
    Sorry my bathroom time is over.

    Reply
  • Savannah Kocopelle June 4, 2015, 2:56 pm

    Whoever wrote this article does not seem to know a lot about penny auctions or about statistics. While I cannot speak for other sites, we specifically chose/created the auction models Kocopelle is using to avoid any need for trust or any question of impropriety. Our motto is “Trust the Math”. We never ask you to trust us, we don’t have to. We have made every Deal/Auction that has closed on our site available for public review and will continue to do so always. Our ending prices clearly demonstrate, when you correctly apply statistical analysis, that we are running truly random reserves. To make things even easier for our Members, we plan on producing real time graphs that will make it unnecessary for our Members to even have to do the math. However, that programming task is not at the top of our programming board – new auction types and other innovations are! But, the raw data is and always will be available to anyone who wishes to run the math and verify the statistics themselves. It is easy to earn trust when you run your site with honesty and integrity – and when you ship fast! LOL Although, I do admit we ran a little behind last week as we were putting the final touches on our new Virtual Currency, Fastrack, and the Coin Store.

    Reply
  • Bobby James June 4, 2015, 3:48 pm

    Your statement, “In the history of penny auctions never once has any site owner said, “My site runs shills and bots.”” is not an expressed idea, it is an inaccurate, poorly researched, misstatement of fact. Perhaps, if you did less of your thinking while on the toilet and more research on the computer before you opened your ignorant mouth, you would engender more credibility. As it is, the environment in which you choose to do your thinking is not conducive to accuracy.

    As far as your assertion that “there have been more than one penny auction site shut down by the District Attorneys office for shill bidding and running bots”, please enlighten us as to the sites. First of all, to the best of my knowledge, a District Attorneys office has never shut down a penny auction site for shill bidding and running bots. Second of all, your initial statement was that “hundreds of sites have been found guilty of exactly that.” Another inaccurate, poorly researched misstatement of fact.

    While some site owners, such as Avi Solomon from UBIDWIN.com – https://www.youtube.com/watch?v=1sZHw_7zU3c – a must listen – the whole thing is amazing but particularly @ 7:55 where he states, “Americans tend to be sometimes not so smart and they need things explained to them” – think we bidders are stupid, we are not. And the concept that I would find any support for your ignorant comments regarding Random Reserves from what you judge to be the “inferred principals” contained in an off topic article leaves me speechless. Simple math and simple statistics govern the provability of randomness. But good attempt at dazzling with bullshit to hide ignorance.

    Reply
  • Anonymous Author June 4, 2015, 9:52 pm

    http://blog.seattlepi.com/boomerconsumer/2013/01/10/state-files-action-against-rigged-internet-penny-auction-site/

    Read the paragraph under “Restitution”

    Now that you can see at least three have been shut down by DA and if you do further research you will find that many more were exposed by bidders, bloggers, and split and run. PAW has exposed a number of PA sites itself.

    Now regarding “Random Reserves” I visited Kocopelle’s site. I cannot find anything that shows me evidence via math that her auctions are truly random. I was looking for history of all auctions, the ranges they were posted at, and the end prices. Perhaps, you or Savanna Kocopelle can provide me with a link or explain how I am able to do the simple math to have proof that her site is “random” and not just setting bids in the backend.

    Reply
  • Savannah Kocopelle June 5, 2015, 11:23 pm

    Every single Deal and Auction that has ever closed on our site, along with the ranges, the end prices, micorsecond time stamps, etc. are all available to our Members. The math is simple. Perhaps the statistical methods are confusing to you. We however are absolutely confident in the Microsoft function that we, along with other major corporations, use to generate our random ending prices. We did not take Microsoft’s word, we tested it extensively and verified for ourselves the randomness of the function.

    Further, once the random ending prices are generated by the Microsoft function, they are entered directly by the function into the database in a hashed encrypted format (meeting PCI Compliance Standards) so that they cannot be read or changed by anyone; not that anyone has access to the database. We did not want to place our employees in a potentially difficult situation if a beloved Member asked them if an auction was getting close to ending. They can truthfully answer, “I don’t know.” They don’t have access to the database and, even if they did, NO ONE is able to decrypt, read, or modify the ending price of any auction. We are dedicated to doing everything concievably possible to ensure a fair and level playing field for our Members at all times and reducing or eliminating the NEED for trust, down to our need to TRUST our employees. Can’t tell what you don’t know. Can’t change what can’t be changed. The money that would/should normally be spent watching after that particular detail can now go towards more “Bonus” Deals for our Members.

