So How Do Penny Auction Websites Really Work? – Penny Auction Scams Exposed!

So You are here because you are wondering how penny auctions work. They seem too good to be true, are penny auctions a scam? Penny Auctions are auction style websites that charge you money every time you bid. Each time you bid the price of the item only goes up by one penny (hence the name “penny auction”). But are these sites really too good to be true?

In many of the articles on this website I will explore different penny auction websites, find out how they work and expose their scams so you can stay informed and make an educated decision for yourself on whether you want to be part of this style of gambling… And if so, which sites you should stick to (however in general I recommend not even entering the slimy gamble world that is Penny Auctions)

But for now, on this page I will explain in general how these penny auctions work and how much it really costs to make bids.

Penny auction websites charge you to bid on items at a per-bid fee. The typical sign-up standard rate for bids is 60 cents per bid. Your initial sign up process will usually charge you a beginner user package at this ~60 cents per bid price (more on this below as it can confuse some people). Once you have a membership, you can also bid on “bid packs” or “bid vouchers”. Using bid packs, it is sort of possible to win bids for as low as 10 cents per bid, however, there is one key thing to remember…


Thats right, you just won that bid pack at a net price of 10 cents per bid, but for every winner there are 10+ people who just spent a lot of their money bidding who did not win anything in return, they simply threw their money away. Let’s take the following bid voucher penny auction as an example:

Penny Auction bid voucher

Penny Auction bid voucher auction in progrses

If someone were to enter this auction right now and win by placing only 1 bid, and would only pay $2.80 to win the 50 bid bid voucher, that would break down to a net cost of 5.6 cents per bid. Hey thats not too shabby is it? But the thing is, that will never happen. Let’s say he had won a previous bid pack for 10 cents per bid and it took him 20 bids to win this bid pack, now if they win the bid pack they will be out of pocket $4.80 and will have paid 9.6 cents per bid for each bid in the bid pack.

Now that doesn’t seem all that bad either does it, except theres a catch, the likely hood of winning after only 20 bids is extremely rare. There are 16 other bidders in this auction, and more people will enter it as they think the item will come to an end. You could be competing with over 20 people for this bid pack in the end, and who knows when anyone is going to throw in the towel. There have already been, in the picture above, 280 bids on that one bid pack and this thing is just getting started. Let’s say the people bidding have won their bids at a value of 25 cents per bid, these people together have spent $70 bidding on this thing, no one has won, and only one person will win after battling everyone else for hours. Yes, it is true that you could be the last one standing after only spending a few dollars worth of bids… But out of all the other people also in the auction, do you really think that is very likely?

Penny Auction style websites will tell you that you need to have a system in place that gives you an advantage, a theory that will allow you to be the last bidder… but everyone else you are bidding against is thinking the same thing.

So at this point, we can agree that 25 cents per bid is a good number to stick to? 10 cents per bid is very hard to come by, 60 cents per bid is what you pay when you join, 25 cents per bid seems at least feasible. So we will use that number for the rest of this article and in other articles to base everything from in terms of costs on these penny auction websites.

So now let’s see where that 50 Bid voucher auction ended. $5.80, or 580 bids. Spending no money per bid, that works out to 11.6 cents per bid. If someone bid 20 times at 25 cents a bid the total cost for the bid voucher would be $10.80. That works out to 21.6 cents per bid. If someone had to bid 40 times to win that voucher, they would have spent about 31 cents per bid for each bid in the bid voucher. All In All, collectively people spent ~$145 bidding on this one bid pack. And you wonder how they can sell items so cheap?

Penny Auction bid voucher finished

Penny Auction bid voucher finished

OK so what if I turn my 80 bids I start with into 1000 bids by continuously winning bid vouchers using only my original bids? This is very possible is you are extremely lucky, but remember, there is fierce competition out there, people may be willing to pay higher than the cost of an item just so that they will not have wasted all their money on the penny auction with nothing to show for it. Some people are even trying to make a name for themselves by being fearless and never losing an auction so that they can intimidate other users from trying to compete in future auctions (sounds crazy doesn’t it? But it REALLY happens!).

