How I lost a $9 iPad to “BrokenHead” on penny auction website, SwipeBids.com

My recent lust to acquire a 16gb iPad cost me $150 when I allowed myself to be sucked into joining the penny auction site, SwipeBids.com.

Some idle browsing led me to the site where I noticed an iPad being auctioned off at a paltry $9.50 bucks. I watched a few of their promo videos and figured it was worth a shot. I mean, what did I have to lose?

Well, it turns out $150 smackeroonies! When I registered they requested my credit card information (which is fine, so does Ebay) but I missed any reference to a $150 debit on my account which would apparently qualify me for me 300 bids.

I was a bit suspicious, but figured that maybe I had just been too sloppy to read the terms properly and perhaps this site was one of the best kept secrets on the web.

Plus, there was less than 1 hour left before the iPad auction expired. I was intrigued: Could I walk away with a $10 buck iPad?

Give me that iPad

I would never forgive myself if I did not try. A quick review of their help files confirmed that — like Ebay — a ‘sniper bid’ approach was called for in the dying seconds of the auction.

You had to wait until the last second of the clock hand to fall before activating your bid thus squeezing out any competition.

SwipeBid’s magic sauce is an ‘auto bid’ option which allows you to buy additional automatic bids to be put through at any time. In my case, I went for an additional five.

However, these could be cancelled out by any higher rival AutoBids and are not necessarily going to guarantee you success. SwipeBids offers this warning:

Beware: If another bidder has more Auto Bids it will use up your Auto Bids

According to their site, this is the secret weapon that less educated bidders fail to use to secure victory int the so-called penny auction wars.

So, after a quick swim at Fort Lauderdale beach I came back to the auction with a couple of minutes to spare and sure enough the bid price was still low at around the $9.87 mark. I patiently waited for the clock to run down to 3 seconds before I put in my ‘sniper’ Auto Bid.

Bid Activated! My screen name briefly flashed above the auction and then something strange happened.

I say “strange” because the clock suddenly added another 10 seconds to the auction timeline. My five bids had evaporated into thin air and the auction was still proceeding. I guess I was not the only auto bidder in the system. But why an additional 10 seconds?

I also noticed that an additional $0.1 was added to the auction price.

I waited again until there was 2 seconds remaining on the clock. But, about 3 milliseconds before I hit the ‘BID’ button another dude called “BrokenHead” lit up the screen and the clock rolled back to 1O seconds. The bid price was now also 1 cent higher at $9.89.

Suddenly, this did not look soo easy and I settled in for a long day in front of my MacBook Pro.

Eight hours later the the clock still showed 10 seconds, but the bid price was now $189.

And my 300 bids had been whittled down to 255. I had used them sparingly hoping for a lucky kill shot and harbored the silly hope that my nemesis “BrokenHead” would give in to fatigue.

Actually, there were a dozen other regular bidders in the auction not too mention additional “virgin” bidders who would stumble upon the iPad and put in a blind bid — probably using no Auto Bids. I guess a sucker is born every minute!

Who is BrokenHead?

After I sat back and thought about this business model I was struck by how clever it was. I had given up $150, been allocated 300 bids to use on whatever auction took my fancy, including a new iPad being offered at below $10. But, once the countdown entered the last few seconds, each new bid added 10 seconds to the clock and $0.1 cent to the price.

This meant I had wasted my whole day online, battling with some dude called “BrokenHead” and my 10 buck iPad was nowhere to be seen.

This raised two questions in my head: Who was this “BrokenHead” and is it possible that this auction may never end or at the very least carry on for weeks, moving forward 1 cent and 1 second at time?

After some further investigation online, I discovered these post on Penny Auction Watch which confirmed I was not the only sucker worried about the authenticity of SwipeBids.

A few of the posts argued that vast majority of online bidders in the system were ‘bots’ and the whole thing was a scam. Thus, was “BrokenHead” a bot or my real life enemy in the penny auction world? I hoped he was real, I badly needed an online rival!

There were the usual moans and groans about SwipeBids suckering them out of $150 bucks. As I said before, anytime you offer credit card information you need to do your due diligence. As much as I was suspicious of the SwipeBids system, anyone who registers on a new site has to take responsibility for their actions.

