The discounts offered on penny auction sites are tempting, but the Better Business Bureau (BBB) warns bargain hunters that they should stop and do their research before making their first bid.
Most commonly with a penny auction, users must set up an account and purchase bids with a credit or debit card; each individual bid may cost less than a dollar and are often sold in bundles of 100 or more. Every item has a countdown clock and as people bid, the cost of the item goes up incrementally and more time is added to the clock. Even if you don't win the item, you still have to pay for the bids you placed which can add up over time.
"The BBB encourages online bargain hunters to do their research," said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. "Unlike typical auctions, unsuccessfully bidding on an item through a penny auction will still cost you money."
Before making your first bid on a penny auction:
Research the penny auction with BBB first. Not all penny auctions are created equal and BBB ratings on various sites range from A- to F. Always research the penny auction site with your BBB at Read the fine print carefully. Before providing any personal information or signing up for any "free" trial with a penny auction, read all of the fine print carefully on the website. Pay close attention to details on signup and annual fees, minimum bidding requirements, maximum prize amounts and how to get a refund. Know what you're buying. Before bidding on an item, research how much it costs elsewhere and keep track of how much you're spending on bids overall to see if you really are getting a good deal. Complain to BBB if you feel you've been ripped off. If you feel you've been misled by a penny auction site, file a complaint with your BBB. BBB has assisted customers in resolving their issues, including getting refunds. If the business does not cooperate, your complaint will still be included in the company's BBB Business Review and serve as a warning to others. To find businesses you can trust, visit www.bbb.org
