Consumer Watchdog: Auction turns into gamble

Geoffrey Souster found he was bidding for, not buying, an iPad. Photo / Rob Tucker

It's an online auction site where expensive electronics, beauty products and clothing sell for a fraction of what you'd pay at the mall. But there is a nasty twist - the losing bidders pay, too.

It may seem a dubious way to nab a bargain. But unsuspecting Kiwis are being lured into these websites, which market themselves as an "exciting new type of auction" with "up to 95 per cent off" retail prices. The Commerce Commission has received several complaints.

Geoffrey Souster, 74, lost more than $400 in just a few days trying to score a cut-price iPad.

"I had been on another website and I saw discounted iPads being advertised down the side. I thought, 'I'll have a look at that'," Souster said.

He clicked the link and ended up on dealfun.com, a website complete with a "Buy Safe" security endorsement and New Zealand currency pricing.

But Souster, a founding member of the New Plymouth chapter of Senior Net, soon discovered dealfun.com was more about gambling than shopping.

He bought "credits" to bid with for 60c each. Every time a bid was placed, the price of the item went up by 1c. So while a 40-inch flat screen TV sold for $59.83, bidders had spent more than $30,000 trying to secure the item.

"They hook you in pretty quick. I had all those gambling instincts coming through. You're doing it online with the click of a button," Souster said.

Dealfun.com responded to the Herald on Sunday with a written statement that said the company made significant efforts to educate visitors to the site.

"From 'How it Works' to our 'Dealfun University', we have always put forward a detailed outline of the process, an educational tutorial, our FAQs as well as testimonials."

Souster wrote to the company directly and was awarded 40 free bids, the statement said.

Not satisfied with the company's offer, Souster raised his concerns with New Zealand authorities and was shocked to discover nothing could be done, as the site was run from the United States.

Trevor Henry, a spokesman for the Department of Internal Affairs that oversees gambling, said the site was not illegal and even if it was, it would be difficult to hold an offshore website accountable.

"People need to be wary," Henry said.

The Ministry of Consumer Affairs and Commerce Commission confirmed complaints had been received, but also conceded little could be done.

NetSafe director Martin Cocker said: "Buyer beware."