The Truth About Penny Auction Sites

There’s no question that more and more people are shopping online every day. As the economy fluctuates, the type of site that attracts them changes. Following the popularity of auction sites like eBay came flash sites with daily deals like Groupon. Now penny auction sites are the newest niche gaining in popularity with online shoppers seeking the best deals. There are as many as 165 active sites, according to research from the Technology Briefing Centers.

What you may not realize is that penny auction sites are in the business of selling bids, not products. Their pay-to-bid format means that the site makes money every time someone clicks the ‘bid’ button. The winner may be able to buy an item at an unbelievable discount, but the losers are subsidizing the site. Are these sites just a harmless form of retail entertainment or an unregulated form of gambling? We’ll give you the truth about penny auction sites, and share our tips on how to find reputable ones and place bids.

Getting started

1. It’s important to understand exactly how they work. In general, this is what happens:
   • The penny auction site puts up an item for auction starting at $0.00, and each bid increases the price by a penny.
   • The sites offer new members some free bids to join, but bidders normally have to purchase bid packs at a cost averaging 60 cents for each bid.
   • The auctions have a countdown clock, and time is extended with each bid.
   • Some sites provide bidding tools that will make automated bids within a set price range when less than 30 seconds remain on the countdown clock.
   • When the countdown clock finally does reach ‘zero,’ the person who placed the last bid wins the opportunity to buy the item at the final price.
2. Search online for any reviews or complaints with the Better Business Bureau, and check out reputable forums and review sites like Penny Auction Watch or PennyBurners, where bidders post reviews on the forums, and discuss their experiences.
3. Pick a site you trust. You should read all the rules, FAQs, and fine print on each site carefully before bidding. Many sites fail and are acquired by competitors.
4. Decide how much risk you are willing to take. Set a budget and stick to it; bid on one item at a time.
5. Research the value of the item you’re bidding on, and keep track of the number of bids you’ve used so you won’t bid beyond an item’s value. If you do not win, your bids are not refunded and that is how you can lose money.
6. Develop a strategy. Watch the auctions for a while before bidding. Start small with low-value items to learn. Read tips in the forums.

A word of caution

Being a new form of online entertainment, penny auction sites have for the most part fallen through the cracks of regulation and have been a question of much controversy. Here are just a few things that could go wrong with the auctions: shill bidding, fake accounts used to drive up bids, bidding bots, automated software to drive up bids, credit and debit card fraud, won items may never be delivered, etc.

Top sites for 2012

Here is the list of several popular sites as ranked by PennyAuctionSites.com. The logos link to the “how it works” page for each site.

	A medium to small site in business since mid-2010. Quick shipping and good customer support.  Gift cards, iPods, Kindles, gold & silver bars, telescopes, metal detectors, remote control helicopters, and the top site for iPads.
	Largest penny auction site, debuted October 2009.  Average shipping speed. Offers daily deals and promotions through social media sites. Every auction offers the option to Buy It Now.” Common auction items include wine bars, carpet cleaners, blu-ray players, game consoles, notebooks, large-screen HDTVs, gas scooters, sandals, Apple iMacs, iPads, and iPods.
	Launched in 2009, it has over a million registered users worldwide. Offers high end products from brand name companies, average shipping speed. Includes “Buy It Now” on most auctions. Look for vacation packages, large screen TVs, high-end blenders & toasters, brand name makeup collections.
	Started in February 2010, fast shipping. Exclusive profile features allow more strategic game play. Aggressive bidding is possible with an automatic Bid Agent for sports equipment, household goods, precious metals, electronics, cameras, gift cards, and Apple products.
	Online since the end of 2009. Active in social media and blog.  Autobeezid and AutoSniper bidding tools. Average shipping speed. Typical items include GPS, game consoles, new cars & SUVs, health & beauty, cameras, electronics.
	The oldest U.S. penny auction site has fewer bidders, and different auctions for beginners and experts. Auction items include name brand electronics, gift cards, DVDs, and jewelry. Founding member of the nonprofit trade organization Entertainment Auction Association (EAA). Good customer service by phone or email during business hours.

