Bidcactus Sued In Hartford On Claims Its An Illegal Gambling Site

October 22, 2011
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You have probably heard of Internet penny auctions where they tell you that you could win an iPad for $10 or a 55 inch HD TV for $20. Millions of people have actually played – most of them losing.

Westport is the home of one of the largest penny auction sites – Bidcactus – which was sued recently on claims that the site is nothing more than illegal gambling.

Bidcactus, along with Oklahoma headquartered QuiBids, have been targeted by a Texas law firm for possible class action lawsuits, seeking millions of dollars in damages, legal fees and to force the companies to clearly state on their site that its gambling not an auction.

Bidcactus said it denies the claims in the Hartford Federal Court suit and will defend itself against the charges. QuiBids is also defending itself saying it is doing nothing improper. It has sought to dismiss the lawsuit.

There are scores of other sites, called penny auctions, where consumers pay a fee to bid on an item and every time someone bids on that item, its price goes up by one or two cents.

As an example of how the typical penny auction site works:

Let’s say you want a new iPad. Bidding starts at 0. It costs you 60 cents to make a bid. After you bid, anyone else has 20 seconds to bid up the price. That person then pays 60 cents for his or her bid and the price goes up by 2 cents. The 20-second clock starts running again, and it goes on until there are no bidders left. So your first bid of one cent costs you 60 cents. The next person bids two cents and pays 60 cents for the bid. You then bid three cents and pay 60 cents for that bid.

So let’s say the iPad gets sold for $25. That means that about 2,000 bids were placed at 60 cents each, bringing the owner of the web site $1,200 for a $500 gadget.

Great for the web site, too bad for the 1999 people that lost hundreds of dollars.

Jill Farrand, the spokeswoman for QuiBids, has told CtWatchdog, that unlike some other site, his is run legitimately and that players have a chance to use their lost bids to purchase items at “online retail value,” using their losses to make up part of the payment. Farrand says that not even members of QuiBids employees’ families are allowed to bid on products.

“Auto-bots and shill bidding are some of the ways penny auctions get a bad reputation,” she wrote me. “One bad apple spoils the whole bunch. We try to be as transparent as possible and we believe that by working the way we do, ethically and morally, we’ll continue to build and keep strong relationship with our users.”

Steven M. Mendelsohn, the named plaintiff against the Westport firm, is from Arizona, is not a person a jury would be very sympathetic to. His lawyers hope that a judge will grant them class action status, which would include everyone who lost money at the auction site.

His attorney, Roger L. Mandel, paints Mendelsohn as a fool, who spent more than $15,000 on the site, and got less than $6,000 in prizes, before realizing that he was getting ripped off.

Mendelsohn also appears to have been addicted to the site, bidding for several months on a whole host of items, ranging from a steam mop to Wal-Mart gift cards.

However, the shocking amount of money he lost was not immediately noticeable to Plaintiff. It took weeks for Plaintiff to realize that he had lost and the total amount he had lost,” states the lawsuit.

I have no idea what the outcome of the lawsuits are, but don’t be a fool like Mendelsohn and let other suckers bid on these sites. Go to eBay where there are real auctions. Remember, nothing of value is free, and no one is going to sell you a new iPad for a few dollars.

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9 Responses to Bidcactus Sued In Hartford On Claims Its An Illegal Gambling Site

  1. Amanda Lee PennyAuctionWatch.com Founder on October 22, 2011 at 2:40 am

    It’s true, ““However, the shocking amount of money he lost was not immediately noticeable to Plaintiff. It took weeks for Plaintiff to realize that he had lost and the total amount he had lost,” states the lawsuit.” Bidders need to be very careful, watch their spending. There are sites that have ripped people off, but Id say in most cases bidders like Medelsohn and even myself at times in the past have gotten carried away. Self responsibility is necessary, I don’t know how someone who knows how penny auctions work, they’re unpredictable, with some having bota/shills, but even if they don’t, for someone to sue and blame the provider because they didn’t exercise self control is foolish and I’ve lost money too, I wont sue for it just learn from my mistakes…If on the other hand the sites scammed me with bots, shills, failure to ship, some indeed have, well that is another story and as I have been saying since 2009.. enough is enough. Many consumers have caught on and have stopped bidding. It is not a sustainable form of e-commerce for buyers or sellers as I recently told Consumer Reports and other news outlets..

