Not exactly a matrix... But is it legal?

[timcow]

I am looking at auctions4acause.com
It is not a matrix site, but it seems like it would be illegal for the same reasons that matrix sites are illegal. Does it matter that they give some to charity?

[ycchen]

This looks more like lottery than auction! The highest bid don't get the prize, but the highest "UNIQUE" bid gets the prize.

It is definitely a ponzi-based "business" because all the money comes from members who pay "bidding fees". Okay, a better description of this business is : lottery!

Well, if it is a lottery, then I hope they have licence to run it.

If you check all the "winner of the lottery", you will find that the fees paid in every auctions is MUCH higher than the price of the product. In the nutshell, all the money comes from bidders! The owner pockets 20-30%, gives some to charity (who knows?) and the rest the UNIQUE winner.

This lottery (or ponzi) is quite creative but have serious flaw! Unlike the legitimate lottery where the winners are chosen by open drawing process, auctions4acause.com's insider and owners knows the UNIQUE bid and can easily manipulate the system so their friends can win the lottery.

So, unless you are friends of the owner of auctions4acause.com, otherwise, my advice to you is: STAY AWAY! Don't donate your bidding fees to this fundamentally flaw lottery.

See the following example and you will understand why this diguisted lottery is fundamentally flaw.

http://auctions4acause.com/products/ProductDetail.asp?auctid=2493

If I am an insider, I will know the unique highest bid for the above item is $12.84 or $12.85 in advance. And I have the power to stop or continue the auctions anytime. :)

[avago181]

This type of scheme is officially known in the UK as a "reverse auction"

[ycchen]

"reverse auction"? Interesting name. :)

Here is my question. When we talk about "auction", we are talking about "highest bidder" wins the item, right?

Now, "reverse auction" does not work this way. You have to be LUCKY to bid on a UNIQUE number, which is not the highest. If you bid on the highest number, you can be 99.9% sure that there will be 10 people up there with the same number, and you will be disqualified.

In this way, your chance of winning is based ENTIRELY on your LUCK. However, if you are insider, then you know the right number to win the item!

In sum, 1) this is a lottery, and not auction in the traditional sense; 2) it is not a fair lottery because insider have 1000% chance of winning.

Just my 2 cents.

[avago181]

It is the UK gaming board that call it a reverse auction, i don't know why they chose that description.

[redmist]

If I am an insider, I will know the unique highest bid for the above item is $12.84 or $12.85 in advance. And I have the power to stop or continue the auctions anytime. :)

sorry for going off topic, but why do you always seem to accuse any website that you do not approve of as having "mates rates" type things going on?

cant you accept that people do run legit businesses?

[mercinary]

Rather than going off topic Redmist, I suggest starting a new thread (referencing this thread).

OK?

-Merc

[redmist]

done ;)

[ycchen]

sorry for going off topic, but why do you always seem to accuse any website that you do not approve of as having "mates rates" type things going on?

cant you accept that people do run legit businesses?

See ... if you want to run a convicing lottery site, you need to prove to your customers that the drawing process is fair and open.

However, the flaw for the above lottery site (or mislabeled as "reverse auction") is TOO obvious. I won't trust a lottery site that has such an obvious flaw, i.e. very high risk of being manipulated by the owners and insiders.

In other words, I believe in fair and transparent business practices, not blind faith on the honesty of an owner. :)

By the way, I am 99% sure that this site is not "reverse auction" in a conventional way, e.g. priceline.com.

Here are few definitions of "reverse auction" from google.

http://www.gametheory.net/Dictionary/Auctions/ReverseAuction.html

While traditional auctions involve a single seller and many buyers, a reverse auction generally involves many sellers and one buyer. For example, procurement auctions are used to obtain competitive bids to provide goods or services. Theoretically, regular auctions and reverse auctions are equivalent.

http://www.netlingo.com/right.cfm?term=reverse%20auction

reverse auction
a.k.a. buyer's auction

An online auction in which sellers bid against each other to win a buyer's business. A reverse auction empowers the buyer (in this case, the end-user) to find the best deal. For example, Priceline.com sells airline tickets, hotel rooms, and additional products based on the price the consumer is willing to pay.

[jokach]

My take is that part of the reason why lotteries in general are credible are because they are federally regulated. Like Ycchen stated, these types of 'reverse auction' and 'raffle' type sites are so open and vulnerable to fraud because there is nobody making sure the rules aren't being broken. When the people making the contest rules are the same people who are enforcing the contest rules, one should be skeptical. This is part of the reason why when you see charity events running raffles and auctions, there is ALWAYS an independent resource that chooses the winner or manages the event. It adds credibility.

I've seen other sites like this (UK based), and I think we've discussed some of them here. My opinion is to be skeptical who you are giving your money to ...

jokach

[MatrixWatch]

If you think this is suspicious, or even fraudulent, then report it to the WatchList at MatrixWatch.com (http://www.matrixwatch.com/)