Monday, August 23

The scam of penny auctions:

Today I was motoring around Facebook, clicking status and taking names, when one of those sidebar ads caught my attention. They did it by appealing to my man gene. There are three ways to appeal to someone’s man gene. You can show him a woman in a seductive pose, you can show him a frosty mug of beer, or you can show him a BBQ Grill the size of a Chevy with wheels and tires and enough gleaming stainless steel to blind low-flying birds. That last one is what they used on me. Just below the picture of Grillasarus Rex was the following text.

Click here to see how our unique website can get you your dream BBQ Grill at up to 95% off retail price. No joke.

Wow. Ninety-five percent? That’s a lot, isn’t it? With my man gene fully stimulated, I clicked on the ad. I was directed to a website named Brightly colored pictures of vast warehouses of items, one of which just HAD to be Grillasarus Rex, were plastered across the page, and bold type proclaimed that they offered fantastic prices on brand new items because they bought from warehouse closeouts and overstocks. Furthermore, the text assured me, I could trust this because it’s been COVERED ON THE NEWS. (This, dear imaginary reader, is where my man gene was wrestled to the ground by my suspicion gene, tied up, and stuffed in to a burlap sack closed with duct tape.)

There was a prodigious array of logos from major news outlets across the top, and right dead center of it all was an embedded video showing some generic local newscast (I think I figured out it was from the Atlanta area) covering auctions. Only, it was covering auctions of police seizures and repossessions, and didn’t mention a single thing about closeouts or overstocks. The point was made during the report that the items were NOT new, they were just LIKE new, which again differed from the text.

(Here’s a note to all you would-be scammers. When you slap up a video that has nothing to do with what you’re advertising, it’s counterproductive. We will notice.)

So now, I scroll down further and see a panel of auctions that just closed (allegedly), showing me screen names that had bought a Honda Civic for $1700 and change, a Macbook Pro for $120 and change, etc., etc. Pretty impressive stuff, if it was true at all. Under that were some more auctions that were just about to close. For the same sort of items, at the same sort of price. Clearly the pressure was on. Bid, damn you, BID!

Luckily my man gene’s muffled screams could not be heard through the burlap sack. I scroll down a bit further and see two things of interest. I’ll tell you about the second one, first. At the very bottom of the screen was the now-standard disclaimer of all Internet scam websites that vouch for their products by saying the news media has covered them. We have no affiliation with the companies identified by the logos above. They did not publish anything about our specific service. However, the subject of penny auctions was featured.

So, let me get this straight. I can trust you because the news media has covered you, only…they haven’t? Charming. Right above this disclaimer from hell was a list of names and beside each one it said “Name Goes Here invested $159 and won auctions worth $SomeHugeAmount.” Aha! The scam shows itself in the light of day!

Here’s how these penny auction scams work. They get your credit card and tell you that you’re “buying bids.” Get that? You’re not bidding on items, you’re not buying items, you’re buying bids. Once you’ve bought some bids, the auction site will bid for you on items, bumping the price up a few pennies at a time. What they SAY will happen is, as soon as there is no available bid for a given item, the auction closes and the last person who entered a bid on that item, wins it. The problem is, you have no control over what item you’re bidding on, and you have no control over how long the auction goes on. It’s not time limited, as legitimate sites like eBay are, it continues to run until it runs out of bids.

You could win something you don’t care about at all (a number of people complaining about on scam alert websites said they “won” gift cards worth between $4 and $10), or you could pay the regular retail price for an item if the bids continued to come in. It’s all very vague.

The one thing that’s NOT vague is that YOUR credit card will be charged $159 for a supply of “bids.”

There are two lessons for us to learn here. First, always be skeptical. Look over the entire site first, and scroll down to the bottom where the disclaimers live. Any time an auction website wants money before you can bid, that’s a bad sign.

Second, just because the ads are repackaged into friendly little Facebook sidebar nuggets that look just like the official bits that come from Facebook itself means precisely nothing. Those ads are PACKED with scammers who want a piece of Facebook’s 500+ million users.

Make sure one of them isn’t you, okay?


Anonymous said...

Thank-you Mr.Lautenschlager,
I found this blog to be very informative as well as correct I believe judging from my experiences with Swipebids. I think one of the greatest deceptive practice for any website like this is to not disclose any information at all through the live auction pages that there is a charge for membershipof the $150 or $159 now ripped from your wallet. Why hasn't the FTC shut these people down long ago and why do banks and credit card companies continue to play along with this carnival sideshow?

Anonymous said...

