Advertising on TV, Australian Online auction websites are offering iPads for $24, 50-inch Samsung TVs for $85 and even a Honda Civic car for $1800!
This type of auction, in one form or another, could be on its way here, so be careful or you could end up spending way more than you bargained for.
Some users of the sites - which claim to offer up to 95 per cent off the retail price - have reported that they maxed out their credit cards within minutes, while another user said they churned through $50,000 in a fruitless effort to grab a bargain.
These "penny auction" sites aren't your run-of-the-mill auction platforms such as eBay, the key difference being that you have to pay about 60 cents per bid and, while the last bidder gets the goods at the impossibly low price, everyone else loses money. The higher value the item, the more frenetic the bidding.
Although the idea is relatively new and some overseas sites have Australian portals, consumers appear to mis-understand how the 'auction' works."
On one site for instance, each bid costs 60 cents and users are able to buy packs of 45 to 800 bids. Users then bid on the items and the last person to place a bid before the auction expires gets to buy it at the listed price.
Every time a person bids, the auction price goes up in small increments but only one person gets to buy the item for that cheap price. All the others who have bid lose their money.
The site allows people who miss out on the item to buy it at full retail price minus the amount they have spent on bidding so far. But most don't do this, and the site Is able t make thousands of dollars from one relatively low value item just from all the losing bids.
Some of the penny auction sites are more upfront about the terms and conditions than others, but consumers have complained that they were enticed with "free" registration, only to have their credit cards immediately debited with the cost of a bid pack.
"They say we can join for free. I had to pay to get in one bid. I had my credit card maxed out in less than two minutes, plus I had to pay an extra service fee just so I could join," one user reported.
“Although the successful bidder will often gain an otherwise expensive item for a fraction of its retail value, potentially thousands of bidders will gain nothing while the auction site retains their spent bid credits," Consumer Affairs said.
