Talk:Bidding fee auction

Work In Progress
I've undone a lot of the subtle vandalism of this page, which seems to have mostly been perpetrated by accounts that have for one reason or another been removed from wikipedia.

I'm still examining the "Penny Auction" section of the article, which is new to me, and will update it as soon as I know more. It certainly appears that this section of the article has been used to introduce a certain quantity of linkspam.

As for the use of the word "grey area" -- these sites exist in a legal grey area, because U.S. and european courts have not formally ruled what set of regulations (gambling, auctioneering, etc.) are applicable to them. Cases have been settled out of court to prevent this legal distinction from being formalized. It is important that consumers be warned that their normal expectation of legal regulation and redress associated with these sites is unwarranted.

Otherwise, I welcome discussion related to the perceived POV of this article, and suggestions for improvements. J.Mayer (talk) 03:26, 27 January 2010 (UTC)

Bad Redirect: Penny Auction
I was looking for an article on the historical term "Penny Auction", which refers to an action taken against bank foreclosures during the great depression (Article: http://www.livinghistoryfarm.org/farminginthe30s/money_10.html ) and found myself forwarded to "Bidding Fee Scheme". This should be its own node, and offer "Bidding Fee Scheme" as an alternate. 97.107.131.163 (talk) 15:22, 21 October 2009 (UTC)

History Of The Penny Auction/Bidding Fee Auction
This July 2012 penny auction software article might be a good source for additional commentary on the history of penny auctions. — Preceding unsigned comment added by 70.66.209.47 (talk) 16:21, 3 August 2012 (UTC)

Neutrality
This article seems to be asserting that bidding fees are unique to unique bid auctions. They are not, and can be fopund in many types of auction. Tim 17:50, 10 January 2007 (UTC)

Whoever wrote this seems to have an axe to grind and does not seem to have a problem with showing bias... it would be easy to assume that there is an agenda Monsi786 (talk) 06:55, 11 June 2008 (UTC)
 * I agree (with the second comment, not sure about the first), for example in the part about charities - "Make sure that you can verify that the site actually lists the charities they claim to donate to so that you can check with them if you desire". Written like an essay or a guide (or a warning).--kelapstick (talk) 20:37, 14 February 2009 (UTC)
 * I agree about that section and thus removed it. PuerExMachina (talk) 23:53, 25 May 2009 (UTC)


 * It seems to me that there's been some pretty strong pushing of points of view here from both those who consider this to be a legitimate business model and those who consider it to be a scam. I won't revert anything at the moment, but in the next few days I'll have a good look around what the reliable sources say and make sure that the article reflects the correct balance. If anyone who has an axe to grind either for or against these schemes has anything to say I would urge them to state their case on this talk page rather than by editing the article. Phil Bridger (talk) 23:20, 28 May 2009 (UTC)

On the subject of neutrality... www.pennyauctionwatch.com doesn't really seem to be a neutral source. (has advertising relateed to other penny auction sites) Fylar (talk) 22:54, 2 February 2010 (UTC)

List of sites
I have removed the long list of sites alleged to be operating these schemes. We shouldn't be accusing sites of operating schemes that are in a legal grey area unless we can provide independent sources for each particlular site. Phil Bridger (talk) 11:10, 13 March 2009 (UTC)

Maybe we should have the list of sites included, as they are clearly bidding feee auction sites, and this is useful information for readers, and instead reword the legal grey area statement to make it seem less accusatory. (Controversy section anyone?) Fylar (talk) 22:56, 2 February 2010 (UTC)
 * It is not necessary to have a list of every single bidding fee auction site (see NOT). It would be better to link individual sites that have articles of their own, such as Swoopo. There are sources which question the legality of bidding-fee auctions, although I agree that calling it a "grey area" might be presumptuous. White 720 (talk) 00:09, 3 February 2010 (UTC)

broken link to discussion
The link isnt' working http://discussion.ottawabusinessjournal.com/article.php?sid=320

return nothing...

an alternative if it can't be fixed is

http://www.codinghorror.com/blog/archives/001196.html?r=19317#endcomments —Preceding unsigned comment added by 128.196.20.224 (talk) 00:42, 8 May 2009 (UTC)

Let's try to evaluate the issue from both sides - is it gambling or not
Some people would argue that bidding fee auctions, also know as pay per click auctions, are a form of gambling. There are strong and valid arguments for both sides. On one hand, it can be claimed that users are "betting" on a chance outcome. On the other hand, it is just as easy to say that the bid fee is a participation charge, since the outcome is really not determined by chance - in fact, there is no element of randomness at all.

