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Control Your Money - The Dangers of Penny Auctions

OK, I have to say this.  I've been seeing a lot of ads for these penny auction sites.  You know, the "get a brand new big screen TV ($800 retail) for $23.96" sites.  They make it sound so easy to get things so cheap - like it's too good to be true.  Well it is.

Here's how it works:  you pay to get bids.  The price usually comes out at about $0.60 per bid (you buy them in lots of 100 or so).  The bids only go up in one penny increments.  So that TV that sold for $23.96 required 2,396 bids.  At $0.60 per bid, that's $1,437.60 the site made on the TV (plus the $23.96 you paid for it).  Somebody's making out like a bandit, but it's not you.

Basically, these sites are gambling sites.  You pay money for a chance to "win" stuff.  However, just like all gambling places, the house always wins - even if you win the auction.  If you lose, well you're just out a few bucks - just like playing the slot machines.

So, here's my view of penny auction sites:  Their deals are not deals and there are far more losers than winners.


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