Now that was fun, but what is the true cost of bidding on actual Penny Auction items, like those MacBooks and iPads people win for less that $50.00?

Well, let’s take this penny auction for an iPad as an example so see how it works. Retail, this iPad costs $499.00 (Funny they tell you this model’s value is 699 because it is really $499)… That is how much you could waltz into an apple store and pick one up for right now if you wanted to… Let’s break down this example auction and see how much people are really spending (this will reveal exactly why penny auction websites are capable of selling items so cheap):

Penny Auction iPad Cost

Penny Auction iPad Auction

Now Keep in mind I started writing this report 8 hours ago and was hoping this auction would be done by now so I could give you the final costs. I guess I’ll get to that later because I want to keep writing. So far this auction has had 11570 bids!!! At a cost of 25 cents per bid people have already spent $2892.50 just bidding on the damn thing! Even at a super duper value of 10 cents per bid, people would still have spent $1157.

Now as things would have it, I watched this penny auction closely for about 10 minutes about 8 hours ago when the price was still at $30… There were relatively the same 8 people continuously bidding on this item thinking they would be the last ones… Heck under the picture it says the last iPad sold for $1.01.. This one already up to ~$30 should be ending soon right?… Yea right, that was 8 hours ago… And to people just entering the auction, $115 is still a bargain compared to $499 (or $699).

Now 8 hours later it appears all of those people have abandoned this auction as there is a new group of ~5 people continuously bidding on the item… Well save 1, lilili was still bidding way back and shes still here now. She has probably spent over $200 just bidding on this thing and i bet now she is shaking and sweating that she is about to waste all of that money if she doesnt win (Update: Ok now 10 hours later shes gone, must have run out of money)… Which brings me to another point…

Be Prepared To Shell Out As Much As Full Retail Value, At LEAST If You Are Serious About Winning The Item.

Penny Auction iPad Cheap


And that is just to get you a good chance of winning… Penny Auction websites do a great job of making your forget how much bidding really costs. All of these testimonials about how people won items for 1 penny, a dollar, some absurdly low price… But how many auctions did they lose before winning that one auction? How much money have they spent bidding in total before winning that one item? Sure the final auction cost was $1.00 but they may have spent $500 losing other auctions before finally winning one. It is really niece and narcissistic to think that for some reason you will be able to “out smart” everyone else bidding on these things every time to really save any real money.

If everyone was saving money, penny auction websites would make absolutely no money. The stories they tell about being able to sell items so cheap because of their high volume deals or police auctions are complete garbage. They buy these items at full retail price and sit back while people spend over $2,000 just bidding on a $500 item, and they go laughing all the way to the bank.

Penny auction websites tell you they are being helpful to people, they tell you they are being moral, they are nothing more than a form of a legal online casino… Which brings be to another point…

How can you be sure there are no “Bots” placing bids to extend the auctions?

Shill bidding could occur and you would have absolutely no idea. They could have their auction plug the current price and money spent on bids into a mathematical formula that keeps extending the auction until they have covered the price of the item, and then some... And there is absolutely no way to verify whether or not this is happening. How do you even know you are bidding against real people?

Penny auction websites will spend thousands of dollars every day attracting people to their websites through advertising. This is another cost that they need to cover by making people purchase more and more bids. Who’s to say that a particular penny auction websites isn’t run by a complete sleezeball who doesn’t want to spend much on advertising to attract bidders, and just uses bots to make it look like there are a lot of people who use the website… You can never really know, and the people running the penny auction website sure as heck are not trust worthy.

So I hope I have answered all of your questions about how penny auctions work. Now go off and make your own decision about if you really want to be part of this. It is easy to get drawn in because of your “chance” to win something so cheap… But your odds are very bad, you are playing against real people who may be VERY dedicated to making sure they win.

Update:The iPad auction finally ended 10 hours later.

penny auction ipad sold price

Penny Auction iPad Sold

  • A total of 13,653 bids were made on this iPad Penny Auction
  • Even at an extreme value of 10 cents per bid, people still spent $1,365.30 bidding on something that costs $499. It is more likely however that people spent closer to $3,413.25 at 25 cents per bid.
  • Only ONE person won that auction
  • Several people spent hours of their life and hundreds of dollars in bids on this penny auction and still won NOTHING
  • No one will know if penny auction websites extend the duration of their auctions superficially by bots, or if real people ever win the items

Do You Still Want To Try Out These Penny Auctions?

