Swoopo, BidRivals (and other Penny Auction sites) – Are they a Scam?

My answer is ‘Probably Yes‘!

These sites (and there are plenty of copycats) appear to operate as eBay-type auctions, but they have several important differences which people need to be aware of: The main one being, unlike eBay, when the auction ends, it doesn’t!

These are not real, fair auctions like you’d expect – you bid in tiny increments, say a penny – but, every penny costs you around 60 cents (or equivalent local currency) and every bid costs money so the more bids that are made on an item, the more money the ‘house’ gets. Everyone pays, not just the winner and simple math shows that the company nearly always equals or exceeds the value of the item in bids.

It’s obviously a huge money spinner – a few ordinary goods seem to be going for $5, when in reality they can be paid for many times over by the losing-but-paying other bidders.

This system and the interminable nature of these auctions (the clock gets reset every time a new bid is received) means that this scheme is in actual fact a lottery.  This is a fact that these sites want very much to suppress as the legal rules change a great deal if this is the case, but the fact remains that any logical examination of the system points to a lottery or some other form of gambling.

In the interests of investigation, I signed up with Swoopo and tried to win some items. At the end of a very long day, almost continually monitoring the site, I lost $50 and helped the profits of Swoopo incrementally. You can always try an Amazon refund service which got me some of my money back. I even got up at 3:00am to see how one auction for a HDTV was doing. I’m sure there are plenty of people who have the time and money and persistence (and luck) to actually snag one of those HDTVs for $20, but they are very much in the minority.

My advice? Avoid these sites like the plague that they are – if you want to gamble, buy a lottery ticket or play online poker, just don’t waste your time and money on Swoopo!

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