Washington State

Office of the Attorney General

Attorney General

Bob Ferguson

Online auctions remain popular with buyers and sellers alike.  Before you buy or sell on an Internet auction site, take the time to learn about the site you are using – review the auction site’s rules, terms, and conditions about payment methods, making bids, and resolving disputes, and how the site will protect your personal information.

The Federal Trade Commission has information available for buyers and sellers.

Penny Auctions

“Penny auctions” have increased in popularity.  Unlike traditional auctions where only the highest bidder pays when the auction is over, in a penny auction everyone pays to bid and each time they place a bid.

 Penny auctions s are time-limited, usually starting with several days.  But as the time ticks down to a few minutes or seconds, each bid extends the auction by a few more seconds and increases the product purchase price by a cent.  In this fashion, continued bidding prevents an auction from concluding until no more bids are placed.  When the auction closes, the individual who placed the last bid must pay the final price of the item, plus shipping and handling.  That’s on top of whatever was spent on bids.  So, if you are the winning bidder for a laptop computer at $100, and you placed 150 bids at $1 each, you will end up paying $250 for the laptop, and more for shipping and handling and other transaction fees.  If you placed 149 bids for the laptop, you lose $149 and won’t be able to purchase the laptop.

Some fraudulent penny auction sites have used “bid bots” or “shills” to make bids on behalf of the website.  These websites use the phony bids to artificially increase prices and they sometimes make it impossible for bidders to actually win.  These fraudulent websites make money off the bids, not necessarily by selling anything.

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Online Auction Tips