4 ms·

Penny Auction Scam Exposed by USCD Math students

9 points by cellis 15y ago

twiceaday 15y ago
Am I missing something? What rule are those sites breaking? They are clearly a scam. If you sign up and play by their rules and give them your money than it's your fault.
- jerryji 15y ago
  When you signup, were you informed of the following? "You understand and consent that you will be bidding against our robots, whose sole job is to take your money and waste your time."
- Lazare 15y ago
  Yes and no. The stated rules of these sites are profoundly unfair (even evil) but they are not, in and of themselves, scams. After all, someone has to win, and it's at least theoretically possible that the winner will have actually spent less than the items retail cost to get it. To quote Wikipedia's example: For example, if an item worth $1,000 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. This represents a profit of $5,060 for the auction site. Assuming the winning bidder used 150 bids in the process, they would have paid $150 for the bids and $60 for the final price, a total of $210 and a savings of $790. Of course, in a real auction, the winner may well end up paying more than $1,000 for the item...but still, it COULD work. But if bots run by the auctioneer always bid on items, then no actual person ever wins. In fact, the merchandise wouldn't even exist. (Why have a warehouse full of PS3s if nobody but the company ever "wins" an auction for one?) It's like a slot machine that never pays out. And that would be fraud. (Also, an example of shocking greed, considering that the normal penny auction format is effectively a license to print money.)
neemaux 15y ago
UCSD!
ChuckMcM 15y ago
It is interesting but its not clear that the robots are actually ArrowOutlet's. There are a number of ebay 'sniper-bots' which take your actual maximum bid price and will enter that price precisely 1.0 seconds before the auction ends if the price is currently lower than your max. If you sell stuff there it can be fascinating to what 30 - 100 bids arrive with 1 second to go. But those snipe-bots are being 'driven' by humans who are trying to minimize the price they pay for something. The statistics work was very nicely done though in the paper.
- therobot24 15y ago
  there are a few arguments that are presented as to why the robots most likely belong to ArrowOutlet: http://arrowoutletinfo.com/robots.php http://arrowoutletinfo.com/robots.php When reading the article, you have to click "[Who are these robots?]" within the table in the center of the page.

9 points by cellis 15y ago

Am I missing something? What rule are those sites breaking? They are clearly a scam. If you sign up and play by their rules and give them your money than it's your fault.

jerryji 15y ago
When you signup, were you informed of the following? "You understand and consent that you will be bidding against our robots, whose sole job is to take your money and waste your time."
Lazare 15y ago
Yes and no. The stated rules of these sites are profoundly unfair (even evil) but they are not, in and of themselves, scams. After all, someone has to win, and it's at least theoretically possible that the winner will have actually spent less than the items retail cost to get it. To quote Wikipedia's example: For example, if an item worth $1,000 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. This represents a profit of $5,060 for the auction site. Assuming the winning bidder used 150 bids in the process, they would have paid $150 for the bids and $60 for the final price, a total of $210 and a savings of $790. Of course, in a real auction, the winner may well end up paying more than $1,000 for the item...but still, it COULD work. But if bots run by the auctioneer always bid on items, then no actual person ever wins. In fact, the merchandise wouldn't even exist. (Why have a warehouse full of PS3s if nobody but the company ever "wins" an auction for one?) It's like a slot machine that never pays out. And that would be fraud. (Also, an example of shocking greed, considering that the normal penny auction format is effectively a license to print money.)

neemaux 15y ago

UCSD!

ChuckMcM 15y ago

It is interesting but its not clear that the robots are actually ArrowOutlet's. There are a number of ebay 'sniper-bots' which take your actual maximum bid price and will enter that price precisely 1.0 seconds before the auction ends if the price is currently lower than your max. If you sell stuff there it can be fascinating to what 30 - 100 bids arrive with 1 second to go. But those snipe-bots are being 'driven' by humans who are trying to minimize the price they pay for something. The statistics work was very nicely done though in the paper.

therobot24 15y ago
there are a few arguments that are presented as to why the robots most likely belong to ArrowOutlet: http://arrowoutletinfo.com/robots.php http://arrowoutletinfo.com/robots.php When reading the article, you have to click "[Who are these robots?]" within the table in the center of the page.