Vancouver Island’s Better Business Bureau is warning consumers to use extreme caution when taking part in any online “penny auctions.”
Penny auctions offer chances for bidders to “win” items at low prices, but many use a complicated bidding process which ends up costing a bidder more than they intended spending.
"The idea is that you're going to end up getting a great deal, however, you still have to pay what you bid," said Rosalind Scott, president and CEO of Vancouver Island BBB, which is based in Victoria. "So you can end up spending a lot of money and getting absolutely nothing."
Many sites require a user to set up an account and purchase bids with a credit card. Bids can cost less than a dollar and are sold in bundles. The user then places the bids on items, the price for which goes up incrementally as others bid.
So even if a bid is used to raise an item’s price by a penny, that bid still cost the user anywhere from 50 cents to a dollar. And in the end, even if a user doesn’t win the item, they must pay for the bids placed.
The BBB agencies across North America have received a total of 338 complaints so far in 2013 related to online penny auctions, which now hold a rank of 31 out of 84 most complained about industry categories.
"You get ones that fall into the shady penny auction category where they're charging all kinds of fees and doing all kinds of things that really aren't very ethical," Scott said.
To avoid being scammed, the BBB recommends researching penny auction sites at bbb.org, reading the fine print carefully, researching how much items cost before bidding and keeping an eye on credit card statements.
The BBB also advises those who have run into trouble with penny auction sites to file a complaint by visiting vi.bbb.org or calling toll free 877-826-4222.