    As far the article that you have linked to, it states that the Washington State Attorney General’s Office filed a lawsuit against ArrowOutlet.com and they reached a settlement. They were not found guilty. A second site, PennyBidr, reached a deal with the same AG’s Office after they were accused of using bots/shills. They were not found guilty. A third unnamed site was stopped, whatever that means, for failing to ship. They were not even accused of using bots/shills. In all three cases, none of them were “shut down by the District Attorneys office for shill bidding or running bots. I think you may need to “get your facts straight on that one.”

    I am not sure if you understand what a consent decree is so, for your edification, here is the definition for wikipedia: A consent decree is an agreement or settlement to resolve a dispute between two parties without admission of guilt (in a criminal case) or liability (in a civil case) and most often refers to such a type of settlement in the United States.

    Your original statement was that “hundreds of sites have been found guilty” of running bots/shills. To my knowledge, no one has been found guilty of that heinous act and most certainly not “hundreds of sites”. Not only do you not sign your work or do your research but I have to agree with Bobby James, the majority if not all of your statements on examination are found to be incorrect. With this kind of irresponsible publishing you are only harming an industry that some of us are working very hard to bring past its shady past. Shame on you.

    Reply
  • Anonymous. Author June 7, 2015, 12:49 am

    Savannah, I have spoken to many bidders on your site who have lost big. None of them believe your auctions are honestly random. Even if they are (which I doubt) do you deny that it is still easy for you to game your auctions in your favor by simply having a higher price range. You talk about being knowledgeable. Of the penny auction industry. If you had any knowledge of the industry you would have known that pennygrab has the best model for a reserve auction site where prizes are awarded throughout the auction at different benchmarks. Secondly, you would have known that reserve auctions are much less popular than Timer auctions. Thirdly, you would know that a business needs to advertise in order to grow. I can’t seem to find your site on any adwords. Only place it seems you advertise is on PAC and your constant posts on multiple forums. Finally, if you did any market research you and all these other site owners would know the industry is in a decline. To invest in penny auctions is like betting that the Cubs will win the World Series.
    Now, let’s address that hundreds of sites have been proven to be running shills and bots. If this is such an honest and descent industry why does it have such a bad reputation? Why have so many bidders claimed to have been screwed? Why have so many people posted proof of evidence of foul play at work with so many sites. Why is it that after 10 years penny auction bidders are burned out and many have left never to return. Why is it that any reputable company such as Amazon, ebay, Wal-Mart, and etc… have not bothered to compete in this industry? Why is it that most site owners if not all, are some loser living in their mothers basement?
    Savannah, I look forward to your response.

    Reply
  • Bobby James June 7, 2015, 4:18 pm

    Kocopelle, thanks for saving me the trouble of stating what you did in paragraphs 3 -5 of your post above. Anonymous Author, you do not seem to have an appreciation for language; either the words that you write or the words that you read. I wonder how you would feel if you were the Attorney General of the State of Washington and someone referred to you as a DA (District Attorney) – extremely insulting and incredibly inaccurate. Also, I am sure you are fully aware of what the words “guilty” and “hundreds” actually mean, You need to become more aware of the words you choose to express yourself in writing and you need to take a reading comprehension class.

    Moving on to math, if you don’t know what you are talking about, please shut your yap. Take a statistics class, run the math, make your observations, and be prepared to defend them. Your AFTER THE FACT apologies have become very predictable and meaningless and, if you keep on spewing BS at your current rate, you’re going to have to personally petition for an extension to Yom Kippur. There won’t be enough hours in one day for all of the atoning you will have to do.

    Reply
  • Bobby James June 8, 2015, 1:58 pm

    ROFLMAO. Anonymous Author, just saw your latest comment which was approved after I submitted my last comment.

