FRANKENMUTH, Mich. -
Maybe you've seen the ads on the Internet, promising a Macbook $23.50, an iPhone for $5 or a $50 gift card for just pennies.
If it sounds too good to be true, welcome to the world of penny auctions. It isn't a scam, people actually win, but there are things you should know before you jump in.
Jonathan Mason from Frankenmuth is the proud owner of a brand new $35K Chevrolet Camaro, and you're not going to believe what he paid for it: $5.28. When he won, Mason says his wife didn't believe it either. "I said wake the baby up we just won this car, she made me show her on the Internet that it was my screen name that won."
Mason took advantage of a brand new website called fastpennycars.com. The owners of the website are here in Mid-Michigan, and this Camaro was its first-ever auction.
"We wanted to do something different, and there are no other websites selling new cars," said website founder Kent Kern.
Kern admits that the website took a huge loss on this first auction, but he's quick to point out selling the car for $5 earned them a ton of free publicity, which leads to new bidders. "It has helped, when the mustang goes up for sale on the 16th we are hoping it goes for more than the last one," Kern said.
Most of the well-known penny auction sites like Quibids, Beezid or Skoreit don't sell cars, they auction off gift cards, computers and other gadgets. On any penny auction site bidders have to sign up and buy bids. Bids generally cost anywhere from a dime to a dollar apiece.
Once they have bids, then the bidder chooses an item to try to win. Items for auction are on a timer, and the clock winds down to zero. Each bid adds time to the clock. In theory, the auction could go on forever, but since bids cost money, bidders drop out of the auction. The bidder who puts the final bid in before the clock hits zero wins the item.
Since bidders on penny auction websites must buy bids, the true cost to Jonathan Mason to get that car was more than $5.28. He says he used $40 worth of bids to win the auction. But when he picked up the car, he had to pay the final auction price of $5.28.
Video:
http://www.wnem.com/story/15062471/fran ... ro-for-528
