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Sunday, February 20, 2011

Florida's Attorney General is Investigating Penny Auction Sites

According to News4Jax, Florida's Attorney General is investigating penny auction sites and looking into the possibility that penny auction sites are scams. Many people believe penny auctions are too good to be true. Florida's Attorney General agrees that it is just too great of a deal. However, real people do actually win great items like a 42 inch tv for $1.53 or a PS3 for $2.34. The way penny auctions make money is by charging for bids. Each bid costs anywhere from $0.50 - $1.00. When a bid is placed the auction price increases a penny. Thus, if a video game is sold for $1 and bids are $0.50 each, the penny auction site really made $51 (100 X $0.50 + $1). Some people think penny auctions are a scam, but they are not illegal.

Below is a statement by Florida's Attorney General's Office:
    "Our Cyber Fraud Task Force is looking into the issue of penny auctions as an active investigation and therefore we will be unable to provide any additional detail. As far as tips for consumers, we are still learning about these sites. However, at a minimum, reading and understanding the terms and conditions, including any information about the charges necessary to register or buy bids is certainly important."
    There have been several lawsuits on penny auction sites and lawyers claim that they want these sites to be listed as gambling sites rather than retail sites.

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