However, there were a few other posts which suggested strange SwipeBids activity on their credit cards. This is unacceptable and if this happens to me I will also make my voice heard.

22-year old’s are lot smarter than I give them credit for

The most interesting post on Penny Auctions Watch is offered by somebody called Kyle, who suggested a 22-year old scammer is the force behind the SwipeBids system:

The person that is behind this scam is Jesse David Willms who is only 22 yrs old and has been scamming ever since he was 16 years old. Last year he was sued by Microsoft and Symantec for stealing their products,apparently both companies settled out of court for millions of dollars. Currently he is being sued by Dr Oz and Oprah.With SwipeBids being his latest scam obviously he had to retrieve his lost millions to Microsoft and Symantec late last year.
If anyone receives a so called cheque from Swipebids as they say we couldn’t ship the product,it is not a cheque at all,its a MONEY ORDER. My wife has received 3 so far so the scam is we are supposed to go to our bank firstly pay $10.00 each for the money orders then they post the money order back to 204-85 Cranford Way Sherwood Park,AB T8HOH9 Canada {that is the address that my wife received on the letters}then along with my wife’s bank account details be posted to Jesse Williams and then supposedly he will put the funds into my wife’s account,yeah right this is what will happened,firstly the money orders will bounce purposely then my wife will lose the money order amounts and every other penny in her account. Thankfully we haven’t done that,we both know that my wife has lost money on that so called legit website,its a small price to pay compared to what would have been.
We are going to be seeking legal advice it will be a uphill battle and take some considerable time but I’m determined to bring this lowlife mongrel down.

Sure enough, after some more digging around, I found a video on yahoo.com which confirmed that Oprah Winfrey was suing Williams. Further, the BBB had issued an F-Grade rating for non-authorized credit card transactions. It appears that Williams owns several dubious websites with questionable business practices.

It also appears that Microsoft has sued Williams.

The BBB says there are at least 1000 claims pending against Jesse Williams and his several websites.

Should I risk my cash on SwipeBids.com?

Here is a video by the DeskDoctor channel in YouTube which offers an insightful glimpse into why you may not want to risk your money on SwipeBids, which they claim is akin to buying a ticket in a lottery.

By the way, by the time I had found out all the information above (and below) over 24 hours had passed on the iPad Auction and the price was now up to $350-plus with, you guessed it, still 10 seconds on the clock. My old friend “BrokenHead” was still tirelessly firing away his bids. Bot or not, he is relentless!

Finally, in between all this poking around, I decided to contact their support chat operator and ask a few basic questions relating to the auction dynamics. For those of you who have a interest in using SwipeBids or understanding their business model, you may find the chat transcript below helpful.

I tried a weak attempt to get my money back back. Apparently they do have a 30 day money back guarantee, but you have to use the site every day for 30 days and consume all your bid credits to qualify.

Short of becoming a Penny Auction Whore on SwipeBids, I don’t think I will be able to do this.

In closing, I would just like to tell SwipeBids that I could live with the state of things if they would just kindly let me know whether “BrokenHead” is a real person or not.

I plan to return to the iPad auction in 2 weeks to see if this iPad is now trading at around the $1000 mark with 10 seconds left on the clock. If so, this Jesse Williams has found a way to make a a sequel to that great movie called GroundHog Day. Only this time, “BrokenHead” not Bill Murray, is the star actor.

June 26, 2010: SwipeBids Chat Transcript

Falon: Thank you for visiting SwipeBids. We are here to help you win auctions, save money and have a great time. Who am I speaking with?

Jason Stevens: http://www.swipebids.com/prd_detail.php?prd_id=2319527 Is this really only $10….how is it possible for this device to be priced so low? Jason

Falon: Every company requires a profit margin in order to sustain itself and provide high quality services to its customers. Our profits are earned from the cost of bid packages which customers purchase. Although these fees are not substantial, the volume of customers that our site gets allows us to accumulate revenue that we can put towards providing huge discounts to auction winners.

Jason Stevens: ok, so that device is actually about 10 bucks. If i put in a bid what are my percentage changes of winning?