Best Of Luck


37 Comments to So How Do Penny Auction Websites Really Work? – Penny Auction Scams Exposed!

  1. Ivan's Gravatar Ivan
    October 25, 2010 at 11:37 am | Permalink

    It has to be bots bidding on these sites because no one can be that silly, surely?

  2. leslie's Gravatar leslie
    November 5, 2010 at 3:39 pm | Permalink

    Oh my, did I feel so embarrassed! But I did not even realize that I had actually signed up, so I immediately filled out the paperwork for the guaranteed refund. That was 2 months ago. I thought it would just go into my account immediately. But no, this last month they charged my account again another $12!! Plus the international transaction fee! Geez! I am surprised my bank did not flag this sooner. But so now I had to cancel my debit card and fill out more paperwork so that my bank could pursue these guys. They truly are criminals! You will not get your refund back unless you call your bank and file a complaint. Do not waste another moment. Do it now!!!

    • Geoff's Gravatar Geoff
      August 13, 2011 at 11:07 am | Permalink

      It’s extremely unwise to use a debit card over the internet. If you get a fraudulent transaction on a credit card and dispute it, the transaction is immediately suspended. With a debit card the money has gone from you account and you have to wait until the problem is investigated and resolved before you get a refund.

  3. Barry Ruffin's Gravatar Barry Ruffin
    November 26, 2010 at 3:52 am | Permalink

    Thanks for the informational heads up on these scams.

  4. Scot's Gravatar Scot
    November 29, 2010 at 2:20 pm | Permalink

    ello All,
    I too was duped by wavee’s website. I thought I was applying for a 5 credit trial when in reality I was being set up for a $179 charge for 300 credits. The website is very cleverly designed and very quickly you are taken to a purchase that you are unaware of. After many repeated attempts to get a refund and many of the same, ‘we are sorry but that money is non refundable’ answers. Today I sent an email detailing some of what has been said here along with a threat of a class action lawsuit through the firm that just won suit against ATT and is in suit with BP. Within about 4 minutes I received an email stating “Typically we do not allow for refunds under these circumstances, as the price is very clearly disclosed and this purchase was non-refundable. However, as a valued customer, we are making a 1-time exception and submitting a refund for all unused purchased credits. You can expect to see your credit within 3-5 business days. Please let us know if you have any further questions.”
    So it worked, but I am still pissed off that I (and what looks like so many others) have been duped and then treated the way wavee has and so I am still considering beginning a class action suit against wavee. I was curious as to the level of support for this action may be out there.
    At the very least, threaten them with action or web press to get your money back, it seems that is all they respond to.

  5. cindy's Gravatar cindy
    December 1, 2010 at 5:16 pm | Permalink

    Thank you for this explanation. I have been studying these penny auctions (I have no intention of participating) and some of the websites give “convoluted” descriptions that made it difficult to decipher.

  6. Melanie Marie Shifflett Ridner's Gravatar Melanie Marie Shifflett Ridner
    February 20, 2011 at 10:36 am | Permalink

    Cancel your cards quick on this one.
    They are scammers and I was lucky and found out quick.
    Your Credit Card people will help you in this.
    I have also reported them as Fraud under the Intewrnational Auction Laws as well and as Scammers.
    They can be stopped for cheating people.Report all.

  7. Sandy Edgerly's Gravatar Sandy Edgerly
    May 7, 2011 at 3:58 pm | Permalink

    What a hoax and scam, if you think you’re going to win, good luck. I wasted more money than I ever anticipated, trying to win something, anything, everytime I purchased bids and got to a low amount of bids, it seemed very suspicious that I just happened to get the “sorry your bid was not accepted before the auction ended. I believed that they were doing this on purpose so I would run out my bids and buy more. I don’t trust their tactics and I don’t believe that they are totally legitimate, I did win a few time and received my items but all in all stay AWAY!!!!
    I would not recommend this site to someone who works hard for their money, I could have bought myself everything I wanted cheaper than trying to win it! So much for having a good time and actually believing in honesty and integrity!!!
    I also want to advise to stay away from Their jewelry is cheap and they are a rip off too! Maybe they are cloned with Quibids and whatever other auction sites that make tons of money of innocent and hard working people.