Conclusion

The penny auction sites seek to increase their membership through commercial advertising and referrals. Amid increasing complaints and threats of lawsuits, site owners argue that the auctions are a new twist on retail sales and not gambling. I believe that if consumers gather enough information and are careful about bidding, it’s possible to play at penny auctions like any other game – for fun and entertainment, and not expect them to be a legitimate place to consistently find bargains. While these sites offer the possibility to buy, or win, anything from designer accessories to gift cards for a fraction of the retail price, just keep in mind that the sites buy these items at full retail price and sell them at outrageously low prices.  One person can indeed walk away with a good deal, but the losing bidders collectively spend more on bids than the value of the item, and the sites make an unbelievable profit. Such was the case with a recent auction at Zeekler.com for a Mustang convertible – the winner placed 105 bids at a cost of $1 each, the auction ended at $4,077.07, and the site collected $407,707 in bid money.

Add comment February 13th, 2012

How to Make Your Valentine’s Day Plans “Price-Less”

Valentine’s Day is just around the corner, and we’re being bombarded with the usual ads for roses, chocolates, and jewelry. Perfume and sweets are common gifts that aren’t very original and can be expensive. If those prices are a bit over your budget, you can still give your loved ones thoughtful or romantic gifts without exceeding your price limit. A little careful planning can help you show how much you care, even with inexpensive gift ideas.

In last year’s blog post we collected trivia about the history and traditions of Valentine’s Day around the world. This year, we have some great tips and deals that will help you take a different path from traditional ideas, and save some money too.

Greeting Cards are still the most popular choice for Valentine’s Day.

• Make your own Valentines to give them a unique touch. Try these free printable cards, garland-style cards, creative card ideas, or these cards and decorations – it’s the thought that counts.
• For the price of an extra envelope and postage stamp, you can even send your valentines to be hand-stamped with a custom postmark and 4-line verse from Loveland CO. See details here about the popular program, now in its 66th year. Cards with US addresses should arrive in Loveland by February 9 in order to reach their destination by Valentine’s Day.

Save on gifts. Search for good online offers that you can combine with promotional codes for extra savings. Fill a CD with a favorite playlist of music. Take advantage of seasonal discounts on small consumer electronics to pick up DVD or Blu-ray players, MP3 players, or cell phones. Buy several smaller gifts and set up a treasure hunt to find them.

Special Meal

• Find a sweet deal to eat out, or plan to make a special dinner at home, creating a less-expensive meal using in-season winter foods. Breakfast in bed (try heart-shaped pancakes), lunch together, or a dinner you’ve prepared yourself can be loving, inexpensive alternatives.
• If you don’t cook, try making a pizza with added pepperoni cut into heart shapes, or just save on dinner and splurge on dessert.  White Castle will give you a photo and free dessert with your Valentine dinner reservation.
• Pop a bowl of popcorn and rent a classic romantic comedy or other favorite movie using these coupon codes.
• Make that special meal a picnic, even if you only spread out the blanket on your living room floor.
• If time permits, pack some wine and cheese in a wicker basket and surprise your sweetie at the office.

Sweet Treats

• If you’re not into baking homemade sweets from scratch, try just decorating store-bought cupcakes with heart-shaped candies or those little pastel sugar hearts that have the sayings on them.
• Make a strawberry bouquet with strawberries that you’ve dipped in chocolate, strawberry milkshakes, chocolate heart lollipops, or freeze candy hearts in ice cubes.
• Build a roaring fire and relax together with mugs of hot chocolate. Get some mini heart-shaped marshmallows to float in the cocoa. Make chocolate fondue to feed to each other by candlelight.
• Take a hike together, packing a thermos of hot chocolate or cider and some chocolate truffles.

Flowers

• The price of roses are often 50% higher for Valentine’s Day. Get flowers for less by choosing in-season flowers from the grocery store or local farmer’s market. It’s the best time of year to buy tulips cheaply anyway, and they can be just as romantic.
• Take a trip to your local nursery together and pick out a flowering perennial, another long lasting plant, or even a pot of scented herbs. Then plant it together in the back yard to enjoy for more than just a few days – a living, breathing, growing reminder of your love.

Balloons are an inexpensive treat you can find at the dollar store. Put a small love note or trinket in each one before blowing it up and put together a bouquet of them so your loved one can pop them one at a time to find each little gift.  Or simply fill your sweetheart’s room or office with lots of red and pink balloons.

