Thursday, July 23, 2009

Swoopo shafts its customers

All of my many, many readers know that I'm a strong defender of penny auctions, but when an auction house steps over the line, I'll call them on it.

Today (or recently -- I just noticed today), Swoopo started doing something subtly egregious.

Remember I talked about Swoopo was going to start allowing bidders to use their expended credits towards purchases of the merchandise for retail price.? So if you spent $24 worth of bids in an unsuccessful attempt to buy a $100 TV, Swoopo would sell you the TV for $76.

I had my doubts about whether this change was a good idea, but Swoopo went and implemented it in just about the most dishonest way imaginable, taking it from "maybe not a good idea" to "maybe an actual felony".

Swoopo's mistake -- which was probably made in honesty -- was they only offered their purchase-credit program to bidders in Germany even when the auction was also being offered in the US as well.

Swoopo has always been a little dense about internationalization issues ("I18N", as we in the business call them, for the 18 letters separating the first "I" from the last "N" in the word). They had their German bidders bidding in Euros at a nominal 1:1 exchange rate with Americans. Problem is, a Euro is worth about $1.43, so they end up losing a lot of auctions against Americans with our cheaper money. Plus, Hans and Franz have to pay €0.60, almost a full dollar US, for each bid.

Well today, Swoopo, a German company, made it up to their compatriots.

Here's the scenario: Bob and Wolfgang are both bidding on the same TV. Because of Swoopo's odd pricing policy, the official list price is $100 in the US and €100 in Germany and by a huge coincidence that makes my explanation simpler, they would be perfectly happy to pay $80 and €80 respectively.

The two of them bid neck and neck until they have both poured in 20 bids, the TV is at $4.80. Then Wolfgang has a flash of insight: the 20 bids he already spent are gone, but his bids from now on are free, since Swoopo will credit their cost dollar-for-dollar against the purchase of the TV. He puts 80 more bids into Swoopo's automated bidder, the BidButler, which dutifully pounds the hapless Amerikaner into submission. If Bob figures out what's going, he bails out early (Wolfgang wins the auction for €24.80 or a little more) and loses only $20 or so. If Bob is unlucky enough or stubborn enough to power through the 80 bids, he "wins" the auction and ends up blowing $124 for a TV he values at only $80. Worse case, he could just give up at the 99th bid, spending $99 and getting nothing at all.

The worst part here is that Bob isn't told any of this. He thinks Wolfgang is playing by the same rules when in fact the situation is very, very different.

Swoopo owes it to their customers to make a full and frank disclosure of this appalling situation as soon as possible. In the meantime, if you do have any Swoopo bids on account, don't waste them on any auction with the "global" tag -- you would be playing a game rigged against you.

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