  8. Goinggoingsold's Gravatar Goinggoingsold
    June 29, 2011 at 9:32 am | Permalink

    I have been on for a month 1/2 now. I have lost over $12000.00 since then, I have found many problems on this site from auto bidder not working fairly to catching cheaters ganging up on new members to stealing the items being bid on. I have proof of every thing Im saying and will post them one at a time. After I caught the members cheating they got a 24 hour supention and were back at it the next day. The owner or man I talked to at koodeal was Mitchel. I had a problem yesterday when the auto bidder screwed up and bid twice to every bid made by two other bidders, one was called lovetobid and the other was asaliah how I think were working together or for koodeal. The item was a gremin worth $160.00 and I spent over 250 bids valued at 70 cents each. I reported the problem to Mitchel from koodeal and asked him to look at the auto bidder that screwed up or was maybe made to screw up. He said he would look into it. i waited all day to find my account with koodeal was suspended. STAY off this SITE or you will loss your shirt. There are several things I found crooked from being charged shipping when it never said so on the item I was bidding on. Right now I will be seeing a lawyer and calling bbb plus internet fraud along with Paypal about hidden charges. This place is as crooked as they get. BE WARNED

    was on Facebook a week ago deleting old freinds and I saw a post about, it seams they are sending out 1000s of emails to get people to join their penny auction, they are advertizing everywhere even on TV, the problem is people join then find out its crooked and a scam, lose all their money and then quit. That must be why them have to advertize so much, no one stays long. On the posting they told about three people complaining they open the link and got a bad virus. I don’t understand why koodeal would be spreading a virus or its been attached some where down the line, but I know one thing I will never open an email from koodeal until they say its safe.

  9. Rich's Gravatar Rich
    July 3, 2011 at 10:34 am | Permalink

    Thanks so much. You know the saying ” if it’s to good to be true……..” —- I was just about to buy a laptop on one of the many PA sites. Before I went on I spent a few minutes looking in to the best one to go to. Sadly, there are many so called ” objective ” review sites that claim PA sites are great !!!! The sites are well known….they must have a deal with the PA sites or get a cut of their profits. Google ” the best PA sites ” and you’ll find a ton of positive reviews on many PA sites. Like others that have posted here, btw- you posted this over 9 months ago and you ONLY have 9 reply’s!!!!!!! My guess is it’s like going to a casino. It’s addictive, like gambling. My guess is that most people know it’s a scam but love the rush, just like gamblers. How can they still be on??? Again, thanks for saving me time, effort , energy and money!

  10. Joe's Gravatar Joe
    August 3, 2011 at 10:04 am | Permalink

    Nice Article!

    These sites are a HUGE scam… please people – Beware!


  11. Ore Oand Milk's Gravatar Ore Oand Milk
    August 6, 2011 at 10:45 am | Permalink

    THANK YOU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I DID NOT KNOW HOW THESE THINGS WORK.

  12. Roger's Gravatar Roger
    August 21, 2011 at 11:37 pm | Permalink

    Yes. I thought “hmm… These look too good to be true” so I decided to check it out and see what they are. I didn’t try any because I’m not that dumb witted. Anyways great story. It really is a scam. And are you sure there is a winner every time? It could be a bot most of the time. They might not even have the real item. And isn’t online gambling illegal? So shouldn’t these be gone?

  13. Susan's Gravatar Susan
    August 29, 2011 at 10:33 am | Permalink

    Oh dear. I was about to sign up and buy some bids. Good thing I got the time to read your article before I even got to pay for anything. Thank you. Really.

  14. Tom's Gravatar Tom
    August 30, 2011 at 4:28 pm | Permalink

    Thank you for this article! I was just browsing around looking to see how much Ipads were and stumbled on one of those penny auctions websites. I was almost signed up for it and decided to do some research before I committed to the site. I’m sure glad I did and found your article….. No penny auctions for me. Ill stick to and

  15. Carlos's Gravatar Carlos
    September 19, 2011 at 6:23 pm | Permalink

    Thanks I was thinking about it, but I had no idea how it works. Thanks again you opened my eyes.

