“Penny auction sites aren’t like normal Internet auctions,” says technology expert, Sarah McDaniels. “Consumers should know that they can lose their money at these sites, whether they win an actual auction or not.”

According to McDaniels, auction sites like SkoreIt, Beezid and QuiBids require consumers to buy so-called bidpacks that provide them a set number of bids. When competing for an item, they must use a bid from their pack. Each time they do so, time is added to the auction, and the price ascends by a few cents.

“What most consumers don’t know is that they will lose all of their bids, regardless of who wins the auction,” McDaniels says. “So these penny auction sites make most of their money off of failed bidders and not off the actual merchandise they are selling at auction.”

The problem with commercials

McDaniels, who specializes in informative features centered on reviews and scams, says the growing prevalence of television advertising is putting less savvy consumers at risk, because they tend to trust what they see on T.V.

“Penny auction companies, such as SkoreIt and QuiBids are pouring a lot of money into television commercials; however, this doesn’t mean they are reputable, honest entities,” she says. “I just did a review on QuiBids, and I can tell you that there are a disturbing amount of online complaints, where current and former members are accusing the site of using bots to place fake bids in an attempt to keep auctions alive longer. Although there’s no way to know if the company is actually doing this, they aren’t policed by any third-party organization; so I’d advise consumers to be wary.”

What are the alternatives?

If surfers are looking for legitimate places to find bargains, McDaniels says they can use online marketplaces, such as iOffer, Bidz or a local coupon site, such as LivingSocial. That said, she says buyers should always beware.

“Although these sites don’t try to deceive customers like penny auction sites do; many have a bad reputation for not policing their vendors well enough,” she says. “So I advise consumers to only buy from reputable vendors that have good reputations.”

Ryan Lawrence is a freelance copywriter based in Boulder, Colorado. Special thanks to technology expert, Sarah McDaniels for sitting down for this interview.