Wednesday, 9 May 2012, 11:47 am
Press Release: Netsafe
Media releaseWednesday, 9 May 2012 Penny auction
websites takes more than small changeConsumers are being
warned about penny auction sites, which despite offering
‘free trials’ are quietly charging hundreds of dollars
to credit cards.The warning comes from a new cross-agency
working group, made up of the Ministry of Consumer Affairs,
Department of Internal Affairs and Netsafe. The group is
dedicated to fighting consumer fraud.Penny auctions are a
twist on online auctions. The difference is you pay to take
part − either each time you bid or through a monthly
membership fee – even if you don’t win the auction. Each
bid increases the price by just one or two cents; so ‘in
theory’ you can buy sought-after goods for a fraction of
their retail price.The working group has had dozens of
complaints about penny auction sites, says Ministry of
Consumer Affairs Team Leader Jarrod Rendle.“In a number
of cases, the complainants thought they’d bagged a bargain
while on a seven day ‘free trial’, but by redeeming
their goods they’ve unknowingly agreed to three months’
membership, at $119 a month.
“When they tried to cancel,
they were told to send a $54 cancellation fee, along with
photocopies of their credit card and passport. This leaves
them not only out of pocket, but potentially open to
identity fraud.”