Bush: Auto Bailout Still on the Menu | Main | Top Headline Comments 12-15-08
December 15, 2008

"Pure, Distilled Evil in a Business Plan"

This comes under the heading "Morally Questionable, But Not Illegal" and I'm not sure it should be made illegal. It certainly is an interesting system, designed to prey on those who don't know any better.

I was fascinated to discover the auction hybrid site swoopo.com (previously known as telebid.com). It's a strange combination of eBay, woot, and slot machine. Here's how it works:
  • You purchase bids in pre-packaged blocks of at least 30. Each bid costs you 75 cents, with no volume discount.
  • Each bid raises the purchase price by 15 cents and increases the auction time by 15 seconds.
  • Once the auction ends, you pay the final price.
I just watched an 8GB Apple iPod Touch sell on swoopo for $187.65. The final price means a total of 1,251 bids were placed for this item, costing bidders a grand total of $938.25.

So that $229 item ultimately sold for $1,125.90.

[...]

But wait -- it gets worse! Swoopo also offers

  • Penny auctions, where each bid only increases the price of the final item by 1 cent, while still costing you 75 cents.
  • FreeBids auctions, where the item up for grabs is Swoopo bids. Near as I can tell, this is swoopo printing their own money.
  • 100% off auctions, where the "winner" (and I use this term loosely) pays nothing for the final item, regardless of what the final price is bid up to. Imagine the bidding frenzy on this one at 75 cents a pop.
  • Cash auctions, where you win actual real money at the end. It's like they're not even trying to pretend they don't run a gambling site with these.

It's not clear that Swoopo even has the items they auction; they appear to sell first, then use the money they gain from the completed auction to buy and ship the item.

Swoopo started in Germany in 2005, then extended itself to the UK, Spain, and---in September---the U.S. and Austria.

As Jeff writes, it's more of a lottery than an auction. For each user, a single losing bid isn't that costly. But they can really build up fast and at the end all folks who made losing bids end up with nothing. As long as the winning bid is one sixth of the retail price, Swoopo breaks even (*you may want to check my math). But many users are going to be willing to bid the price up higher than a mere sixth of retail.

From a legal standpoint, this is a contract for services---the privilege of participation in the bidding---rather than for goods. Ergo, this is not an auction and no one has a right to complain about anything. Swoopo has done even more to protect itself from legal challenge by giving each winning bidder an "unconditional" right to cancel (which actually has conditions on it; heh) the so-called "order" and return the merchandise.

I don't object to lotteries because there is no coercion involved. For the same reason, I don't object to gambling or casino-ventures. But even if I did object, that doesn't mean they should be made illegal. What do you guys think?


*My math to find the break even:

At break even the following condition obtains:

Retail price ($) = Winning Bid Price ($) + Amount spent on bidding ($)

Amount spent on bidding = Winning Bid Price ($) / (.15$/Bid)

Solve where 1 Bid = .75$

Solution: Retail price ($) / 6 = Winning Bid Price ($)

There must be a more elegant way to do that, though. I admit, law school makes one's math skills kinda rusty. Somebody put some mathematics to me.

digg this
posted by Gabriel Malor at 01:11 AM

| Access Comments




Recent Comments
Bag of Dicks Salesman: "Got an order sent out for Cowgirl Sparkly Birch. ..."

Professor Chaos aka gumdrop gorilla: "I see before I finished my post, other assclowns w ..."

TrivialPursuer: " Oooh, Juan sez "Obama was extremely careful.....i ..."

J.J. Sefton: " Rhinestone cow-pie. ..."

Witwickian Sage: "to be fair, I don't think I ever read the WaPo's r ..."

Burger Chef: "I study human beings, especially the creepy ones. ..."

mercenary13: "Barack Obama had Rahm Emanuel as Chief of Staff. ..."

Iowa Bob: "[i] 350 Niger won't allow armed drones by foreign ..."

Maritime: "What do you want to bet these same types also wors ..."

Jane D'oh: "One of the dead Green Berets is from a little town ..."

FenelonSpoke: " and "personally insulted a congresswoman." Post ..."

Steve and Cold Bear: "Sally Quinn Magick Nood. ..."

Recent Entries
Search


MuNuvians
Polls! Polls! Polls!
Frequently Asked Questions
The (Almost) Complete Paul Anka Integrity Kick
Top Top Tens
Greatest Hitjobs

The Ace of Spades HQ Sex-for-Money Skankathon
A D&D Guide to the Democratic Candidates
Margaret Cho: Just Not Funny
More Margaret Cho Abuse
Margaret Cho: Still Not Funny
Iraqi Prisoner Claims He Was Raped... By Woman
Wonkette Announces "Morning Zoo" Format
John Kerry's "Plan" Causes Surrender of Moqtada al-Sadr's Militia
World Muslim Leaders Apologize for Nick Berg's Beheading
Michael Moore Goes on Lunchtime Manhattan Death-Spree
Milestone: Oliver Willis Posts 400th "Fake News Article" Referencing Britney Spears
Liberal Economists Rue a "New Decade of Greed"
Artificial Insouciance: Maureen Dowd's Word Processor Revolts Against Her Numbing Imbecility
Intelligence Officials Eye Blogs for Tips
They Done Found Us Out, Cletus: Intrepid Internet Detective Figures Out Our Master Plan
Shock: Josh Marshall Almost Mentions Sarin Discovery in Iraq
Leather-Clad Biker Freaks Terrorize Australian Town
When Clinton Was President, Torture Was Cool
What Wonkette Means When She Explains What Tina Brown Means
Wonkette's Stand-Up Act
Wankette HQ Gay-Rumors Du Jour
Here's What's Bugging Me: Goose and Slider
My Own Micah Wright Style Confession of Dishonesty
Outraged "Conservatives" React to the FMA
An On-Line Impression of Dennis Miller Having Sex with a Kodiak Bear
The Story the Rightwing Media Refuses to Report!
Our Lunch with David "Glengarry Glen Ross" Mamet
The House of Love: Paul Krugman
A Michael Moore Mystery (TM)
The Dowd-O-Matic!
Liberal Consistency and Other Myths
Kepler's Laws of Liberal Media Bias
John Kerry-- The Splunge! Candidate
"Divisive" Politics & "Attacks on Patriotism" (very long)
The Donkey ("The Raven" parody)
News/Chat
Archives
Powered by
Movable Type 2.64