FTC Cautions Consumers on the Pitfalls of Penny Auctions

Online penny auctions may offer deals, but they can also pose problems, as the Federal Trade Commission warns in a new consumer alert Online Penny Auctions: Nothing for Something?

Penny auctions often charge a substantial fee just to register, and you have to pay each time you place a bid, whether you win or lose. For example, your $50 winning bid for a camera might seem like a bargain, but if you placed 200 bids that cost $1 each, your cost will actually be $250 – plus shipping and handling, and possibly a transaction fee. Many people have experienced late shipments, no shipments, and shipments of lesser quality than advertised. You also have to be wary of hidden costs, and what options you have if something goes wrong.

The FTC, the nation’s consumer protection agency, encourages consumers to learn how penny auctions work, and how to recognize the pitfalls before it’s too late.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.