Why do some pay per bid auction sites cheat?
May 27th, 2010
Many pay per bid sites have been accused of bots and shill bidding including Joxed.com, SwipeBids.com, CrayZbidZ.com, PennyBiddr.com, For10Cents.com, BidTent.com, TdBids.net, SoMuchCheaper.com, Bid2Play.co.uk, Biduh.com, WinkBid.com to name just a few. The practice is absolutely rife! The newer and smaller the site it seems the more likely the site is practicing this deplorable behaviour.
What is Pay Per Bid?
Pay Per Bid auction sites simply charge users to make a bid or take some sort of action. The best known pay per bid auction models are penny auctions (countdown auctions), reveal the price and lowest unique bid auctions. All these auction types allow the winner to win the auctioning product for a fraction of its retail value…even 100% off. The tiny auction value is essentially paid for by the value of the bids sold. But if there are not enough bids sold then the seller risks losing a bundle…which is where part of the issue arises.
What are bots and shill bidding?
Bots are simple programs that place fake bidders into an auction if a certain criteria is not met. For example, in a penny auction a bot might place fake bids if the bidding price has failed to reach a predetermined level. To genuine bidders it looks like the auction has far more interest than it really does and they end up having to pay much more than the actual selling price if the fake bidders were removed. But worst of all it stops genuine bidders winning when they should.
Shill bidding is just as wrong but is more of a manual bidding practice. In this case the auction seller or their friends etc bid on the item to increase the price. This behaviour has been a problem even on sites like eBay. But where bots and shilling become a really big problem is when sellers also own the auction site…
The real issue…
The real issue is when the auction seller also owns the auction platform. This is for two main reasons:
- The platform is no longer impartial and is biased to the seller (as they are the seller) and so are not incentivised to protect the bidders
- They can easily create bots or give themselves (or their friends) free bids to bid on their own products.
All businesses at the end of the day need to make money or they go out of businesses, and new start-ups usually have limited funds to keep running and need to generate a profit quickly. If they have only a limited database of interested bidders then they can quickly lose a small fortune on their auctions completing (selling) at low prices. The solution? Fake bidding!
Some tips
I would suggest:
- Most importantly check out reviews and forums on any pay per bid site you were thinking of joining. Scammers are usually named and shamed pretty quickly. PennyAuctionWatch.com is always a good source of information.
- Watch out for new and unpopular sites as these are under more pressure to try desperate measures to stay in business
- Watch out for sites that are selling expensive items but are not popular (low Alexa ranking)
- No site should ask you to take part in a continuity program (i.e. regular monthly direct debits from your account)
- Finally, (sorry for the home plug) check out Exceet.com. We are creating the first site to really solve this problem by allowing users to sell the items and Exceet operates the platform, much like eBay, but on pay per bid auctions. So Exceet is impartial. Exceet will earn its income from charging sellers a percentage of their sale price, so we will want auctions to end (not keep them going like auction sites that sell their products).
Plus we will have four different auction styles running all on one site to make it really exciting. You can register your interest on our home page and we’ll email you when we’re ready to go.
Categories: Buyer Auctions, Lowest Unique Bid Auctions, Penny Auctions, Reveal the Price Auctions, Zero Price Auctions
