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{{auction}}
A '''bidding fee auction''', also called a '''penny auction''', is a type of [[all-pay auction]] in which all participants must pay a non-refundable fee to place each small incremental bid. The auction is extended each time a new bid is placed, typically by ten to twenty seconds. Without new bids the last participant to have placed a bid wins the item and also pays the final bid price. The auctioneer makes money in two ways: the fees for each bid and the payment for the winning bid, totalling typically significantly more than the value of the item.<ref name="reviewopedia">{{cite web|title=QuiBids.com Reviews – Legit or Scam?|url=http://reviewopedia.com/workathome/quibids-com-reviews-is-quibids-a-scam/|publisher=Reviewopedia.com|accessdate=13 November 2012}}</ref> Such auctions are typically held over the [[Internet]], rather than in person.▼
{{For|'Penny auction' in context of foreclosure, in which participants collectively discourage competitive bidding in order to force the sale of a foreclosed property at a low price|Penny auction (foreclosure)}}
▲A '''bidding fee auction''', also called a '''penny auction''', is a type of [[all-pay auction]] in which all participants must pay a non-refundable fee to place each small incremental bid. The auction is extended each time a new bid is placed, typically by
==How it works==
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For example, if an item worth 1,000 currency units (dollars, euros, etc.) sells at a final price of 60, and a bid costing 1 raises the price of the item by 0.01, the auctioneer receives 6,000 for the 6,000 bids and 60 as the final price, a total of 6,060, a profit of 5,060. If the winning bidder used 150 bids in the process, they would have paid 150 for the bids plus 60 for the final price, a total of 210 and a saving of 790. All the other, losing, bidders collectively paid 5,850 and received nothing.
A 2010 ''[[TechCrunch]]'' article
==Criticism==
Due to the possibility of participants spending
|date=25 May 2009|url=https://blog.codinghorror.com/penny-auctions-theyre-gambling/|publisher=Coding Horror|
Potential [[fraud]]ulent practices which can disadvantage buyers even more include shill bidding, where a human or software (bot) bidder covertly acting for the seller places bids which make legitimate bidders continue bidding where otherwise the auction would end, and simply not sending out goods for which a price, albeit low, has been paid.
Some bidding fee auction sites have been shut down by state governments after investigations. Wavee US, LLC, settled with the Governor's Office of Consumer Protection in Georgia and agreed to close its website after the office received complaints about merchandise not being shipped in a timely fashion. Washington state shut down PennyBiddr after a lawsuit in which the state accused PennyBiddr of using [[shill bidding]] to drive up prices and extend auctions. In addition, several auction sites which claimed to be [[Better Business Bureau]] "Accredited" were not members of the BBB or had poor ratings with the BBB.<ref name="consumerman">
▲Some bidding fee auction sites have been shut down by state governments after investigations. Wavee US, LLC, settled with the Governor's Office of Consumer Protection in Georgia and agreed to close its website after the office received complaints about merchandise not being shipped in a timely fashion. Washington state shut down PennyBiddr after a lawsuit in which the state accused PennyBiddr of using [[shill bidding]] to drive up prices and extend auctions. In addition, several auction sites which claimed to be [[Better Business Bureau]] "Accredited" were not members of the BBB or had poor ratings with the BBB.<ref name="consumerman">[https://web.archive.org/web/20120502081923/http://today.msnbc.msn.com/id/44010040/ns/today-today_news/t/most-online-penny-auctions-just-dont-make-any-sense/ Most online penny auctions just don't make any sense]</ref>
==See also==
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{{DEFAULTSORT:Bidding fee auction}}
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