Penny auction websites are not always fun and games

Posted: Updated:

A $100 gas card for a quarter.

A $50 gift card for a penny.

These are the deals consumers like Steve Mendelson see when they log on to the penny auction website,

“A gift card or something was probably the first thing that I won,” he said.

Steve registered for the website about a month before Christmas to score some good deals on gifts.

“And I said well holiday time this will be nice.”

But four weeks and $14,000 later, Steve now admits it was an expensive mistake.

“It's a trickery,” he said. “It's not legit.”

Here's how works:

Users sign up and purchase a bid package.

Each bid costs 75 cents, not a penny.

Fifty bids cost $37.50, 100 bids cost $75 and so on.

The penny only comes into play when users actually bid on auction items.

If the process seems confusing, Ken Colburn with Data Doctors says it's supposed to.

“If you’re going to engage in auctions on the internet you have to understand that you're probably in the largest category of fraud on the internet,” Colburn said.

Steve won several gift cards and IPod Touch for $658, which retails for $229.

He also won a set of Wii gaming accessories.

The set retails for $449, but Steve spent more than $1,000 on them, he says, without even realizing it.

“So that's well over $1,000 that I spent for an item that costs a fraction of that,” he said. “But, you don't realize that when you're doing it because you're just sitting there bidding.”

Steve also suspects many of the users aren't even real people, but bots that bid automatically putting real users like him at an unfair disadvantage.

“At the end of the day, it's really impossible to know who's telling the truth, whether it's real or not so you've got to do your homework before you decide to bid on anything on any website you've never heard of,” Colburn said. tells 3 On Your Side it does not use bots on its website, and that while there are many fraudulent penny auction websites out there, Bid Cactus is not one of them.

A spokesperson says it’s gone to great lengths to prove its legitimacy, including posting on its homepage a review by auditing firm Ernst and Young.

It also says it’s a member of an industry association, "With the sole purpose of promoting integrity within the entertainment auction industry.”

Steve, meanwhile, no longer uses the website, and cautions anyone who signs up to be careful or your money too could be going, going, gone.