Auction in name only
I work from home and thus sometimes have the television on in the middle of the day, which provides an interesting insight into commercial programming compared to ads I see during primetime viewing. Along with commercials for personal injury attorneys and reverse mortgages, one of the ads I see often is for the “auction” site DealDash. It’s certainly not new, but it bothers me that this site is allowed to operate and bill itself as a legitimate auction site and not have to be regulated for what it is: gambling.
DealDash promises the opportunity to win valuable items for a tiny fraction of their retail price. An iPad Pro for $42? A Nintendo Switch for $20? A PlayStation 5 for a ridiculous 50 cents? Sounds too good to be true! Well, it is.
Now, it is possible to score crazy deals on things at DealDash, just like it is possible to win big when gambling. It’s just highly unlikely. I wouldn’t quite call it a scam, though the advertisements are very “scam adjacent,” but I would definitely call it gambling. You risk something of value (money) to win something else of value (the item up for bids), and the outcome relies largely on chance.
When you lose, you really lose
For those unfamiliar with DealDash, it’s a fairly simple concept, but it’s also one that is important to understand when getting involved with the site or when understanding why it should be categorized as gambling.
The site lists all sorts of items for bids – gift cards, iPhones, home goods, etc. – and every bid increases the price by one cent. A penny. Whoever is the last bidder standing wins the item, often for a very low closing price, considering the price goes up in one-cent increments.
every bid costs money
But there’s a gigantic catch: every bid costs money. The base price for a bid is supposedly $0.20, but right now, the site is advertising a sale of $0.12 per bid (bids cost the site nothing to generate, so any “retail” or “base” price is just made up). Bids are sold in packs, which you must purchase before actually bidding on an item.
So, if you do win a $100 gift card for $20, but end up bidding 100 times, you have just spent, with today’s price, $32 in total. That’s still good, but it’s not $20.
The thing is, and this is very important, if you don’t win the auction, you are still out the cost of all your bids. That’s how DealDash rakes in the big bucks. For every person that wins an auction, even if their total is significantly less than the retail value of the prize, there are loads of people who didn’t win and still spent money to bid. DealDash might make $200, $300, $1,000 on that $100 gift card.
It’s luck, so it’s gambling
Ok, we’ve briefly established that DealDash stinks, but why is it gambling? Simply put, you don’t know if or when you will win an auction and you are risking money to try.
On DealDash, you don’t know when the auction will end, so you have no clue as to when a good spot is to stop bidding, aside from doing the math and setting a dollar limit for yourself. But again, even if you are “responsible” in your bidding, you are still losing money if you don’t win the auction.
you keep spending money on the chance that you might be the lucky winner
It’s like a slot machine. You put quarter after quarter in (I know most machines don’t use coins anymore, but it’s a visual) and don’t know if that next spin will be a winner. And if it is, you don’t know if you’ll be better off financially than you were before that spin. Similarly, on DealDash, you put in bid after bid after bid, never knowing if one of them will be the one upon which your competitors will all quit (and most of them will be bidding automatically and won’t actually be at their computers). In the meantime, you keep spending money on the chance that you might be the lucky winner. Keep feeding that machine.
Compare that to eBay, where you know when an auction is going to end and you can bid to your heart’s content for free. If you lose, you are out nothing.
Sunk cost fallacy
And the uncertainty of when auctions will end, plus the cost of bids, makes DealDash extremely predatory. Its target market is people who are home on weekdays. I’m generalizing here, but that includes homemakers, unemployed people, the elderly, and the sick and injured. All people who could greatly benefit from being able to win expensive items for pennies on the dollar. And mostly people who can’t afford to lose.
unwilling to give up the chase because they have already spent so much
All too often, though, people get caught up in the heat of the moment, unwilling to give up the chase because they have already spent so much trying to win an item. For example, I’m looking at an auction for a $25 Wal-Mart gift card plus a 50-bid pack, which would be worth about $31 in total. Some recent winners include “YMC1691,” who bid so much that they spent $82.12 on this prize. “SAN47YOU” spent $151.08, and “bodoghim1” got it for $160.24 just three days ago. That’s insane.
The structure of DealDash – making people pay for bids and not knowing when an auction will end – causes people to be victimized by the sunk cost fallacy. That is, continuing on a path because of their past investment, even when the wisest move is to change course.
DealDash does let people recoup the bids they used AND get the item by purchasing it at the “Buy It Now” price, but that, too, is a ripoff. The Wal-Mart gift card’s “Buy It Now” price is $55, significantly more than it is worth, which is again taking advantage of people who can’t cut their losses and just walk away from the table.
DealDash is gambling, pure and simple, and it is almost criminal that it is not regulated as such.