Thanks for your informative post. I was browsing through the CNN website, when I noticed an advertisement in the sidebar proclaiming a way to get an ipad for an insanely low price. As an avid reader and student, I have been hooked, gutted and fried the instant I saw my first ipad ad, but couldn't bring myself to spend $500 on one when I could get a netbook with 300GB hdd, a webcam, and multitasking abilities for the same price. So I was very interested in checking out swipebids and I never suspected that it could be a scam. I came upon this page by chance when I wanted to check out when swipebids was founded, since it appeared to be a very new thing, considering the lack of buzz (in the real world, not cyber) about this site. I'm glad I found your blog.

Anonymous said...

Great blog!

I like your writing style. Not all penny auctions are rip-offs, and SwipeBids (now SwipeAuctions) has a class action law suite against it, filed August 27th, 2010.

You can contact the lawyers handling the case at

I administrate a site called We verify legitimate sites and list scam sites. We donated SwipeBidsVictims (domain, hosting, design, etc) to help victims find legal recourse.

I am not aware of any legitimate sites auctioning off a Grillasarus Rex, however there are a lot of other nice man-items. =)

-With gratitude,
Nicholas Boccio

Hong Kong Willie said...

Facebook ,Is Facebook knowingly involved in Fraud. Prison Time ,possible for Facebook executives and Swipebids executives.

Does Facebook Know if we Know. Ask Bank of America,see what they say. If you and I did this we would be in Federal Prison like the boys of the mortgage fraud scam.

The FBI I know has their Handfuls with fraud,but this is a Big Fish. The reco act was made for this type of crime. They got AL Capone,Jimmy Hoffa,soon to be Jesse Willms Owner of Swipe Bids .

Anonymous said...

I believe SpeedyBuys is a direct copy of the old Bidhustle penny auction now known as TravelBidz. PennyAuctionWatch has blogged about a virtually identical site called JumboCloseouts and I have found one at ZaxDeals that is yet another clone. All have the same registration two page process that are very similar to the former sign up pages used by SwipeBids now know as Swipeauctions with nearly the same amounts charged for membership. SwipeBids was the first penny auction I know of to claim that the $150.00 charged for a membership was normal in this industry to justify all the surprise charges made to peoples credit cards and banks. Are all these penny auctions from the same group of individuals trying to exploit or extort people on the internet? You tell me!!
SwipeBids aka Swipeauctions
Bidhustle aka TravelBidz
Be very cautious while visiting any of these penny auctions and be sure to do your homework. If you find conflicting or vague contact information in the Terms of Service or Privacy Policy you should further investigate with a web search before filling in any of your personal information.

rico menyox said...

nice post.

Greegor47 said...

How many of these "penny auction" scams are using the Scriptmatix software that
was originally designed to simulate shill bidding? These scams seem to think
that calling themselves "entertainment auctions" in the fine print helps them legally?
Even if the auction company was stupid enough to pay "full retail" and bought
a TV for $1000, and even if they sell it for only $20, they collected 2000
bids at .60 each or $1200 worth of bid fees for it.
If it "auctions" for $100, they collected SIX THOUSAND dollars worth of bid fees.
If it "auctions" for "half price" at $500, they collected THIRTY THOUSAND
dollars worth of bid fees.

Quibids and most other clones of it use Scriptmatix software.
The British Office Of Fair Trade got after Scriptmatix because
of the fraudulent or shill bidding aspects designed into it.
Yes, it’s a SCAM! I watched Quibids sell (supposedly at least)
a $400 item for 17.72 so they got 1772 bids (raffle tickets)
at .60 each so they? collected 1063.20 for that item.

How this evades GAMBLING laws I do not know. A raffle that
profitable should ONLY be allowed for a charity.

You'd think that when they got caught cranking out
fake testimonials and fake "news reports" that
their operation would have been out of business..

Before Matt Beckham CEO'd Quibids, he CEO'd Swipebids.
Jesse Willms, the famous Multi-millionaire Canadian scammer
Owned SwipeAuctions formerly swipebids.

How many of these penny auction scams are secretly
or partly owned by one giant "shell company"?

What is the connection between
Matt Beckham and Jesse Wellms exactly?
Or Jesse's business partners like Nolan Paquette?
Or Jesse or Nolan's dba's or shell companies?
They also use the dba JDW Media LLC, out of Idaho &
Coastwest Holdings Ltd / LLC as well as shell companies
Gillmap Limited County Durham England and
Farend Services Limited Nicosia Cyprus.
Wellms and his companies have registered a
huge number of web domain names.
I'm guessing their intention is that if
any of these scams are shut down, they intend to
start several more, in a sort of shell game or
leapfrog game as a means to perpetuate the scams.