While people will have strong opinions on both sides of the issue, it is perhaps worthwhile to compare bidding fee auction sites to other real-life situations when evaluating whether it should be considered gambling or not.

One comparison that can be made very easily is to carnival games. The participant pays a fee in order to obtain a chance at perform a task, such as knocking three bottles off a pedestal with three balls. If the participant succeeds, he wins a price that is worth far more than the fee he paid to participate. If he loses, he forfeits the fee. There is no element of chance. It is a skill based game and is not considered gambling.

Another comparison would be to the stock market. In the stock market, a customer pays a fee (known as a commission) in order to buy securities. After some time, the customer can sell the securities, making a profit or a loss, depending on how all the other people in the market reacted in the meantime (see supply and demand). Regardless of whether the person makes or loses money, a fee is paid. Trading on the stock market is not considered gambling.

One can compare bidding fee auction sites to a lottery. In a lottery, a participant pays a fee in order to have a chance at winning a much larger prize. One or more winners are selected by chance and the prizes are distributed to them. Since the selection of the winner is determined purely by chance, a lottery is considered gambling.

It is not possible to classify pay per bid auctions that will appease all people. Some people will have had fun and may have won items on such auction and will support them. Other people undoubtedly paid money for bids, participated in the auctions, and did not win anything and so they come away bitter. It is a highly polarized issue, and in the end, such auctions should not be treated as ways of saving money, but instead, as ways to have fun while dreaming of getting a fantastic price on a desirable piece of merchendise. —Preceding unsigned comment added by 76.124.1.125 (talk) 05:00, 4 June 2009 (UTC)
 * This might be an interesting subject for discussion, but the article needs to be based on what independent reliable sources say about it, rather than our own comparisons. Do such sources say that it's gambling, or not? Phil Bridger (talk) 09:06, 4 June 2009 (UTC)
 * Courts have not tested the concept yet. There is no objective consensus based on my research. Seems like some scorned souls yell loudly in forums that it is gambling. Until it is proven to be gambling by courts of law, I would say the closest thing that can be done is make comparisons to other similar activities or provide information for both sides of the argument so that the reader can decide. However, calling the concept gambling all over the article is biased. —Preceding unsigned comment added by 76.124.1.125 (talk) 01:30, 5 June 2009 (UTC)

Bidding fee auction sites can also be (somewhat) compared to a traditional live "Sotheby's" style auction with an entrance fee. While some such live "Sotheby's" style auctions have a one time entrance fee to be allowed to bid, the bidding fee auction style requires the fee for each time a bid is placed. A "Sotheby's" style auction with an entrance fee is not considered to be gambling. —Preceding unsigned comment added by 75.18.198.67 (talk) 04:30, 10 June 2009 (UTC)

If one concedes the above, then a slippery slope argument can be made like this: Imagine a "Sotheby's" style auction in which a participant must pay to enter, but is only allowed to place a single bid and then must leave. If that is still not gambling, then allow people to reenter after placing their single bid, and you have something very similar to the bidding fee sites. —Preceding unsigned comment added by Credo2 (talk • contribs) 21:27, 20 July 2009 (UTC)

The article seems to be in very good, neutral and factual state and Mr. Bridger did an excellent job looking into the issues. Thanks for tirelessly working to improve Wikipedia for everyone. —Preceding unsigned comment added by 75.18.198.67 (talk) 04:26, 10 June 2009 (UTC)

There's no question that this is gambling, because it can't be legitimately framed any other way. You don't pay-per-bid in a conventional auction - you might pay to gain access to the auction (a bid fee when submitting sealed bids, or an entrance fee for the auction event), but not at each bid - a bid is an offer to pay. At a conventional auction, you wager that nobody is willing to pay a higher price than you, with a zero stake. Generally, nobody loses at an auction - they merely come away with nothing (there are forms of auction where some risk is involved, but the all-pay auction is a theoretical game used for modelling, and rarely occurs literally). In these games, you are playing a game of chance, you have no influence over the price, and - most crucially - you do not win a "penny auction" based on your bid price. Tenders are won based on the price and quality of the bid. This game is won based on the timing of your bid. You are effectively placing a bet that nobody else will participate in the next x seconds, the prize being a call option on something valuable with an increasing strike price - this is effectively being used as a "front" to cover up that it is a game of chance. 81.111.114.131 (talk) 07:58, 14 September 2009 (UTC)

