DealDash and Penny Auctions

If you want an unbiased review of DealDash and penny auctions, read on.  Unlike the majority of what you read or see online about penny auctions, I am not being bribed by any company and my information is factual not just a mad person spouting off about it being a scam.  I signed up last week for DealDash.  Read below for my synopsis.

First thing to consider: When you see that someone has won an iPad for $30.00 what that really means is that 3000 bids were placed on that item.  Each bid is one "cent".  Each cent purchased at full price on DealDash is 60 cents. Those 3,000 bids actually equal $1800 for the company.  At the Apple Store an iPad 64 with wi-fi costs 699.00.  That's more than twice the amount of the actual product.  I'm sure they are buying these products in bulk, thus discounted which equates to probably an even larger profit.  The winner has paid whatever they dolled out in "credits" or bids plus shipping.

I'll explain more in detail how $30 really equals $1800.  Each bid for an item goes up in one cent increments.  $30.00 equal 3000 cents. You have to buy that ability to spend that "cent".  It will cost you 60 cents in advance for each "penny" you want to bid.  DealDash calls each of these "cents" credits. Each credit or "penny" equals 60 cents. So 60 cents (the cost of a bid or "cent") times 3000 bids or cents equals $1800. They offered me a "deal" last week when I signed up at supposedly half off.  I bought 200 credits for $60.  That means that each credit was 33 cents, or so I thought (which I explain below). People can also bid on credit bundles.  For example, there was an auction for 40 credits in which 5 people participated.  If one were to buy 40 credits from DealDash it would cost them $24.  The final price of the auction was .69 (which means DealDash made about $41 for something they value at $24).  If I divided this up equally, each person bid 13.8 times.  This means the winner probably spent about $8.28 if their credits were purchased at the .60 cost.  If they purchased the credits at half off like I did or won the credits for a fraction of the cost, that causes a serious imbalance in purchasing power between bidders.  

Is it legit?  Well yes.  Is the vending machine at the arcarde, mall, or grocery store legit in which you put in a quarter and win an Ipad, or other such virtually impossible to win prizes?  Well... yes.  Right? This is more like put in $20 or more and  compete with 10 or more other people to win that same prize.  9 times out 10 you will walk away with nothing.  It's essentially gambling and the majority of those who play seem to have that gambling mentality.  A lot of, I will call them players rather than bidders because it is more of a game in which money is at stake and is actively being gambled, will spend far more on the gambling than on the actual winning.  I watched many people blow way more on a product than the value,  not win, and then blow more on other products.  How are these people affording  to do this?  Picture the elderly in Vegas who are on oxygen surrounded by chain smokers throwing their life savings into the mouth of a slot machine because they might win the big one.  That slot machine will probably never pay them the amount they have spent. When people like that are competing against you to win a product, you have a very low chance of winning. They are willing to spend whatever it takes to win. The company, however, will allow you to buy the product at retail price if you bid and lose and you will get back your credits.  Oh, but there is a big gaping caveat that comes with this.

If you are looking to buy that 3G Kindle with wi-fi for your sweetie for their birthday, you may think that putting $70 in bids is worth it if you were going to buy it full retail anyway.  You and a few others  may be thinking this.  Then there are those that are gamblers and are not really concerned with how much they throw into the pot.  The thrill is in the chance of winning.  You may get very lucky, come in at the end of someone's budget on an auction and be willing to spend your $70 and win.  Or you may put $70 into it and lose everything because another player decides to start bidding after you've thrown in your $70 budget.  Oh but you can buy the product at "retail" value and get your credits back, right?  Amazon is selling the 3G 6in. screen Kindle with wi-fi for $189.  If you want to buy it from DealDash, you'll have to pay $289, plus shipping I'm sure.  If you did decide that you wanted to pay $100 over retail for it, you wouldn't be able to cash your credits back in either.  You are stuck with the credits you purchased.

Some people get lucky and are able to win credit packages of 40, 80, 150, 300, or occasionally 800 for perhaps a few dollars (in actual money spent not "cents"), perhaps late at night when not a lot of people are on or if there are a lot of other auctions going on and no on is paying attention.  It can sometimes be random how lucky someone can be. I have also had the experience of bidding a high amount on an item and part of my bids were given back or credited to me as I was bidding.  I'm not quite sure on the rule of this.  Perhaps for every 25 cents I bid I get a portion of it back.  My theory is that this is a way to drive up the final cost of an item.  If I'm given credits back, then I suddenly have more to spend on this item, giving the item a longer period of time to be exposed to other players that may just want to to throw a credit or two in, thus increasing their profits.  So if you're a power bidder because you've invested a lot initially or you've won credits disproportionally to the amount the majority of those who play on DealDash spend for credits, then you may have the ability to spend bids like it's water coming out of a faucet and muscle your way into winning whatever you please.  There are certain players on DealDash that most know not to get involved in a bidding war with because most likely they will not have the bottomless pit of credits these players have. It's sort of  like communism, some people are hooked up with deals on credits and the majority are stuck with not a lot.

