In the ads for penny auction sites like QuiBids, you hear of bidders who won cars, computers, TVs and other pricey items for just a few dollars. Curious about how these sites worked, our investigative in-laws at Consumer Reports recently scrutinized them and found that while the one winning bidder might get a good deal, you’re more likely to spend a bundle to end up with nothing.
With their low-rent advertising and seemingly outlandish success stories of people buying vintage cars for only a few dollars, so-called penny auction sites like QuiBids.com and Swoopo seem too good to be true. News coverage on these sites appears to be divided — between labeling them retail crack and covering the latest bottom-dollar big buy — so we figured it wouldn’t hurt to ask the Consumerist hive mind to see if any of you have had first-hand experiences with penny auctions.
We often receive e-mails from readers wondering whether this or that penny auction site is an awesome way to kill time and get cheap iPads, or a scam. Back in 2009, we looked at Swoopo, and penny auction sites have proliferated since then. The sites differ somewhat, but the business model is always the same, with users placing prepaid bids, and the auction site collecting far more from all of the bids than the retail value of the item. It’s like a very lucrative, for-profit raffle.