    For more info on penny auctions, precautions & warnings visit my site http://pennyauctionwatch.com.

  2. Penny Auctions on October 22, 2011 at 9:43 am

    The individual referenced in the article engaged in bidding for an extended period of time and invested ridiculous amounts of money. Unfortunately, that’s not an excuse for them to sue.

    Penny auctions have a learning curve. The formats and fundamentals need to be grasped before consumers start participating on a site for the first time. Users who aren’t willing to do their HW, should avoid penny auctions at all costs.

    Users who appreciate the thrill of winning items at a discount, should learn more about the entertainment shopping industry and decide whether or not its a good fit for them.

    http://pennyauctionlist.com has site reviews, tips and strategies for those who are new to this concept.

    Josh

  3. Anthony on October 22, 2011 at 12:03 pm

    I feel no sorrow for Mr. Medelsohn. You played Penny Auctions, and won 9K worth of stuff, but didn’t know how much you lost. Only when you calculated that you were not ahead of the game did you cry foul. REALLY!! So If I smoke for 10 years knowing there are health risks, and then get diagnosed with cancer after all that time, I can sue for that. Cmon Man. Be responsible for your actions. I’ve played penny auctions, and I’ve probably come out on the short end of playing the GAME, but I’m not going to sue someone because I couldn’t control the addiction. It’s a game.. That’s why they call it Entertainment Shopping. It’s no different than buying tokens at Chuckie Cheese, and not winning enough tickets playing games to win that stuffed animal for your sweetie. BTW.. I’ve lost a lot of money to that damn bear as well. I didn’t sue him either. It’s my fault, my lack of self control. PENNY AUCTIONS ARE NOT GAMBLING!!! THEY ARE A GAME. WIth the opportunity to win an amazing deal, or lose money trying.. Just like Chuckie Cheese.

  4. Anthony on October 22, 2011 at 12:13 pm

    @Amanda…
    WTF… Are you for/against penny auctions? Take a stance, clearly state it. I don’t know what point you were trying to make? Do you agree with the lawsuit, or think its frivolous because penny auctions are not gambling. Your comments need to be clearer so that the reader can determine where you stand. You can’t disagree with the plaintiff and then negatively bash the industry which your site profits from in advertising. I understand you are trying to warn people to be self-accountable, and that there are scams out there, but you almost make it sound that you think the site in focus of the article, BidCactus, is one of those scams. How do you feel about BidCactus?

    • George Gombossy on October 22, 2011 at 3:29 pm

      I am for warning people about them
      They are a rip off

      • Anthony on October 22, 2011 at 8:02 pm

        Are you referring to Penny Auctions in general, or specifically BidCactus? Many Penny Auction sites that start up LOSE money, and go under. Many due to poor business plans, start-up funding, and advertising. The two to four big sites; BidCactus, Quibids, Beezid, and Skoreit have brought in the traffic to succeed early with national TV advertising. Subsequently, the more members they have, the harder it is for a new member to win, and then end up calling “Scam”. People who get involved in Penny Auctions need to do homework as Josh mentioned above, and learn the ropes. Visiting penny auction specific information and forums such as Josh’s and PennyBurners, the newer players can arm themselves with the vital information to be successful.

        This link is a good starting point: http://www.pennyburners.com/getting-started/what-is-a-penny-auction

      • Jason on October 11, 2012 at 5:47 am

        If you are a stupid person, then yes they are a rip off. If you can read and comprehend english, then they are not!

        • Tony Douglas on June 21, 2014 at 7:44 pm

          Evidently the people that feel BidCactus is not a scam must not be aware of all of the people that have won thousands of dollars in products and gift cards that were never sent out. I won several gift cards and cruises ETC. and every time you talk to them on the phone they would say those are backordered. But looking at the auction you could see they were still actively selling more of the same items. This is unethical and at the best case criminal when they never ship out the items that you win.

  5. Peter on July 25, 2012 at 3:38 pm

    My one day experience with bidcactus is horrible. I wouls suggest all people to stay out of it. They at the first place makeing you wrong commitments like you will get cheap items. Its completely wrong. Also, i doubt this site has some damy people (employee), who wont allow you to win any good stuff without paying double (bid price). trust me. I lost money in one day of gambling, i learnt lesson, Advise people to stay out of this gamling site. Its just like speeding money in casino o online casino.

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