Retitled
The previous version of the page, starting from the title, was focused on the risks of the business model and cited few sources, particularly in the "Example" section which was written in an instructional tone. I've retitled the article and removed most of the unsourced information. The topic is still controversial but it is not a form of fraud by its nature. White 720 (talk) 20:15, 1 February 2010 (UTC)

I strongly disagree with the decision to retitle the page to "Bidding Fee Auction". The whole point of the "bidding fee scheme" is that it is distinct from an auction, despite the attempts of unscrupulous websites to conflate bidding fee schemes with auctions. Please provide reputable documentation showing that bidding fee schemes are actual auctions, or I will revert this change. J.Mayer (talk) 22:43, 8 February 2010 (UTC)
 * Auction, noun. 1 : a sale of property to the highest bidder. Bidding fee auctions involve a sale of property to the highest bidder. The only difference is that bidding has a transaction cost. What makes you say that it is "distinct from an auction"? There are disreputable forward and reverse auction sites. Calling the article "bidding fee scheme" implies that it is impossible to run a bidding fee auction site legitimately. White 720 (talk) 23:22, 9 February 2010 (UTC)

PennyBurners
(out of business)

PennyBurners.com (closed) is a forum where you can go to learn about verified scamming Penny Auction sites, verified legit Penny Auction sites, and where you can discuss both, among other Penny Auction industry news. I believe a link or a mention of PennyBurners should be posted on the Wikipedia article, as it is a vital tool in helping the general public learn about the in's and out's of the PA World.

Keroppi29965 (talk) 01:59, 24 April 2010 (UTC)

Bids by definition don't cost money, bets by definition do cost money
A bid is an offer to purchase something. See Bidding. An Auction is a method of selling something by collecting bids according to various rules. If you don't win the auction, you don't pay anything.

Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods. Typically, the outcome of the wager is evident within a short period.

The key factor to being defined as gambling is that if you have to pay to keep playing you're gambling. You don't know if you will get anything back, but your losses are well known up front.

Auctions are not gambling because you don't lose anything by participating. Some auction houses require a fee to participate in an auction, but that fee is only to be allowed to place BIDS which are OFFER on the items. Once you sign up, you can place as many bids as you like or none at all. The fee is also for an auction event which includes lots of items. The fee is unrelated to the bidding process itself. A sotherby's auction fee is like the cover charge to get into a bar, it doesn't affect the price of drinks, what you can order or whether or not you get your drink. Again the key point here is that an auction involves collecting offers which cost you nothing unless you win.

The "bidding fee auction" also almost exactly describes the Dollar Auction experiment, right down to the increasing the bids by a penny at a time. The key difference in the names being that the Dollar Auction describes the prize, while the name 'Penny Auction' describes the bid. However if you read the dollar auction article you will see that experiment actually was an auction - only the top two bidders have to pay. No one has to pay anything until the winner(s) are determined.

Further you can see that the dollar auction experiment is an auction that eventually becomes gambling by forcing the 2nd top bidder to pay his bid while receiving nothing. At that point his bid becomes a bet. The rational goal is no longer to increase your winnings, but to decrease your losses by hoping the other person will stop betting before you do.

Even if you do be somehow still think this is an auction, paying for bids totally changes the strategy of both the buyers and sellers since the amount of bidding itself now affects the eventual price, and that is not covered in this article.

Bottom line, any definition of gambling mentions bets, stakes or wagers which by definition have a cost, while auctions are comprised of bids which are offers with a defined price. --GreatTurtle (talk) 08:00, 3 May 2010 (UTC)
 * WP:FORUM. Sources, not original research, please. White 720 (talk) 15:54, 3 May 2010 (UTC)
 * I was serious when I linked to the definitions of gambling and auctions. Bidding fee auctions appear to be both gambling AND auction at the same time according to the definitions I could find.   It appears to be an interval of gambling which culminates in an eventual auction.  I'm not trying to do original research. Without saying it's not an auction, I would just like to reframe the question, how is this NOT gambling? GreatTurtle (talk)  —Preceding undated comment added 19:41, 7 May 2010 (UTC).
 * The question to ask is, "Is this gambling?" If you're going to accuse someone of running an illegal sort of business, then you will need reliable sources that back it up. This is not an appropriate place to question the legality of a particular business model. White 720 (talk) 21:03, 7 May 2010 (UTC)

