Consumer Complaints Against Penny Auction Websites Rise
BOSTON (CBS) - Penny auction websites are more popular than ever, offering a chance to by new electronics and designer goods at wildly discounted prices.
But some people claim the sites may actually be breaking the law, luring you into spending money with no guarantee of getting any product at all.
Penny auctions promote great deals on hot merchandise. For example: brand new iPhones for $15, digital cameras for $3, and Prada sunglasses for $46.
But as the number of these websites increases, so has the number of consumer investigations, lawsuits and complaints.
The Better Business Bureau has gotten more than 1,500 complaints in the last year.
WBZ-TV's Paula Ebben reports.
"We urge extreme caution with consumers," says Becky Maier of the BBB. "We urge that consumers understand that it's very hard to actually win the products."
Two class action lawsuits have already been filed in federal court. One of them is against Quibids and other penny auction sites, claiming they are engaging in illegal gambling and operating a lottery. Quibids strongly denies those charges.
"I know for a fact this is not gambling or any illegal lottery," says Jill Farrand of Quibids. "What I would call it is entertainment shopping."
Quibids points to satisfied customer Pat Brown, who got an iPad for $150, an iMac computer for $1.60, a flat screen TV, and many other products, all by bidding on the Quibids site.
Here's how it works: The starting price of an auction is zero and bidders up the ante a penny at a time. Each time they bid, they're charged about 60 to 75 cents.
So you can win the items for a cheap price, but you could shell out thousands of dollars for bids.
"I probably spent $4,000 in bids in the past five months, but on the other hand I've won probably double that in merchandise value," says Brown.
But the Better Business Bureau says complaints keep pouring in. They include getting charged more than $50 for a "free" trial offer, not being able to get ahold of anybody at a company to dispute charges, and being lured into spending a lot of money.
"They're just sucking dollars out of your wallet," says penny auction shopper Bill Larson.
Larson spent $200 dollars to win two $50 gift cards and says he never even received the cards. "You don't realize it until that money is gone how much you've lost," he says.
The better Business Bureau says some penny auction sites operate well and recommends that before you get started, do your research and play frugally.
If you think you got ripped off by an online penny auction, contact the Better Business Bureau, which may be able to get you a refund.
