I keep getting email from different organizations claiming that if I join their auction I could buy an iPad for $20 or less, or even win one for the cost of entering the sweepstakes! Tempting, but do ya think it’s legit, Dave?
I got your question while I was going through my spam filtering report for the last 24 hours. For fun, here are the two spam messages I found that were in this same vein: “BREAKING NOW – iPad auctioned off for $18.23!” and “iPad Auctions $12 – WHAT A DEAL!”
I don’t have to read any further to tell you that either it’s a completely scam (which is what I’d guess) or that your odds of winning with a small entry fee are tiny and without any fee at all is zero.
Let’s do the math, shall we?
The entry-level Apple iPad runs about $599 + tax + shipping. Let’s say $650. Now if you wanted to have a raffle or sweepstakes, you could theoretically tell 700 people that for a $1 entry fee they have a chance of winning a free iPad. Your net would be $700, the unit costs $650, you probably pass on the shipping costs to the winner (e.g. “You’ve won! Please send us $25 for shipping”), and you could clear $50-$75 on the transaction.
That’s not enough to be interesting, though, so perhaps we’re talking about 1000 entrants? Or, better, it’s a $5 entry fee and there are only 200 people in the running. 1:200 odds of winning? Not too bad, I suppose, and $5 for an iPad would be sweet, sweet deal. Oh, and the person organizing it? They’d clear $450 or so for each iPad raffle they held.
Buuuutttt….
My guess is that somehow you, as someone not associated or affiliated with the sweepstakes organizer, would never win. Think about the profit margin now, when the organizer’s girlfriend “wins” the raffle and not only does he pay for her iPad (massive bonus points and one heck of a present!) but he also drops an additional $500 in the bank.
So the entry-fee certainly seems like a guaranteed scam, even if they do give away an iPad at the end of the sweepstakes. It’s online and an auction? No, it’s probably not. That’s a sham set up for you to pay your “registration fee”. Enough people pay the fee and “Susie” wins again. Tricky, eh?
If it were a giveaway without any fee, you then have to ask the question “what’s in it for them?” No organization is going to give away a $500 product. I’d be even more suspicious of them, and very reticent about sharing any personal information. Because here’s the savvy trick: You want to collect personally identifiable information to data mine for identity thieves? Run a giveaway and ask for lots of info from entrants.
Suddenly none of this sounds so good, does it?
Good. Run away from these deals. None of them are legit, none of them are going to end well for you. If your local church or girl scout troop is hosting a raffle, that’s worth supporting. If it’s some random group online? Yeah, that’s why you have that big “delete” button in your email program. Use it. And be safe out there.
There are also some new auction sites that tell you you can get the same types of deals, just remember the auction house always makes money…
so first off you sign up, then you have to purchase bids, bids run approximately 100 for $20.
here’s the “gimmic”, there is no set end time for the auction, the time gets extended based on how close to the end you bid.
(and keep in mind that each bid costs the bidder 20cents)
for ex: you bid on an iPad currently at $23.00 with only 30sec left. your bid raises the price to $23.01 and adds 2min to the clock
bidding eventually ends at $75. and someone gets the iPad for $75 plus what their bids cost.
so at $75 the auction house has collected $1500.00 in bids ($0.20 bids each raise price $0.01) plus the $75 the winner pays…
is it a scam? not exactly, but they certainly are NOT losing money
Leif, yeah, I run Google AdSense and have no control over what specific ads they include. It’s ironic, but hopefully my article gives you enough savvy to be suspicious of the ad that showed up from SwipeAuctions.com!
Dave, I am unsure of your message here. I have read your response but on your page you advertise
“Today: iPads are $26.11 Alert: iPads are Being Auctioned on SwipeAuctions.com for 90% Off. ”
Another version is the one with “participation required” in small print. I suppose that, if you really did everything they required, you might actually get the iPad/laptop/whatever they are “giving away” for “free”. But, by the time you’ve done everything they require, you’ve spent quite a few bucks, and I don’t have the time nor the money to actually try it.
I’ve followed a couple of them through to the point of discovering what, exactly, is “participation”. Typically, it’s something like following through on “10 silver, 5 gold, and 2 platinum offers” that you’ll receive. With each one of those, you can be sure that “they” will receive a nice chuck of change for a referral fee or affiliate commission. And the “platinum offer” might be something like taking a 5-day cruise.
And, if you decide partway through that you don’t want to be bothered, they still collect their fees and commissions.
Great Blog Dave. Nice to see someone sticking up for the consumer. There are so many scam artists out there these days. And yes, if we give them our personal information, we are doomed. My question is, how can the consumer distinguish between online purchases that are safe and online purchases that are not safe?
advice taken !!!
thank you for sharing …