A lawsuit filed in Minnesota last week alleges popular penny auction site DealDash’s advertised prices don’t reflect what bidders actually pay to win an item. Unlike eBay or a physical auction, bidders on DealDash pay for every bid made.
This means each time someone makes a bid, they pay even if they don’t end up winning the auction.
Knee deep in the hoopla
If the winner bids multiple times before placing the highest bid, all the bids along the way still cost them. For example, if an item is advertised at $50, the winning bidder may have really spent well over one hundred dollars leading up to the eventual victory.
While slimy, this is standard practice in penny auctions.
So what’s the problem? The case against DealDash further alleges that the company is misleading consumers about the brands up for auction. The plaintiff placed thousands of small bids on a travel bag, ultimately winning after spending $848.
Compared to the listed retail price of $2900, he got a bargain.
However, after some investigation into the bag from the brand “Bolivant – Paris,” things got murky. Consumerist did some digging and found Bolivant lists their mailing address in Paris’ fancy-pants shopping district Place Vendôme, but it doesn’t seem to actually have an office there.
There is no contact number for customers or any physical retail locations.
The only place the brand seems to be sold besides DealDash is Amazon, where the products are sold directly by the Bolivant brand. Reviews on Amazon appear to be fraudulent as well, with users reviewing many other products featured on DealDash.
The plot thickens
Other brands auctioned on DealDash like New Haven, Schultz, and Wilson & Mille don’t have retail locations or legitimate contact information either. Additionally, these brands websites are all registered using Domains by Proxy, which hides the website operator’s identity.
And it just keeps getting more exciting.
Many of DealDash’s brands are also registered under the same trademark holder, Galton Voysey Limited, whose site doesn’t mention DealDash. However, the lawsuit claims many of the trademarks were signed by William Wolfram.
This is the same name as the man who launched DealDash in 2009 and is currently the largest stakeholder.
Whoops. The lawsuit alleges, “DealDash’s purportedly expensive, high-end brand names do no legitimate retail business anywhere because they are nothing but the cheap, recent inventions of DealDash and its principal(s).”
A few laws broken
These practices violate multiple state-level anti-fraud and consumer protection laws in Minnesota, where DealDash is based. The lawsuit is seeking class-action status, but the company has yet to comment.
[clickToTweet tweet=”In the meantime, don’t trust any deals that seem too good to be true.” quote=”In the meantime, don’t trust any deals that seem too good to be true.”]
And maybe don’t bother with penny auctions or anything else that makes you pay to lose.