"Internet fraud" links
Bidding fee auctions are not an inherently fraudulent business model based on a consensus of reliable, verifiable sources. Unethical auction operators exist, but the auction style itself is not designed as a fraud. White 720 (talk) 21:23, 7 September 2010 (UTC)
 * Not all service providers are good . "Internet fraud", that is a prophetic warning. Should be careful while playing. KevinNgHoang (talk) —Preceding undated comment added 01:07, 9 September 2010 (UTC).
 * There is no need to link "fraud" from every article that may be associated with it. This is not an instructional document; buyers can be told to beware someplace else. White 720 (talk) 01:18, 9 September 2010 (UTC)
 * Many articles in Wikipedia have to consider the other side of the problem. —Preceding unsigned comment added by KevinNgHoang (talk • contribs) 06:35, 9 September 2010 (UTC)
 * The Internet fraud article doesn't contain any information about bidding fee auctions. Please add any fraud-related information (with sources) to this article directly. White 720 (talk) 15:23, 9 September 2010 (UTC)

Consumer Reports article
This December 2011 Consumer Reports article might be a good source for additional commentary. White 720 (talk) 17:59, 5 June 2012 (UTC)

Someone add Zeekler / Zeek Rewards / Rex Venture Group Ponzi please?
Zeekler, the penny auction, is a part of the ZeekRewards / Rex Venture Group $600 million Ponzi scheme shut down by SEC 17-AUG-2012.

http://www.forbes.com/sites/jordanmaglich/2012/08/18/feds-halt-alleged-600-million-zeekrewards-ponzi-scheme-how-it-happened-and-whats-next/

Kschang77 (talk) 02:39, 3 September 2012 (UTC)
 * See High-yield investment program. This company has a section in that article. White 720 (talk) 05:35, 3 September 2012 (UTC)

Prefunded
Prefunded bidding fee auction The item has a predetermined pre-funding requirement amount that needs to be satisfied for the item to become a live auction item. Users may fund the item, which will count toward satisfying the pre-funding requirement amount of the item. For funding the item, the users are provided with a number of bid credits corresponding to their funding amount, which can be used by the users in bidding on any of the live auction items. Each of the live auction items are associated with an independent countdown timer indicative of the time remaining until the end of the auction, and each bid placed by the users adjusts the countdown timer. Prefunding is the only 1 click solution for the auction house to be sure there are atleast 2 potential bidders interested in the auction, hence making bots and shills unnecessary. — Preceding unsigned comment added by 91.153.80.137 (talk) 22:06, 16 May 2015 (UTC)

According to Dr. Martin Shubik the grandfather of bidding-fee-auction method. Prefunding algorithm was the original way of doing business in 1971. It was considered commonsense knowledge in 1971 that auction needed to have atleast 2 or more precommitted bidders before the decision to initiate an auction was made.

Shubik, Martin 	Sun, May 22, 2016 at 4:49 PM To: Social Shopping Network ®  yes

From: Social Shopping Network ® [mailto:info@socialshoppingnetwork.org] Sent: Sunday, May 22, 2016 12:34 AM To: Shubik, Martin  Subject: Formal Precommitment Mechanism

Dr. Shubik, I ask for your confirmation to my argument?:

"In 1971 it was commonsense knowledge, that an auction was not initiated until there was at-least 2 or more precommitted players/bidders present."' — Preceding unsigned comment added by 91.153.51.245 (talk) 06:05, 23 May 2016 (UTC)

Advert tag
I couldn't see anything adverty in the text or references, so I removed the tag - David Gerard (talk) 09:12, 4 September 2016 (UTC)

FFI:
Though aimed at people who somehow enjoy the penny-auction format, this site was a wealth of information: http://www.pennyauctionwatch.com/ It's no longer being maintained; most data ceases at 20 May 2015. Still, I've not yet found another source that lists fully 52 online penny auctions: http://www.pennyauctionwatch.com/penny-auction-directory/

For the purposes of this article, shouldn't some of the "big players" be mentioned? For many months, television and Internet were being carpet-bombed with Beezid ads. Lately, DealDash seems to be making another assault, at least on sports channels. (Beezid may be in financial trouble.) Weeb Dingle (talk) 04:02, 2 January 2018 (UTC)