The popularity of online penny auctions sites, a relatively new phenomenon on the Internet, continues to rise. Penny auction sites are a great way to grab a bargain on top brand products. Unlike traditional auction sites such as eBay, penny auction sites are pay-to-bid but the potential savings on state-of-the-art electronic products is tremendous. Penny auction sites are sites where members “buy-in” for the right to bid on a certain item and the last bid wins the item. However, they differ from regular auction sites in that each time someone bids, the price of the item goes up a penny. Hence, the name.
From the perspective of a consumer, online penny auction sites are attractive because bidding usually starts at just $0.01. Although there is typically a small “buy-in”, the possibility is there to walkaway a big winner having only spent a few dollars. The auction operators are driven by the amount(s) collected from the sale of “bids” and the ability to attract a large base of bidders.
Operators of penny auction sites must take care not to violate applicable laws and regulations. They should not engage in “shill” or “bot” bidding and should provide fair and safe bidding practices. In fact, industry certification is available for operators of penny auction sites, a great way to assure potential customers that a particular site is a legitimate one. Currently, online penny auction websites are not illegal. However, many argue that the business model is, in reality, a form of gambling.