Falon: The bidding is still open for that auction.
Falon: The bidding process is simple. Each product starts at just one dollar. Then, people place bids on the product. Each time someone places a bid, the price of the product rises by 1 cent. The timer keeps going down, and when the auction falls below 5 minutes, if anyone places another bid on the item then the timer will reset to 10 seconds. When bidding stops and the auction ends, last bidder wins!

Jason Stevens: when you say ‘resets for another 10 seconds’ do you mean the auction is extended for an additional 10 sec?

Falon: Yes

Jason Stevens: So in other words, there is a theoretical chance that the auction may never end if people place multiple bids below the 5 min mark?

Falon: Time is continuously count down but when 10 or less sec will remaining and someone bids the time will jump back to 10 sec again.

Jason Stevens: so it could continue indefinitely?

Falon: Then 9, 8, 7, if some one click it jump back to 190 again.
Falon: Right, until bidders stop.

Jason Stevens: what is the longest running auction of all time?
Jason Stevens: is there one that has never shut down?

Falon: I am sorry, I am not sure about that.

Jason Stevens: So its a possibility?
Jason Stevens: There may be one auction that has been going on since you went live with your site and has never ended?

Falon: No, because each time someone places a bid, the price of the product rises by 1 cent.

Jason Stevens: yes, but it also extends the length of the auction by 10 sec allowing someone else to bid.

Jason Stevens: Thus, potentially, the auction may never ever end, even though the price goes up by 1 cent.

Falon: Right, but every customer has its own limit on purchase.

Jason Stevens: why you say ‘limit on purchase’ — what do you mean?

Falon: If the product worth is $10 and bidder decided to go with it till $5.
Falon: And if it reached $6 that bidder will quit.

Jason Stevens: Ok, but this is a personal preference…while this is going on other bidders may come into the picture.

Falon: No one no anything about the other.

Jason Stevens: ok, when did SwipeBids start…who came up with the idea?

Falon: We are live since 25th february.

Jason Stevens: of 2010?

Falon: Right

Jason Stevens: Who was the founder?

Falon: We are not authorized to disclose it.

June 26, evening: SwipeBids Chat Transcript

Jason Stevens: I would like to get my money back.
Jason Stevens: When I signed up for your service I did not realize you were going to charge me $150

Jason Stevens: It does not state this on your site.

Nichole: Could you please provide me with your full name, email address and Zip Code, so that I can pull up your details?

Nichole: May I have your Email ID ?

Nichole: Please wait while I check your order details in our system.

Nichole: The charge of $150.00 was for our exclusive Membership that you signed up for on Swipebids.com. As stated on the Membership Sign-Up! page, under Membership Details, the membership fee of $150.00 was processed as one payment for the full membership term. Upon completion of the registration page, as you selected to START BIDDING, the membership was activated and your 300 bids were deposited to your account for immediate access.

Jason Stevens: I am not comfortable with your service.
Jason Stevens: http://www.pennyauctionwatch.com/2010/02/swipebids-penny-auction-review/
Jason Stevens: I would like a refund for the balance.

Nichole: I’m sorry, I’m not authorize to open other sites.
Nichole: Customer satisfaction is very important; therefore I can provide you the link to review the details that were stated on the checkout page as you confirmed your original purchase. Please CLICK HERE for the full details. This checkout page and its disclosures have been approved by our Attorneys, and comply with strict credit card regulations issued by the banks.

Jason Stevens: I do not recall seeing a note that you were going to charge me 150
Jason Stevens: this was only made known to me AFTER signing up.

Nichole: Customer satisfaction is our number one priority; this is why we offer each one of our customers a 30 day money back guarantee. We are so confident that you will win auctions with SwipeBids.com that if you don’t win anything, we will refund you the entire sign up fee! To confirm that you are eligible for a complete refund, please CLICK HERE and follow the 3 easy steps outlined to ensure you get this issue resolved.

Jason Stevens: I do not want to be on your site for another 30 days.

Nichole: I do not have the ability to refund you until you have followed the 3 easy steps provided on the link for our 30 Day Money Back Guarantee. Unfortunately, I am unable to assist you any further. Please take the time to follow our incredibly easy 30 Day Money Back Guarantee, CLICK HERE.

Jason Stevens: Goodbye

SwipBids: Thank you very much for chatting with us today. We hope the rest of your day is an excellent one.