Penny Auctions have exploded in the last year, and unfortunately many thieves have taken this popularity and launched fake penny auction sites or sites that employ bots (automatic programs that drive up the prices).
As an internet marketer I have seen more than my fair share of shady websites offering "free trials" or "how to make $$ online" but I feel the need to explain that not all penny auctions are scams.
There are some legitimate companies that do not use bots and are NOT scams, they have a strong community and offer exceptional products and customer service.
However, even these legitimate sites are hard to spot, one reason is that because of their popularity they have many new users who may not fully understand what the rules of these penny auctions are and how they work. What happens in many cases is a user will see an advertisement online that says "Get a MacBook for $ 11" and they assume that they can sign up and buy a MacBook for $ 11. You have to play, its entertainment shopping, and you can get deals, if your patient. This is one of the reasons that penny auctions always, no matter no legitimate they are, always have a ton of bad press.
Its important to know what Penny Auctions actually are.
basically when you sign up you are prompted to make an account and buy bids, this gets most people thinking there is something fishy. But, penny auctions unlike eBay work like this. You buy a pool of bids (usually for $ 0.60 a bid) and you place those bids at auction.
These websites also differ from eBay because the auctions do not have a set ending, its modeled after the traditional live auction. When you place a bid a small amount of time is added to the clock keeping other bidders to continue.
Its a game of wits and patience but it is not rocket science.
One of the most successful strategies is to wait until the last second or two and then place your bids. Also as convenient as auto bidders are you should avoid them as they bid instantly and do not wait until the last seconds.
Another solid tip is to research what the product has sold for recently, unfortunately it's usually the iPads or the MacBooks that gets everyone and their mother bidding. If the last iPad sold for $ 50 do not start bidding at $ 10 wait till it reaches it upper level until you bid.
So how do you tell if an penny auction is legitimate?
I highly recommend you do some research on what sites are real before you sign up with your hard earned money, Read reviews, ask your friends and look at the site carefully. One of the biggest tricks is the big ticket winners. The infamous Honda civic for $ 1100 is a great example. now I want to say I can confirm that at least two cars have been won. One on the now defunct (and shady) SwipeBids and the other on the largest penny auction website Quibids. If you see a site that is not Quibids showing a car or multiple cars as winners, take a step back and do some research before you sign up.
If you are looking for a deal do not be afraid of penny auctions, just be informed!