Cheap auction sites…. beware

Don’t be taken in.

You may see ads around for cheap auction sites selling goods for 90% or more off the RRP. Be careful with these sites; the owners are making quite decent profits, effectively selling each item for well above cost.

Let’s take an example: This is one site (which I will leave unnamed) for which the bidding process works thus: All goods start at $0.01. Any bid increases the price by $0.01 and costs some number of “credits”, where the number of credits depends on the price of the item. For something like an iPad, each bid costs 5 credits. You can buy 1000 credits for about $90, so each credit costs $0.09; that bid for the iPad you wanted costs $0.45. (Payments for bidding credits are nonrefundable.)

Let’s say the iPad eventually sellls for $30. That’s less than 5% of the purchase price, right?

But to reach that price required 3000 bids to be placed at $0.45 each. The amount raised from the bidding price is $1350. The auctioneers get about twice the price of the new item.

Whoever wins the auction probably gets lucky. Everybody else just blew a wad on bids and received nothing. It’s basically a scam.

I was (sort of) taken in by this as the way that auctions work isn’t made clear up front. Fortunately the Commonwealth Bank declined the charge and I wound up paying via PayPal, who have an excellent disputes procedure. (Not so excellent if you’re a vendor.) I posted a request for a refund to the site a couple of days ago, so I’m about to lodge the dispute, which I expect will be granted. I’m also going to suggest to PayPal that they cut this particular vendor off…

Comments policy

In general, any posting which does not actually refer to the contents of the article to which it is replying will be tagged as spam and deleted.

I’m quite aware that this blog is pretty much untenanted. It’s not surprising that essentially all comments I see are spam. That doesn’t mean I’m going to permit comments of the “This blog is great!” variety when is self-evidently ISN”T all that great…