Consumer expert Clark Howard’s column appears here each Thursday in conjunction with Deal Spotter, a weekly print section in The Atlanta Journal-Constitution.
Have you seen those website ads that promise unbelievable bargains on electronics and some consumer goods? Who can resist those come-ons about getting, say, an iPad for some ridiculously low price like $2?
There’s one particularly popular ad with a supposed anchorwoman giving an update on what looks like a local TV station. She goes on and on about this amazing new way to save money, giving the spiel about what are known as “penny auctions.”
But they’re really just an illegal game of chance in my book. Here’s how penny auctions work: You enter bids for the items being advertised while others do the same across the web. You’re required to pay more money each time someone else outbids you and you want to rebid. Only the final winning bidder actually gets the item.
So yes, it is true that the winner gets stuff ultra-cheap. But I cannot believe the various state attorney generals are asleep at the switch on this one. Lotteries can only be run by states. Gambling can only operate when permissible under state law. So any time money is collected from losers in a game of chance is patently illegal.
Know that these kinds of offers are deceptive on their face. MSBNC reported there was one auction for an HDTV where the winner got a $1,500 model for $228. But 22,000 bids were placed and the bids collectively exceeded the cost of the TV by a 9:1 ratio.
If you get involved in this kind of bidding, it can be addictive. In addition, you will probably spend far, far more in bids over time than you recoup in the value of an item you may win on occasion. It would probably be cheaper for you to outright buy whatever it is you want.
-by Clark Howard, Save More, Spend Less, Avoid Rip-offs
Find more answers to your consumer questions at ClarkHoward.com. You can also listen to his radio show live 1-4 p.m. Monday through Friday on AM 750 and NOW 95.5 FM News/Talk WSB.