Who’s Cheating America: The Bad Penny

Image Credit: USA Today

A penny sale! What could be cuter? In my family, we tell the story of my aunt climbing out of her crib, helping herself to my grandmother’s jewelry, and peddling it to neighborhood kids for a penny apiece. Luckily that was in small-town Wisconsin, and all the jewelry was recovered, with the exception of the priceless heirloom that would have enabled me to retire early. Alas, it was lost to the sands of time… for now, anyway (I’m watching you, Zane Zor Zirbachen!).

Just kidding. I’m sure Zane Zor returned the diamonds just like anyone else.

What does any of this have to do with America’s Greatest Cheaters? Well, a penny sale sounds a lot like a penny auction. Right? Probably one of those things online that lets you buy little trinkets or homemade goods. Kids learn how to invest their money. Spend ten cents and get a smiley-face sticker; fifteen will get you a fake tattoo or something. Hard to imagine anyone making much money at a penny auction. They’re probably run by the folks who brought you Sesame Street and Reading Rainbow.

Or… maybe not:

A key player in an online penny auction site pled guilty in North Carolina federal court Wednesday to securities fraud and tax evasion…Dawn Olivares and her stepson, Daniel Olivares, each pled guilty and face five years in prison for their roles at Zeekler.com, a penny auction site.

What??? Five years? For running Zeekler.com? But that’s such a cute lil’ name! How much could this mom-and-pop (or mom-and-stepson) shop have been taking in!? A few hundred dollars, tops! And for that they get five years?

As a result of the scheme, victims worldwide, including more than 1,500 victims in the Charlotte, N.C., area, sustained losses of at least $750 million.

$750 million? That’s an awful lot of pennies. How many fake tattoos are there, anyway?

Hmmm. Something else must be going on here. (Pause for Googling.)

Okay, thanks to Investopedia, I have a better understanding of penny auctions:

A new trend in the auction market is the Penny Auction. How the penny auction works is you buy a certain amount of bids for a flat rate (the bids are worth around 60 cents), which are used to try to buy items. Every time you bid on an item, a bid is removed from your account and a timer pops up. If the timer reaches zero, then you have won the item. There have been cases of bidders winning items for up to 97% off the retail price. The danger is that there are others bidding on the items as well.

And it turns out there are a ton of these on the Internet, or at least there were before places like Zeekler started getting rolled up by the Feds.* They all have names like Beezid and BidFun and Happy Bidday and offer you the chance to buy an iPad for $18. Are they all scams? I suppose not. Are they a good idea? Let’s just say I’m hanging onto my pennies. You never know when the grandchildren of Zane Zor Zirbachen are going to show up with a tableful of heirlooms and I can repurchase my retirement plan for a cent. (Just kidding, Zane Zor!)

*To be clear, Zeekler cheated to the tune of hundreds of millions by ripping off investors, not just auction buyers.

Previous entries in our Who’s Cheating America? series:

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