Consumers warned about penny auctions

Online penny auctions may offer deals, but they can also pose problems, according to the Federal Trade Commission.
The agency has issued a new consumer alert called Online Penny Auctions: Nothing for Something?
Penny auctions often charge a substantial fee just to register, and you have to pay each time you place a bid, whether you win or lose, officials say. For example, your $50 winning bid for a camera might seem like a bargain, but if you placed 200 bids that cost $1 each, your cost will actually be $250 – plus shipping and handling, and possibly a transaction fee. Many people have experienced late shipments, no shipments, and shipments of lesser quality than advertised. You also have to be wary of hidden costs, and what options you have if something goes wrong.
The FTC is encouraging consumers to learn how penny auctions work, and how to recognize the pitfalls before it’s too late.

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