Spa treats are always popular. Choose aromatherapy in a bottle, oils, lotions, and scented candles to create a basket of goodies for an at-home do it yourself spa session. Include home facial or manicure kits, and give each other massages.

Create sweet memories with photo books, framed collages, or a slide show of favorite photos in a digital frame. Drug stores and online photo sites offer discounts and free items with quick or same-day service.

Free Ideas

• Say “I Love You” in 365 different ways! February 14th isn’t the only romantic day of the year. Make your Valentine a love jar filled with 365 slips of paper that each share another reason you love them. Or count out 365 candy hearts or Hershey kisses, to celebrate every day of the year.
• Make free “vouchers” for helpful or relaxing activities. Give them a handmade stack of IOUs for anything from doing the dishes to taking the dog out for a walk on a rainy day. Or decorate an empty jar with 10 blank pieces of paper inside, for them to make their own wishes that you promise you’ll make come true.
• Send emails or text messages declaring your love all throughout the day. Send a funny little valentine every hour on the hour.
• Play Love Scrabble, where the words you spell out are related to love and Valentine’s Day.

Since Valentine’s Day falls on Tuesday this year, you could plan to celebrate later or on the weekend, when you’ll have all day to enjoy and prices will be as much as half-off. No matter how you celebrate, Valentine’s Day can be wonderful and inexpensive if you keep it simple, fun and – above all – personal.

Add comment January 30th, 2012

Tips to Switch to Energy Efficient Lightbulbs

Did you know that when you turn on a traditional incandescent bulb, you have actually turned on a heat source? It’s true, because 90% of the electricity used to power the bulb generates heat and only 10% produces light. That lost energy is money we’re throwing away.

Recognizing this inefficiency, the US Congress in 2007 passed legislation which went into effect January 1 of this year, mandating a change that regular light bulbs must use less energy. The requirement to achieve new standards has spurred innovation in lighting and given consumers three new choices.

New light bulbs

Each of the new products has unique characteristics that will affect your buying decision, based on application and price. Buying light bulbs is not an easy task anymore, shoppers in the lighting aisle now have to make a lot more decisions before making a purchase.

• Halogen Incandescent Bulbs have a filament like regular bulbs, but operate more efficiently because the filament is encased in a glass capsule with a halogen gas atmosphere. These last up to 3 times longer than equivalent incandescent bulbs, producing a whiter, brighter light for the same number of watts, and can be dimmed. Although they use 28% less energy, they still produce a lot of heat.
• Compact Fluorescent Lamps (CFLs) are the best value because they are moderately priced, last 10-20 times longer than an average incandescent bulb, and use only 25% of the energy required. The CFL floodlights are perfect for outdoor lighting or for use in places where the lights are left on for long periods of time. You save both time and money because you replace them less often. Many cannot be dimmed, and frequently turning them on and off affects their performance and life. Because CFLs contain a small amount of mercury, they must be properly disposed. You can take unbroken ones to home improvement centers for free recycling. Visit this link to search for CFL recycling center locations near you.
• Light-Emitting Diodes (LEDs) are the longest-lived and most cost-efficient product, but unfortunately cost the most initially to buy. Also the color of the light emitted may be objectionable to some people, they cannot be dimmed, and are best-suited only for particular applications. But their small size, durability, color production, insensitivity to moisture and cold, and longevity make them an outstanding choice for Christmas lights, motion detectors, flashlights, car dashboards and taillights. They brighten instantly, even in cold weather, and their performance is not affected by turning them on and off.

The government’s goal in this changeover is for the average home or business to consume less power for their lighting needs. You however want to maintain the amount of light to which you are accustomed. So in order to accurately assess the brightness, you will have to begin using lumens instead of wattage to compare bulbs. Here’s a visual guide you can print and carry with you to help convert watts to lumens when shopping for light bulbs.

Helpful resources

There are several useful resources online to help you through this transition.

• Sylvania has created a chart that shows many bulb replacement options.
• Use this light bulb energy savings calculator to see how the lighting in your house compares to the U.S. average and get an idea how much you can save when you switch to energy-efficient bulbs.
• Here’s another chart to help you decide which bulb is best for your home and budget.
• Visit this Energy Star Choose A Light Guide to visualize the effect of light temperature choices and understand bulb-specific light choices.

