OKLAHOMA CITY (CN) - A federal class action claims the online auction company QuiBids defrauds customers by failing to disclose the way it operates. Bidders pay 60 cents for each bid, and each bid raises the price of an item by 1 to 2 cents, so bidders have no real chance to win until the final seconds of the auction, the class claims.
Quibids lures in customers by promising them chances to buy big-ticket items for as much 95 percent off the retail price, according to the complaint. But the class claims QuiBids actually runs a gambling, not an auction, site, and defrauds customers by failing to disclose "what percentage the 'house' keeps.'"
QuiBids advertised that one customer bought a $20,000 car with a bid of only $1,740.78, but did not mention that the company grossed more than $52,000 from the losing bids, according to the complaint.
QuiBids' website offers "the chance to bid on a variety of consumer products at significant discounts from retail prices," but its customers must pay 60 cents per bid, through five different-sized bid packages, including a "Beginner Bid Pack" for $45. QuiBids promotes its site as a way "to win luxury items at significant discounts compared to retail stores and E-Bay, and it claims the winning bidders on QuiBids.com typically save 80%-95% compared to retail prices," according to the complaint. But the real comparison, the class claims, should be to point out that E-Bay does not make its losers pay, while QuiBid does.
The class claims that each time a customer bids on an item the purchase price is raised "by either $.01 or $.02, depending on the format of the auction."
QuiBids pre-sets the amount of time the item is up for auction - often many hours for high-ticket items worth $100 or more. Yet the only bids that can win are placed in the last 20 seconds of the auction, unbeknownst to many customers who waste their costly bids by placing them early, according to the complaint.
In the final seconds of an auction, QuiBids lets bidders participate in a "Bid-O-Matic," which automatically places their bids for them, based on "pre-set parameters." But if a bid is placed in the last 20 seconds, QuiBids extends the auction by another 20 seconds, eventually reducing the extension time at its own discretion, until no one bids within a final 10-second period, the class claims.
The class claims that QuiBids.com is more akin to a gambling website than an "auction," yet unlike a gambling site or a casino, "which may only be operated under specific statutory authority," QuiBids does not disclose customers' low chances of winning anything.
"In contrast, the odds of winning a lottery are calculable and publicized," the class claims.
Nor does QuiBid disclose the amount of money it rakes in from each auction, according to the complaint.
The class claims the company advertised that one bidder won a $20,000 Honda Civic for $1,740.78 in a 2-cent auction.
"That price means QuiBids sold 87,039 bids which were used in that auction," and that "at $0.60 per bid, QuiBids grossed $52,233.40 from the bids alone, an amount that dwarfs not only the savings realized by the winning bidder individually, but the retail cost of the car," according to the complaint.
The class claims that losers are offered a "Buy It Now" option, by which they can buy the item for a limited time, less the costs of their losing bids, but they say that the "purchase price is typically higher than the best price for which the item could be purchased on the internet or in retail stores."
Named plaintiff Lawrence Locke says he spent more than $50 to buy bids. He says he bid on items such as two Nikon cameras, an HP printer, and an LG 55-inch HDTV, and never won anything.
He bid 64 timers for the HDTV, which sold for $228.59, but the losing customers "spent as much as $14,000 on that auction and received nothing in return," Locke says.
QuiBids users will not win most auctions for "low ticket items," and will rarely win auctions for "high ticket items," and "the money they will spend to purchase bids and pay for any items which they are lucky enough to win will greatly exceed the retail value of any items they win and purchase," Locke says.
He demands class damages for violations of the Oklahoma Consumer Protection Act, deceptive and unfair trade practices, common law fraud and unjust enrichment.
His lead counsel is Edward White.