If you do an internet search for “penny auction scam” you’ll get thousands of results on the topic. As we talk about in our guide, many of the people “reporting” that penny auctions are scams are simply unfamiliar with (or misled about) the penny auction process. Others have legitimately been cheated out of money. Let’s talk a bit about penny auction scams.
So when do you know whether a ‘report’ is a result of a misinformed user and when it’s a legitimate case of deception or fraud? It’s not always easy to tell. After reading (literally) hundreds of forum posts about penny auction scams, it seems that the biggest complaint is simply a result of false expectations. While many penny auctions inform users of ‘how it works’, they also promise the world with “HUGE SAVINGS” claims. So when users buy bids and lose auctions, they get extremely upset because the ads and marketing promotions made it sound like everyone was winning (which, by definition, cannot happen).
So, is it irresponsible of the penny auctions to make outrageous claims in their marketing efforts? Well, that’s up to each person’s beliefs but penny auctions certainly aren’t the only industry which makes outrageous and unrealistic claims in promotions.
For example, if Johnny Onthespot says a company tricked him into buying $75 worth of bids, and he didn’t win anything with it, this should indicate that dear old Johnny probably didn’t do much homework. This isn’t typically representative of a genuine fraud claim, and the penny auction isn’t necessarily to blame.
A situation that may warrant further investigation might be if Johnny claimed he won an item he never received (these claims are common as well). Non-shipped items are proverbial big red flags. This can mean the company is either struggling to make ends meet, that they’re experiencing inventory problems, or worse, that they’re a deceptive organization.
Last month’s post on researching penny auctions will give you some good ammo for assessing penny auctions and what to keep an eye on. For a more comprehensive overview, be sure to download our free guide.