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An online penny auction is a site that requires bidders to pay a small fee for each bid that they place on items. Auctions are started at minimal amounts with a set time period for the auction to run. With each new bid, the timer on the auction is extended. The winner is the person with the highest bid at the time that the timer finally runs out. These sites have become widely popular for consumers who are looking for a way to get a great deal on electronics that would otherwise cost several times as much. These consumers often invest lump sums to gain a significant number of available bids so that they can bid on many items in any single period. You may find yourself wondering how these sites can afford to sell items so cheap, especially if an auction for a $500 item closes out at $20. In some cases, these companies are buying in significant bulk, so they get a substantial discount on each item. Also, these companies make a profit on the many consumers who pay large amounts for a bank of bids and then do not win any auctions. When you evaluate the number of bids most of these items receive and you calculate the per-bid fees, the company receives significantly more for the item than it may appear on the surface. One of the biggest concerns that arose as online penny auctions grew in popularity is the potential for fraudulent sites and activities. Many online penny auctions are designed simply to scam the consumer out of hard-earned money. You invest money to obtain the right to bid on items, and then the site either employs someone who uses fraudulent accounts to bid in the background and lock out any other potential winners. In these cases, the items listed for auction typically do not exist, and the website operator is simply scamming people for money. In other cases, the sites have installed bidding bots that will automatically generate computerized bids for items across the site, raising the bid price to ensure that they receive a fair market value for the item that is sold. Some consumers have invested money into online penny auctions and had success turning it into a great deal on electronics. In other cases, even winning bidders report that either the items never arrive or they arrive damaged. Check into the reputation of any online penny auction site before you register or invest money so that you can be sure that they are legitimate. The key to avoiding serious financial pitfalls when it comes to an online penny auction site is to choose a site that has been proven reputable and has a high rating with the consumer services bureaus. Set your budget before you even purchase bid opportunities, and include your bid opportunity purchase in your budget so that you do not over-extend your finances. Even if you find something that seems to be a phenomenal deal, do not overspend your budget. Be prepared to walk away from any auction in the event that you are overbid and do not have the additional room in your budget to bid again. Remember that in most cases, when you win online penny auctions, you will also have to pay shipping. The auction site may have a flat-rate shipping amount that could cost you significantly more than you would pay if you purchased the item at retail nearby instead. These are all revenue opportunities for the auction site, so be prepared and do your research. When you work with a site that is reputable and high quality, you can have an enjoyable experience and find fantastic deals that you are likely to rave about for months.
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