Swoopo - great auction deals or great scam?
Today I stumbled upon a site called Swoopo. It is touted as a new auction site that combines shopping with entertainment. I took a quick look and it seemed like many items were selling for very low prices. For example, an ounce of gold recently sold for only $187.96 when it is worth around $1000. How is this possible?
Apparently, users have to pay 75 cents for each bid, and each bid increases the auction price by a very small amount. In the case of the gold bar, each bid only increases the price by 1 cent since it is a penny auction. This means that there were a total of 18796 bids by all the users with a total value of $14097. If you subtract the value of the item from $14097, Swoopo still made a handsome profit of over $13000 on this single auction. The winner of the auction placed a total of 213 bids so he or she did get a good deal on the gold bar, but the rest of the bidders pretty much lost their money.
A rather fishy part of the site is that many of the winners who "win" these auctions use something called a BidButler. It is essentially a bid sniping bot that bids in the last few seconds of an auction. However, each auction's time left is supposed to go up by a few seconds so that others have a chance to bid. The BidButler allows people to basically schedule bids and get hundreds of paid bids for Swoopo in a short amount of time.
Finally, just as an experiment I sat down and watched a couple auctions. It was definitely exciting to watch the clock going down to less than ten seconds as a frenzy of bids poured in, but then suddenly the clock gets extended by 10 to 20 minutes and the waiting game starts all over again. There is a final end time on each item, but before that final date the clock is basically controlled by Swoopo and they could extend it as long as they are getting people willing to throw their money away. They know that every time they bring the clock close to 0 they will be raking in cash, and they can do that countless times before the final end time.
As the old adage goes, "if it sounds too good to be true, it probably is". Swoopo basically lets people gamble that noone else will make another bid for a ridiculously cheap item, and in the process Swoopo profits. If you are into finding deals via auctions, I would definitely stick with sites like eBay
where you do not have to pay to bid.