Penny auction sites are growing in popularity, but they may be more of a gamble than a deal.
The sites are described as the cheapest way to buy top products. But there's always a catch.
"The first thing that set off my radar is, you have to buy the bids," said computer guru Mike Frey.
Beezid puts hundreds of items up for auction. The bidding starts at zero and can only increase by one penny at a time. The bidding continues, and the countdown clock keeps resetting as long as people are willing to place another offer.
But Beezid makes its money by charging customers 60 cents to a dollar for the right to place a bid. It can add up to big bucks for the website -- and lost money for bidders.
The current offer for an iPad on Beezid was $27.93. If it sells at that price, the website would take in a whopping $1,675 for a device that retails for $500.
But remember, the bidding started at zero, and each penny-increase costs the bidder a minimum of 60 cents, money that goes straight into Beezid's pockets.
It means bidding on items is somewhat like playing a slot machine: It's only profitable if you win before putting too much money in. And, just like a slot machine, there's no guarantee you will win.
"My concern is it's only good for two people -- Beezid and the last person to bid on something," Frey said.
Beezid said a Lake Dallas man recently won a 2010 Ford Mustang. After adding up the final auction price and the cost of his bids, he paid just $1,200 for a $35,000 car.
A Beezid spokesperson said that's what the website is all about. The company also said it encourages responsible bidding by offering tutorials on bidding strategies.
Beezid said it insists proper bidding takes skill, which is why it's very different from gambling.