Sunday, July 19, 2009

Swoopo is a Scam

There is a saying about playing cards - If you can't spot the sucker at the table, you are the sucker. This rule also applies to Swoopo.com.

The only reason this blog post exists is to warm people to STAY AWAY from Swoopo. If you're familiar with the site and do not believe it is a scam, you are either too daft to recognize the scam, or are part of it.

If you're not familiar with Swoopo, it is a reverse auction site that works like this. Swoopo will post a listing for something like a mac or an iPod. The listing will start at$0.00, and will usually end in 24 hours. The catch is that every bid placed on this item will cost the bidder $0.60, and will only raise the bid a few cents. This bidding system tricks another bidder sucker into thinking they can still get a good deal. So, they bid, it costs $0.60 and the cycle continues till every sucker is out of money or simply pays a higher than retail price for the item. In the end a mac may go for $200. Great deal huh?...and it might be to the person who clawed their way to the top of the pyramid last. To make matters worse though, Swoopo will tell you how great a deal the item was for the buyer who pulled it off. What they don't tell you is how many suckers paid $$$$ to LOSE that auction. In the case above that $200 mac garnered 10,000 bids at $0.60 each. That equates to bidders collectively paying $6,000 for a $2,000 laptop. Hmmmm, wonder why they don't advertise that deal. Get it?

Basically, it's like eBay, no limit poker, and a slot machine all rolled into one.

Don't just take my word for it. There have also been numerous articles written about Swoopo that describe the site as:

"a gimmic" - http://technologizer.com/
"controversial" - http://en.wikipedia.org/wiki/Swoopo
"Pure evil genius" and "Too good to be true" - http://blogs.zdnet.com/BTL/?p=14122
"Profitable till deemed illegal" - http://www.codinghorror.com/blog/archives/001196.html
"Shopping's steep spiral into Addiction" - http://www.washingtonpost.com/
"eBay's More Evil Twin" - http://www.theregister.co.uk/2009/01/02/swoopo_startrup/

In fact it seems that the only sites that seem to say good things about Swoopo are the ones advertising "guides" on how to "beat Swoopo." There are a few who say it is not a scam, that it's just a good business model. Perhaps, but it is gambling, and because they do not call it gambling, it is a scam. Simply, it MUST be gambling because you are paying for a chance to win. This is very similar to a raffle, or poker, which are both regulated commercial activities.

The secondary reason for writing this post is because I actually tested out the site to see the entire process. After handing over a few dollars for bids, and taking down a cheap auction. I knew I had seen enough. It's simply gambling. If I can't play poker online, I sure as hell shouldn't be allowed to take part in this scam. So, I have sent a request to Swoopo to refund my remaining bids (before I call the credit card company to do if for them). I am also sending Swoopo a link to this blog post. Lastly, I will be reporting Swoopo to the California Department of Consumer Affairs, the California Gambling Control Commission, and the FTC.

Again, if you're reading this, I highly encourage you to stay away. As another article pointed out, the only way to win, is not to play.