  16. Jackson's Gravatar Jackson
    September 20, 2011 at 8:04 am | Permalink

    Thanks for the article and the good post, I was very close to signing up to one of these penny auction sites…without doing my homework. I’m glad I did. I’m certainly not going to entertain this idea again! Sorry that some of you had to learn the hard way :(

  17. ALLAN K's Gravatar ALLAN K
    September 21, 2011 at 1:45 pm | Permalink

    Really glad I came here first. I do deligence first. I’ve been stung before by the ” just do it ” attitude and come away feeling USED. Yep there are con-artists outthere in sheeps clothing. BEWARE!!!

  18. Mike's Gravatar Mike
    October 8, 2011 at 1:05 pm | Permalink

    Thanks for the detailed article. I wondered how these sites could exist and you make it clear it’s a scam! There’s no such thing as a free lunch!

  19. Ben's Gravatar Ben
    November 28, 2011 at 6:23 pm | Permalink

    Ow.. Thanks guys. This really help me. I also was about to register, but then i decided to ask google first if the penny auction really work and google took me here. Again thanks so much

  20. Phil H's Gravatar Phil H
    December 18, 2011 at 7:18 pm | Permalink

    Thanks for posting this, I was almost going to sign up….but then figured it might be a good idea to see what other folks had to say first. I’m glad I did!

  21. Jason's Gravatar Jason
    December 23, 2011 at 12:34 pm | Permalink

    Ya I signed up for just a few bids to just see for my self and 99% of the people bidding have an auto bidder going. so I don’t know how to come up with a system when everyone is using auto bidder. Ya its dumb that some one can go on say I will bid 500 bids on this I pad go to sleep and get on the next day to see if they won. That is not the way any auction I have ever seen work.

  22. Russel's Gravatar Russel
    January 2, 2012 at 6:30 pm | Permalink

    Boon thank you very much, this is probably the best information with no gray areas. Thank God, i found your article before i spent any money.

    Thank you again and God bless,

  23. Chris Ball's Gravatar Chris Ball
    February 11, 2012 at 3:10 am | Permalink

    Thanks so much for your incisive comments regarding internet penny auctions. I joined QuiBids a few days ago and without indulging excessively (as I’m a nervous gambler – and gambling is what this really is). I managed to lose $500 of my hard earned money. I did win a $10 store voucher to find the charges for Postage & Handling was an astounding $4.00! This reducing the item’s worth to $6. Deduct the $1.80 I spent on bids and the item now has a value worth of a mere $4.20, and of course there would be the bank’s credit card transaction fees on top of that. What small amount is left of the prize would be spent on gas driving to the store.. Who’s the fool here? I did win a camera valued at $170 a day later for $5. But the savings here soon went back into buying more bids as the andrenalin rush started to build. I sensed addiction forming. Thanks for your article. I see clearly now what would could have led me down a financial disastrous path by reading your comments. A dollar is too hard to earn today without having to lose it in this manner. I hope my comments may help others too.

  24. GoGetta4Life's Gravatar GoGetta4Life
    March 1, 2012 at 4:52 pm | Permalink

    Beware of this penny auction site called They’re all a bunch of thieves. I lost over $300 with them and I didn’t even win anything. Don’t say I didn’t warn you all. Circulate this post around to warn other people about them.

  25. Ishop4cheap's Gravatar Ishop4cheap
    March 1, 2012 at 7:48 pm | Permalink



    !!!!!!!!SCAM SCAM SCAM SCAM SCAM !!!!!! BEWARE!!!!!!!

  26. NellyR's Gravatar NellyR
    March 8, 2012 at 10:21 am | Permalink

    Phew! That was close! It pays to reasearch!
    Thanks for the heads up!

