Hundreds of penny auction websites now populate the Web, and they all work very differently than more conventional online auctions, such as e Bay.
"In a penny auction, the site owner posts sale items and you pay to bid," Tressler said.
If someone offered you a 0 camera for free, you'd probably suspect a catch.
But what if it was just really inexpensive, say ? "No," says Colleen Tressler of the Federal Trade Commission.
Regulation 2 defines 'advertising' in this context as "any form of representation which is made in connection with a trade, business, craft or profession in order to promote the supply or transfer of a product." The OFT considers the statements made in the Brochure to fall within this definition.
The OFT considers that such advertising contained in the Brochure (as described above) is misleading because it is likely to deceive traders about the legitimate use of the auto-bidding functionality.
The OFT investigated Scriptmatix's promotion of the use of this functionality.
Consumer Protection from Unfair Trading Regulations 2008 (CPRs) Business Protection from Misleading Marketing Regulations 2008 (BPRs) This investigation was opened by the OFT on its own initiative in connection with a separate investigation it had undertaken into the activities of a trader whose business activities comprised online 'penny auctions'.
As with conventional auctions where bids for items are raised by signaling from bidders, bids on penny auction websites are raised (typically by an increment of 1 penny) when visitors to the site 'click' on bidding buttons.The OFT wrote to Scriptmatix on 26th October 2010 to set out the OFT's view of the relevant facts and to present the OFT's view on Scriptmatix's promotion of the auto-bidding function.The OFT's letter consulted Scriptmatix on a proposal that it give undertakings to desist from and not repeat the promotional conduct described above.According to the Brochure, the Software is delivered with an "auto-bidding feature, included as standard". They place a duty on business not to trade unfairly when dealing with consumers.This auto-bidding feature afforded Scriptmatix' customers the option of artificially raising the auction price of an item for sale on a penny auction website. They place a prohibition on misleading consumers by act or omission.