Choose wisely where to place long-life energy-efficient bulbs, like placing CFLs or LEDs in hard to reach areas or lights that are often left on for long periods of time. Although the new bulb choices are more expensive than the old incandescents, they’re continuing to improve and drop in price. Buying the cheaper halogen incandescent bulbs may seem like a good idea, but it doesn’t really save enough energy to save you money in the long run. With lighting costs accounting for 25% of your electrical bill, it’s easy to save by changing a few bulbs to CFLs or LEDs.

The innovations described here are only the beginning. A recent article in the Wall Street Journal reports that Lighting Science Group in collaboration with Google will produce an Android@Home Intelligent LED bulb later this year. The bulb will have an embedded chip that will allow people to control it using an Android smartphone, tablet or computer.

1 comment January 23rd, 2012

How to Get Rid of Unwanted Gift Cards

Did you know that over $100 billion worth of gift cards were purchased in 2011, a new industry high? But what about those people who received gift cards they can’t use or merchant credit cards for returned merchandise? There’s good news: the resale demand for those gift cards has grown even more since we last reviewed gift card exchange sites last year.

There are several options: you can sell the cards to one of these sites for cash, swap the cards for different ones, sell the cards locally or to friends and family, or give them away either as gifts or to charity. To make your job easier, we reviewed many popular gift card exchange sites and selected the most reputable among them. Look here to find phone numbers and Internet links to verify the balance on the gift cards you want to sell.

Popular gift card sites

Compared to the last round, the list is a bit longer. We updated information for two sites that withstood the test of time, removed eBay which we no longer recommend for the reason listed below, and added four new sites to the list.

	Plastic Jungle may well be the best site to sell your unwanted cards, with lots of merchants and an outstanding track record since 2006. You can enter information about the cards you want to sell online and instantly see what they’re worth to cash in, up to 92% of the value. They provide a shipping label so you can send them your cards for free, and within two business days they’ll send you a cashier’s check or Paypal payment. You can add 5% more to that if you choose an Amazon.com gift card by email instead. Contacting their customer support is easy, with quick response through their Facebook and Twitter accounts. All transactions are guaranteed, and they accept either plastic cards or electronic exchanges.
	Gift Card Rescue has been around for four years, providing step-by-step videos to help anyone list and sell their cards online. They pay up to 90% and send a check within two business days of receiving your cards, but they only buy plastic cards from merchants on their list. You can get a 5% higher redemption value if you accept payment in the form of an Amazon.com gift card by email instead.
	Card Pool is a fairly new site that pays up to 92% cash within 24 hours of receiving your cards. The value varies based on the popularity of the cards. They provide free shipping labels, and accept some cards electronically for select merchants as well as merchandise credit cards. Card Pool is owned by a subsidiary of Safeway, Inc. and has collected glowing reviews from television networks and newspapers. Although I consider this a top site, I rank it third because it has no easy search function and does not include cards for movies or accessory stores like hobby, hardware, office supply, health or pet stores.
	Swapagift will buy almost any gift card at 60-70% of its value, so it’s a good site to use for cards that you find hard to sell. In fact, that’s all they do, they don’t sell or exchange anything. They’re unique because you can sell online to their sister web site Giftcards.com, or take your gift cards to the physical address of one of 685 certified partner locations to sell them in person. You can choose payment by check or pick up a MoneyGram at a location near you.
	GiftCard Swapping will make you an offer of 60-75% for cards from a merchant on their preferred list or post your cards for sale to other customers for a flat service fee of $1.99 when they sell. The rate they will pay is not as high as other sites, but they also offer a third option to give you more value for your cards. It’s one of the best sites for swapping your unwanted gift cards for other cards of equal value. However, there’s a $3.99 transaction fee, which would not be worth it unless the cards are high value.
	Monster Gift Card has a unique price match guarantee, they will match or beat any competitor’s advertised price. You have a choice of selling your cards for cash or Monster points that can be used to purchase other cards. Personally, I find the points system confusing and not worth the hassle. Just take the cash.

The last word

We only recommend sites that guarantee the transaction and make the offer before you send them your cards. We consider eBay a poor choice to sell gift cards, because the hassle and potential for fraud is too great. Even if you get a good price, the auction costs and Paypal fees will reduce your net gain. But there’s no need for gift cards to sit unused, if you can safely trade them for cash or cards you really like. Even though you don’t get the full amount back, getting 80-90% in cash from a reputable exchange site is still better than having a card you can’t use.

