I found some more of these offensive sites. In the future I’ll post a list of them as they come up…

Bid2Buy (who has since gone out of business), Swoopo, Dubli, and NitroBids are all scamming their customers. They offer a chance to buy things, and you think you might get a great deal, while they are raking in the cash.

The system is pretty simple, a little difficult to get your head around for a minute, but then absolutely brilliant in an evil-trying-to-take-over-the-world kind of way. And they all make me think, “Just because you can do something, doesn’t mean you should.”

Here’s how they all work:

They put something up on an “auction”. Let’s say it’s an iPod Nano. Retail for a 16 GB Nano is $179. These sites put up the Nano starting at $0. Then, they open the bidding. Bidding doesn’t work in a classic sense where you can say what you are willing to pay and then buy it if that price is agreeable to the seller. Instead, each time you bid the price goes up a penny. Then, when the timer runs out, if you are the one that made the last bid, you can buy the Nano at the price that you last bid it up to. Here’s the catch: each bid costs you somewhere between 50 cents and a dollar. Let’s start doing the math…lets say 500 people bid on the Nano and one person wins the auction and pays $5 for it.

-$179 for the iPod

$500 for 500 bids

$5 for the winning bid

______________

$326 PROFIT

And this is a poor example. They made almost three times the profit on this auction because they spread the cost of the bids out over a number of people. So you might spend a couple of bucks, and your neighbor, and some other people, but ultimately only one person gets the bid, and that sucks. Three times the profit?!! Come on…

Lets look at some live examples on each of those sites right now…

This is from Swoopo.

If bids cost $.60 and there were 2844 bids placed on that iPhone, which retails for $299 (which they say is an $850 value – how did they decide it was worth 850?), then Swoopo made $1706.40 in bids, but paid $299 for the phone, which ends up being $1407.40 in profit. Sick! And not in a cool sick kinda way, but in a blood sucking kind of way.

This is a recent from Dubli. The math is almost as ugly.

This one is even sicker. Dubli bids are $1. 9300 bids were made. So they made $9100 on a $200 gift card??!!!

Here are a couple from Nitrobids:

The Blu-Ray player they only netted $60, so not terrible, but the second….holy cow. They had 4250 bids, so they cleared $3,294.50 on the iPad.

That’s why I think these should be illegal. I think reverse bids and penny auctions and the like should all be considered gaming and by gaming I mean gambling. There is very little difference between gambling on cards and bidding on an iPad…you never know if you are going to be the last bidder, you never know if they don’t have dummy accounts set up to bid against you so they never even have to sell the item, they rake in huge dollars on other people’s retail prices, and they don’t offer any redeemable value to any community. I wouldn’t be surprised if this kind of thing created a real addiction, similar to a gambling habit, with people buying thousands and thousands of bids, trying to win an auction, but never really winning anything great outside of once in a while to keep them reeled in.

Shame on everyone who does this kind of website. It’s unethical and wrong, and should be illegal.