Penny auction websites takes more than smallchange

[nortonresearch]

http://www.scoop.co.nz/stories/BU1205/S00288/penny-auction-websites-takes-more-than-small-change.htm

Wednesday, 9 May 2012
Penny auction websites takes more than small change
Consumers 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 fightingconsumer 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."
NetSafe Operations Manager Lee Chisholm says: "If you're going to
spend money on a website you haven't used before, do some research
first. Google the website followed by the word 'review', or 'scam' and
check what others have to say."
Under the Fair Trading Act companies trading in New Zealand are
prohibited from deceptive or misleading conduct, says Mr Rendle.
"However many of these auctions are based overseas, where different
laws will apply. If something goes wrong with the goods you've bought,
you may not have the same rights as you do in New Zealand, and New
Zealand enforcement agencies may not be able to investigate your
complaint."
Background info
The cross-agency working group was formed to share resources and
better identify and publicise consumer fraud and scams. It is chaired
by the Ministry of Consumer Affairs and includes the Department of
Internal Affairs' Anti-Spam Compliance Unit and non-government
organisation Netsafe.
* For cyber safety advice visit www.netsafe.org.nz.
* For information on spam, or to report email, fax or text spam go to
www.antispam.govt.nz.
* For more information on scams visit www.scamwatch.govt.nz.
ENDS