Though I consider most casinos unscrupulous in the way they pray on people with gambling addictions, at least those addicts have the ability to cash out at any time.   I sent several letters to DealDash asking for my money back as I spent about $30.00 worth of my $60 of credits. I spent 89 out of 200 credits and guess what?  They offered me $6.60!  They said I really purchased 100 credits for $60 and was given 100 more credits free.  That's not the impression I was given when I purchased the credits.  I was given the impression that the credits were "half off" meaning that I was paying .33 per credit, not .60 for 100 credits and the others were "free".  Dave (the owner I emailed) was not going to let me have the correct portion of my money  back no matter how I tried to politely debate with him.  After several emails back and forth I was stuck with what I had.  I actually did okay and came out with a bunch of stuff that I used for birthdays and Mother's Day.  However, I would NEVER bank on taking a set amount of money and getting lucky and winning more than I put in.  I bid on items that were not coveted items like iPads, TV's, laptops, cameras and other expensive electronics.  I have seen on rare occasions where a player has won one of these items for an unusually low amount.  I'm not sure if it was because they were a power bidder and no one wanted to waste their money bidding against this player, or if they were just lucky. I also bid very early in the morning (4 or 5am as I am up at that time anyway) or very late at night.  I haven't played on DealDash since maybe April.  It seems that items are being won for even higher amounts than I remember (from April 2011 to now July 2011).  

Deal Dash's tactics remind me of credit card companies.  In the same way that people get into major credit card debt, they don't really think about the physical money in their possession.   They do not have to think about their balance.  Instead their purchasing power is the only thing at play.  Is your limit $500 or $50,000?  Or in the case of penny "auction" sites is your purchasing power 100 credits or 10,000 credits (all of which could be acquired from $0 to .60 a credit)?  I really wish they would be forced to change their label to penny gambling sites.  An individual sees something they want and it is as easy as swiping a card or spending a credit (and from my examples above the true value of that credit is hard to determine). I believe DealDash uses psychology to make people think they have more than they do by giving them large amounts of credits through credit deals or by being credited when large amounts of credits are being spent. When you buy credit packages from so-called auction sites, consider that money gone.  You may win a prize, you may not.  I think the term auction is not a fair way for these companies to label themselves.  These sites really encompass a form of gambling.  When a real auction occurs peoples' bids are considered offers, not real payments until the auction has been won.  This is more like people spending chips at a casino to win a prize. In this sense, if you know what you are getting into and consider that money gone as you should when you decide to put $100 down at a black jack table, you'll be fine.  Think of it as gambling and not a way to get a great deal.   My advice would be to go online and watch the "auctions" armed with the information I have given you, and then if you still want to play, buy $5 or $10 worth of chips.


I took a look at their site today for the first time in a long long time and it looks like there have been some changes.  

First, new bidders cannot enter an auction after an item has reached $5.00.  That really equates to 500 bids which equals $300 if a player pays the full price for a "cent"- .60.   As I am writing this there is a $300 Samsung vacuum that has reached $38.00 ($2,280!! in full bid asking price) and it is still going up. There are 70 players locked in.  If you hover over the players' names you can see when a player first entered a bid (at $1, at $4.5, etc).  Though I don't really see what the benefit of that really is?  Deal Dash initially makes the impression that they've made some concessions to appear fair in that they've put the no new bidders limit at "$5.00" thus appearing to control the unfairness of players entering into an "auction" when an item has reach astronomical limits.  In reality $300 is a pretty high amount before other players are locked out. One player can start at .01 while another jumps in at $4.59 ($298.40).

I cannot imagine the mansions the consumers on Deal Dash are supplying the owners.  They are making fortunes off this site and it should be illegal mainly because they mislead unsuspecting consumers into thinking they they are participating in an "auction".  And when many of us think of online auction, we think of Ebay, a legit auction.  Not to mention in a standard gambling facility players can cash out their chips and walk away with their true remaining cash.  This is not the case on Deal Dash.  

The second change I noticed is that  it actually looks like they are charging fair market value for a product now.  So if you don't win, you can just choose to pay full price for it.  I checked Amazon and on an array of items (electronic to kitchen) and it looks to be on par.  Kudos for that.

After doing a cursory review of the current Deal Dash site (as of March 2013) it looks like items are going for much higher than I previously remember.  Perhaps this is because a player can just lock in an amount, walk away (automatic bidding), and then choose to pay the full retail asking price and not lose anything.  I imagine there are a lot of players that are locked in after the $300 limit and are willing to pay the full retail price rather than lose the triple amounts they may have put into an item through "bids".  What do other current players think?  Have they just become an online retailer?  Where is the deal?  Has the site become a revolving door as Ilike2winbig puts it? Is your cash perpetually locked into the site because there are no deals to be had, you are forced to purchase an item, and you are just stuck with unusable/un-winnable bids?  Purchasing power has gone down and prices go up.  $500 for a loaf of bread anyone?