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Maybe it is not the best place to ask a question like this but I could not find a better place to ask it so here it is. You probably know about pennyauction sites like Madbid, Dealdash etc. On every site you have to buy a credit package which you can use then in bidding. My question is why can't you just deposit some money in your virtual wallet on the site and use real money for bidding instead of some credits. Is it because that way it's harder to keep count how much you really spent or there are some legal issues?

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    "Bids" are the main source of revenue on these sites, and, just like with all products, they give you a cheaper per-bid rate the more you buy. They also (probably) want newbies to buy a big bid package upfront (by tempting them with lower prices), instead of just buying a few bids at a time. – barrycarter Nov 19 '14 at 13:53
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Its a trick so that you don't feel like you're spending money when you bid since the bids are in credits, not dollar amounts. This is especially true when there is not direct one to one match with a dollar and credit (1 credit might actually be 3 cents)

  • That's what I thought also, and seeing that more people vote this answer up I decided to accept it. – apreg Nov 23 '14 at 20:02
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I think you should evaluate the value of these so-called "penny auction" websites very carefully.

Going to a random site, madbid .com, (which is British with UK prices, but it works just the same with US prices) they claim that someone has bought an iPod Touch 64GB for £21.18. It is £249 directly from Apple. Sold for £21.18 means there were 2118 "bids". I'd have to log in to their site to find the cost of a "bid" for packages, but you can multiply the cost of a single "bid" by 2,118, add another £21.18, and you'll know what all "bidders" trying to receive this item paid - I'll bet the total is substantially more than £249.

People taking part in these scams obviously convince themselves that they are the "clever" ones who will get an item cheaply. Apart from the possibility that a single "bidder" can easily make more bids than the value of the item, if you think you are more clever than everyone else, you are kidding yourself. (If you think you are indeed more clever than everyone else, go ahead and donate your money to these companies).

The "packages" are most likely designed to give you the false impression that you get some value for money. Years ago when I checked a single bid was £1, but in bigger packages the bids would cost say 50 pence. They also want many bidders to make sure the number of bids will be high (although there is nothing other than the website's honesty that prevents them from automatically adding bids if an item would otherwise sell too cheap).

Just to clarify: These are not auction sites. In an auction, the highest bidder pays the price they bid, usually plus some commission (on eBay, the commission is paid by the seller), and gets the goods, while everyone else keeps their money. In this "auction", every bid costs money, and by increasing the bid by one penny each time they make sure there are usually thousands of bids. (They also offer the products at a "reduced" price if you don't "win" the auction; the reduced price is substantially higher than buying from the manufacturer or any reputable retailer directly).

  • Thank you for your warning. You are right, I'm already aware of these things. – apreg Nov 23 '14 at 20:00

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