One more cash option

There is one interesting option to convert prepaid bank gift cards to cash. If you are willing to pay the 2.75% per swipe, you can transfer the value of each card directly to your bank account! Sign up for a free Square Card Reader here and download the free app by visiting squareup.com/app on your iPhone, iPad, or Android device. A headset and GPS are required. The reader will be mailed to you. If you prefer to pick it up at a nearby retail location like RadioShack or BestBuy, it costs $10 and comes with a $10 redemption code.

Add comment January 16th, 2012

How to Survive Holiday Gift Returns

Did you change your mind about recent purchases or get some holiday gifts that don’t fit or don’t suit you?  Do you know what the policies are for the stores where you need to make returns or exchanges?  With 13% of retailers tightening their return policies from previous years, shoppers should become aware of those new terms.  You can’t afford to carry things around in the trunk of your car for an extended period before attempting to return them.  Otherwise, you’ll miss the window of opportunity and find yourself stuck with unwanted items!

While most retailers have kept basically the same return policy as previous years, rule changes are making returns a lot more difficult this year at many stores.  Some years ago major retailers began requesting identification with returns so they can track customers who make frequent returns.  These days, retailers are refusing returns from shoppers who have no receipt, are past the specified return period, or have made too many returns within a given time period.  But help is available, and customers who are denied a return or exchange can request a copy of their Return Activity Report from The Retail Equation by sending an email at this address. Then they have the option of disputing the report, with TRE acting as an advocate for them with retailers to resolve return issues, usually within 30 days.

Return Policies

Too late — For some retailers, it’s already too late to return anything purchased last month.  If you have items from Marshall’s and TJ Maxx or electronics from Staples, the deadline has passed on January 2.  For most other stores, you’d better get those items back this month, and even as early as January 24 for Best Buy.

Aim to please — Walmart’s stated goal is to satisfy customers, but there are still lots of specific rules. They offer exchange, refund, or repair during their 15-30 day return period that started 12/26 for all purchases made before Christmas.  This policy applies to electronics including TVs, cameras, computers, DVD and music players; all other items have a 90-day return period.

Without a receipt, Walmart gives customers the option of a cash refund (if the purchase was under $25), a shopping card for the amount of the purchase (if it was over $25) or an even exchange for another product.

In the event that a customer has returned more than three items to Walmart without receipts within a 45-day period, their cash register system automatically flags the transaction, and a manager has to approve the return. These cash register messages remain for six months and only disappear if there are no more returns during that time period.

Strict policies — Target probably has the tightest return policy. They’ve reduced their return period for computer hardware, cameras and camcorders from 90 days to 45, and they enforce this policy even though it may not be posted at service desks in every store. Although they’ve dropped restocking fees, they will still deny refund or exchange on open items.  Toys R Us has a similar policy– a 45-day return period, open items are not returnable, and they impose a frequency limit on returns without a receipt.

Relaxed returns — Some of the most lenient retailers include Kohl’s, Macy’s, Nordstrom,  LLBean, and Zappos.com, with no deadline on most items.  Macy’s now applies a customer return label to many items, so a receipt may not be necessary. But they, like JCPenney and Express, require all tags in place for returned apparel like special occasion dresses.

The following sampling of a dozen retailers, who have more simple return deadlines that could be compiled into a table, illustrates just how diverse the policies are this year.

Amazon actually has 30 different product-specific return policies, with a special page of links to check them, as well as a returns center page for return labels and authorization. If you miss the deadline to return Amazon items, they have that covered, too — you can check this page for the option to sell anything purchased from Amazon.

Overstock.com doesn’t accept any returns on large TVs, and is one of the few retailers we found that still imposes restocking fees, which can be as high as 60%.  Best Buy dropped their restocking fees but shortened the return period by a week, except for Reward Zone members.  Sears reduced the return period for computers to 30 days and jewelry to 60 days.

Gift cards — If you received some gift cards you can’t use, either as gifts or in exchange for returned items, you still have another option to get rid of those as well. Websites we reviewed here will pay 85% to 96% of the value of those cards, because there’s such a growing market to resell them. You can choose payment in cash, through Paypal, or an Amazon.com gift card that will give you an extra 5% more. 

Add comment January 9th, 2012