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Warnings, Risks for Online Penny Auctions

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Online penny auctions may seem very appealing, but if you don't do your homework, the risks may not outweigh the good deal. Online penny auctions may seem very appealing, but if you don't do your homework, the risks may not outweigh the good deal.
"They've got to do their homework. They've got to know they're dealing with a trusted site. They've got to know what the rules of the game are," OCU economics professor Steve Agee said. "They've got to do their homework. They've got to know they're dealing with a trusted site. They've got to know what the rules of the game are," OCU economics professor Steve Agee said.

By Jacqueline Sit, NEWS 9

OKLAHOMA CITY – Online penny auctions are growing in popularity and one Oklahoma City business is cashing in on the trend, but even this local company warns buyers there are plenty of risks.

"We Googled 'penny auction' and had over 300,000 hits on that. There are plenty of penny auction sites available," said Steve Agee, OCU economics professor.

Agee said penny auction Web sites may seem attractive, but the name can be a bit deceiving.

"Number one it's new, number two they mention the word penny and people think cheap, and think, 'if I can get something for a penny or pennies on the dollar, than it must be a good deal,'" Agee said.

From MacBooks to digital cameras, if they are going for pennies it must be a good deal, right? More customers are hopping onto Oklahoma City-based online penny auction Quibids each day and they told NEWS 9, it depends.

"It's going to cost money to participate and there's a great chance that they're not going to land a great deal. So, anybody who uses our site, we want it to be the type of user that's OK spending money trying to win a great deal," said Quibids CEO Matt Beckham.

Here's how it works. If you want to bid on a cell phone valued at $200, you enter a bid. Each bids costs 60 cents. Each time you enter a new bid, it costs another 60 cents. So after two rounds of bidding, if you win the phone at a cost of $5, your total is really $6.20 because the phone cost $5 plus the two 60 cent bids. Anyone else who bid on the phone still has to pay 60 cents for each bid they entered or they can put that towards the retail price of the item. Keep in mind there are also additional fees including shipping costs.

"Everyone doesn't have to walk away a loser even though you don't win the auction, you can still pay retail for the product you lost out on," Beckman said.

Visit QuiBids 101 section before you start bidding on penny auctions.

"They've got to do their homework. They've got to know they're dealing with a trusted site. They've got to know what the rules of the game are," Agee said.

There are plenty of unscrupulous online penny auctions, so it's very important to do your homework, and remember there is no guarantee you will win.

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