2010-05-20
Penny Auction Scam at Beezid.com
Consumer, Beware!
There's an auction site out there at beezid.com (DEAD LINK) that advertises real-time penny auctions. Unlike e-Bay, the auctions start at $0 and people bid in real time, one cent at a time. They've begun advertising online that expensive entertainment systems and even automobiles are being sold for about $100. When I first heard about this, I instantly wondered, "Wait a minute, why the heck would anyone want to auction their stuff on this site if you're not going to get what your item is worth?"
One question I think Americans fail to ask often enough is, "What's in it for them?"
So I was curious and decided to check it out. Here's how Beezid can offer penny auctions:
First, individuals aren't auctioning off their stuff. Beezid either buys it from individuals at a reasonable price (like a digital pawn shop) or acquires their stuff from a wholesaler. This isn't unusual, even for some smaller but more traditional auction sites.
Second, users come in and start bidding. The catch here is users pay approximately 70 cents for each 1 cent bid. That's great if you're the person who gets the last bid, but if you placed 10 penny bids on an item, you're out $7 with nothing to show for it. If you get caught up in the excitement and bid like that on an item a day, you're going to be shelling out $210 a month just to play, with no guarantee of getting anything in the mail.
So, just be the last bidder, right? Easier said than done. Beezid uses a server based timer for each product that is obsolete (probably by design), causing it to skip numbers, pause for long periods of time, and more.
Adding to the mayhem, Beezid appears to be using bots (software that runs an automated task) to ensure people keep bidding. In other words, it's possible to make those ten 70-cent penny bids in less than a few seconds. Here's the kicker, though. If a bot wins an auction, they not only keep their inventory, but they also keep all the money you spent bidding.
Why is this particular scam worth posting on KTracy.com? Well, Beezid is totally legal and they've supposedly made some rather large media ad buys on network and cable television. Obviously, I'd rather my readers know up front that this is a scam. However, I think this also has a role to play in our discussions of regulating the internet. Beezid is a 100% legal operation, not because it's avoiding breaking laws, but because there aren't any laws. So why is it that protections exist for consumers in the physical world, but not in the virtual world?
As more and more of our daily dealings are done online, we're entering a millennium where the laws we've used to govern ourselves for centuries will no longer be adequate. Essentially, we're establishing a multi-trillion dollar marketplace in a realm less stable and less secure than post-war Iraq. Regulations on Internet Service Providers (ISP) and more online industries are going to be necessary as we move forward.
Being a conservative, those words coming from me might shock you; but I'm a Republican, not an anarchist.
UPDATE: Beezid finally became defunct in 2016.
