Best Penny Auction Websites

Author: Michael Gajewski
Whether they are legit or a scam one thing is for certain; Penny Auctions are taking the web by storm. Macbooks for $50, HDTV's for $30, and iPods for $20 seems to good to be true. Believe it or not, the Penny Auction business model does make this possible. However not all Penny Auction websites follow the rules. Learn how to determine which site is right for you before diving in.

How The Penny Auction Model Works
For those of you who do not know Penny Auctions work like this: Users purchase bids at roughly 60 cents each. When a user places a bid, the price of the product goes up 1 cent. Let's assume an auction's starting price is 0, and bidders bid on it until it eventually sells for $20. This means 2000 bids were placed at 60 cents each. Therefore $1200 of bids went into the auction allowing the owners to easily cover the cost of the $400 piece of equipment. The winning bidder ultimately spends the price the auction sells for, plus shipping, plus however many bids they used. Therefore the buyer gets a large discount, while the supplier profits. Please keep in mind though that many other users placed bids on the same product and came away with nothing. Therefore, bid at your own risk. This article is only designed to instruct you on which Penny Auction sites are legit and which ones are scams.

Scam Hunting
Not all Penny Auction websites have sufficient users participating in their auctions. With no competition for a product the item will sell too early, leaving the owners unprofitable. To remedy this problem, the seller will fraudulently add in bid-bots or ghost bidders. These bid-bots will continue to outbid the real customers until they fold. This allows the site owner to take money from the customer who purchased bids without ever having the burden of dealing with a real winner whom they must ship the product to. It is relatively easy to spot which sites are using ghost bidders and which ones are not.

Check to see if the same users are winning the majority of the auctions. If so, you may be dealing with an owner who created several profiles and granted them millions of free bids. Are there any usernames that seem to use an irrational amount of bids to win something cheap? Few real people are foolish enough to spend $300 by bidding 500 times on a $100 item. Keep your eyes open for sites that sell a rare product at an alarming rate? Currently, Verizon's Droid X is not one of the easiest items to find. If they are selling several a day, then they must either have a deal with the Dropshipper that not even Cosco can achieve, or they don't actually have this product in hand. Look for typos and poor grammar. A business that is professionally operated usually goes over all fine-print with a fine tooth comb. One of the more obvious things to look for is items that are selling for WAY too cheap. If there are no real bidders bidding, then the bid-bots have no reason to bid. When $200 items are selling for one or two dollars I tend to stay away. With Penny Auction experience you will learn what things to look for on your own as well. These are just some of the tipping points/guidelines to help prevent you from getting suckered into any scams.

Ranking The Penny Auction Website
I have compiled reviews for some of the more trusted penny auctions sites. Roughly a week was spent studying and analyzing each one while noting all pros and cons. The websites have been listed in descending order based off the grades they received.

IShop4Cheap: B+
IShop4Cheap proves to be one of the more legit penny auction sites on the market. The same username rarely seems to win more than one or two auctions. At the moment, IShop4Cheap actually limits the auctions a user can win per month. I have yet to sense any suspicious bidding such as a user irrationally bidding a couple hundred times on a $50 auction. The products available are current and top-notch. Bids are not over-priced, the site runs on a strong server, and shipping took only four days for my Bose Headphones. IShop4Cheap.com does suffer from formatting issues with some of the older versions of Internet Explorer, and they lack any sort of video tutorial. Luckily, the interface is easy to navigate and the minor complaints do not detract from the overall experience.

BidCactus: B-
Bidcactus is designed very well and comes across as a professionally regulated site. It has a large variety of auctions tailored to all customers. Suspicious bidding is minimal. However, it is very difficult to win anything on Bidcactus. Their site gets tons of traffic, resulting in high user competition. I did not win anything so I cannot comment on shipping time. My online research does show that BidCactus will rightfully ship the goods to auction winners and shipping can take up to two weeks.

Swoopo: C+
Originating in 2005, Swoopo was the first penny auction site to hit the scene. They immediately get bonus points for this. Their servers are top notch and run at a great speed. They also offer the widest variety of products. Swoopo's pitfall resides in the fact that they allow users from all over the world to bid on the same product, despite the fact that not all currencies are equivalent to one another. This drives competition up at an exponential rate making it almost impossible to win anything. Just like with BidCactus, I never won anything on Swoopo. BidCactus ranks highers due to the fact that all bidding is done in American currency.
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About the Author
Michael is an Certified Public Accountant from Wilmington, DE. Over the years he has worked in tax preparation, corporate audits, and assisting the public in making significant financial decisions.