    Here is some math that I know even you will understand:

    Avi Solomon = Anonymous Author = sour grapes from a discredited site owner attempting to bash their betters

    Avi, I am sorry to hear that you have to live in your mother’s basement at your age. I hope things will get better for you soon. Perhaps you should look at expanding beyond the “Classic Timer Auction”, the auction type that you are currently running on your site, since time and financial modeling prove that it does not work without the use of bots/shills unless you have an extremely large and active membership and are able to run hundreds of auctions a day with MANY bidders in each auction. Ripping off BigDeal’s Loyalty Bucks only makes the financial model of your site worse. Add to that the “junk” factor of the crap you have in your store and the fact that your ecommerce software is laughable – the outcome is predictable.

    I noticed that despite all of your conventional marketing/advertising, your brief attempt at reserve auctions did not go so well. Maybe your podcast idea will work better for you; however, I would suggest becoming a little more educated about the industry before wrapping up your current venture and moving onto the podcast experiment. I am sure that the response to your “Dumb American” youtube video made you aware that yahoos can get attention so that might be the better venue for you to express your talents. By the way, were you able to make the comment, “To invest in penny auctions is like betting that the Cubs will win the World Series.” because you are only an employee in UBIDWIN rather than an investor?

    It is obvious from your comments about PennyGrab/Kocopelle that you do not have a clue about the functionality available on Kocopelle. I know that Savannah has publically stated that she bans/blocks the IP of all known site owners. It is fairly obvious she has blocked yours because you do not seem to have a clue.

    Avi, I don’t believe anyone has said that this has been an honest and decent industry. I assume you meant decent rather than descent – I have never tried it but it must be difficult to type on on an iPad while taking a dump literally and figuratively. Unfortunately, the availabilty of cheap boxed software lets any Tom, Dick, or Avi start a penny auction site. The damage to this industry from the lowered bar has been astronomical. Hopefully, the new breed of sites, like Kocopelle, will help to change that sad state of affairs.

    Reply
  • Savannah Kocopelle June 11, 2015, 4:01 pm

    Bobby James, you are right, Avi Solomon has been IP blocked from our Site from day one. It is obvious from the Anonymous Author’s comments that it is not just the Penny Auction industry he does not understand but he is completely unaware of what functionality we have on our site. From our perspective it is no longer worth our time commenting on anything that he has to say since he is speaking from an utter lack of knowledge. I would however have to revise your equation to:

    Anonymous Author = a discredited site owner attempting to bash competitors = not worth any further response

    Thanks for your support! We know that our Member are very happy and loyal and we continuously strive to tweak, innovate, and make their experience on Kocopelle.com the very best. Please check out the new Progressive Timer Auctions that we are launching today.

    Reply
  • Avi Solomon July 7, 2015, 11:26 pm

    Savanna, I am not sure what you mean I have been blocked from Kocopelle. I am able to access it. I just have no need to. I do not take your site serious. I have spoken to many bidders about your site and they all say the same thing, Winning is impossible and the site is too confusing.” Let’s do each other a favor and please stop with this war of words. It is very unprofessional.

    Reply
  • Savannah Kocopelle August 26, 2015, 5:52 pm

    Avi, I could care less as to whether or not you take Kocopelle.com seriously since you have been IP blocked and, as a site owner, would never be allowed to be a Member of Kocopelle. If the comments in the article and the other comments attributed to Anonymous Author are indeed yours, they indicate a complete lack of knowledge about Kocopelle which would coincide with your inability to either view Kocopelle or understand it. Further, it is fairly obvious that you did not take your own site seriously since it is closing with a giant cloud over it which is unfortunate for all penny auction site owners.

    Kocopelle.com is doing very well, thriving in fact, and has an excellent reputation and extremely loyal and happy Members with new Members joining on a daily basis. Since we publish 100% of all ended Deals and Auctions, it is fairly obvious that people do win and they keep coming back for more because they know that they can count on a level and fair playing field. Confidentiality is never breached. Backroom deals never occur. Privacy is always respected. To us, it is simple; we treat our Members the way that we would expect to be treated; fairly and with top-notch customer service. It is not rocket science but it is our pleasure.

    Finally, I assume, based on your comment above, that you are the Anonymous Author. My comments to this article were not directed at you but to the Anonymous Author and his/her obvious lack of knowledge and understanding. I was unaware that you were waging a private “war of words”. I do not engage in that kind of activity. Best of luck to you in your new endeavors. Hopefully, you gained some valuable business experience from your serious missteps in the penny auction industry.

    Reply

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