  27. Bidify's Gravatar Bidify
    May 10, 2012 at 1:11 pm | Permalink

    There is a new site about to launch called working together with . The sites are presently being populated by network marketers, for the purpose of making money off of anyone who joins them. It will be interesting to follow up on those sites and see which tactics they will be using. Will they have their main Bidsson site scripted with bots?…

  28. Ian's Gravatar Ian
    June 6, 2012 at 8:45 am | Permalink

    Keep in mind that while these may be legitimate deals, lots of people lose money on every bid, too. For example, let’s look at’s “Glock of Choice” at $28. If you buys your bids in bulk, the best deal you get is about 65 cents per bid. As a penny auction, a final sale prince of $28 means that 2,800 bids were made, so customers paid a total of $1,820 in bids for that $525 Glock. Nice day’s work for Bud’s, who gets to pocket $1,295 profit. If you’re the guy who won the bid, you probably dropped about 250 bids to win it, so you really paid about $190.50 ($28 plus $162.50 in bids) for a $525 pistol. Still a nice deal, but there’s probably another 15 guys who dropped 150 bids a piece for that same auction. So, they spent $97.50 and got NOTHING for it. Bud’s is pretty good in that they will let you buy the item at retail with a discount based on the bids you spent (so if you dropped $75 in bids, you can buy the gun for $450; the retail price, minus 50 cents per bid you cast in that auction). Keep in mind, though, that the bid discount is less than the bid price. If you dropped 150 bids, then buy off the discount, you’ll end up paying $547.50 for a gun that cost $525. So, if you were going to buy the item, and were willing to pay the retail cost (or even slightly over it), go ahead bid, but understand that you will probably end up paying *more* than retail. You’re paying the extra money for the fun and excitement of the bid, and that thousand-to-one chance to come out ahead.

    BTW, sometimes Bud’s does come out losing. I have seen a $500 pistol sell for $4.03 (about a $230 loss for Bud’s), but most guns sell for between $25 and $50 ($1,625 and $3,250 in bids), and I’ve seen a $399 pistol sell for $101.68, for a profit of $6,311.88 for that one pistol. It’s not a scam, but make sure you know what you’re getting into.

  29. Cheryl Williams's Gravatar Cheryl Williams
    June 6, 2012 at 10:54 pm | Permalink

    Ubid and other new sites have some new tricks to burn customers. Amazingly, despite their huge profits many penny auctions go under. I’d love to know how THAT happens!?

    New tricks I saw during a recent moment of weakness involved giving away large numbers of free bids to draw the customer in, then offering lots of bid packages for the customer to win with their free bids. (You see, the free bids cannot be used to win real prizes.) Once the bidder has won some real bids, they have to pay for them. 9Mine were $200! and I had 1700 bids)

    Then I was up against many others who were in the same boat. Hours would go by and no one would win anything. Also, you could not leave your Autobot unattended or you betting would freeze! You would have to sit and click the mouse for hours! It’s no fun at all!!!

  30. caesar's Gravatar caesar
    June 28, 2012 at 7:39 am | Permalink

    very nicely written article,, i am sure it will help a lot of people save their hard earned money

  31. Daniel's Gravatar Daniel
    July 3, 2012 at 10:21 pm | Permalink

    DO NOT USE KOODEAL. IT IS A SCAM. Items have taken months to be shipped, if even shipped at all. I still have hundreds of dollars worth that I have not received yet and now they have suspended my account so I cannot check on my outstanding items any more. STAY AWAY FROM KOODEAL!! Make sure you do your research before joining, you will find many, many complaints against KooDeal with a simple Google search.

  32. Manish Boob's Gravatar Manish Boob
    September 22, 2012 at 1:15 am | Permalink is a scam. No one wins here. I found that they used a bot to fake up the bids. True that nothing comes for free or cheap. Stay away

  33. ccq's Gravatar ccq
    November 21, 2012 at 9:10 am | Permalink

    This Article was very thorough. Thank you for your hard work exposing the truth!

  34. Amber Joy's Gravatar Amber Joy
    January 23, 2013 at 2:00 pm | Permalink

    Thanks so much for taking the time to break all of this down. It was very helpful!

  35. Derek's Gravatar Derek
    February 5, 2013 at 1:01 pm | Permalink

    Thanks for the heads up. I was thinking about Quibids but this article has changed my mind.

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