Consumer Advocate Legal Update : Class Action Lawyers & Attorneys : Khorrami Pollard & Abir Law Firm : Mass Torts, Products Liability

Imagine being able to win a new television set for less than 10% of the retail price just by outbidding other people online in one cent increments. If this sounds like there is a catch, there is. A big catch. The winner of the auction pays the final price that he or she bid, but each bid costs between $0.50 and $1.00 per penny bid. Each bid is non-refundable, so a bidder may spend a good deal of money bidding for a product that they never win. Further, new bids increase the time of an auction by 15 to 30 seconds, so a last minute bidding war can extend an auction by several hours past its original deadline.

Although there are a few good deals to be had with less popular auctions, many penny auction sites also have hidden traps. According to the FTC, some penny auction sites use automated computer scripts (bots and shills) to drive up the price of auctions automatically to prevent any good deals. Some sites are phishing sites that steal financial information.  According to the Better Business Bureau, there are also numerous hidden costs. One such scheme involved bonus “free” offers that end up costing money.

Consumer Reports offers useful tips on how to use penny bidding sites without getting ripped off. First, verify that the penny bidding site is legitimate through user reviews and complaints to the Better Business Bureau. Next, make sure that the site allows unlimited refunds of purchased bids and allows placed bids to be used towards a purchase of the item, commonly known as a “buy it now” option. Finally, be prepared to lose the amounts that you have placed in bids. Or better yet, watch for sales online and in stores through deal hunting web sites like FatWallet and Slickdeals!

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In recent years, cellular telephone users have been increasingly subjected to a scheme known as “cramming,” which has been described by the Federal Trade Commission as “the placement of unauthorized charges on telephone bills.” Unscrupulous companies use a variety of methods to “cram” charges, such as deceptive promotions of free ringtones, game downloads, games, contests, jokes and sweepstakes bidding to entice consumers to provide their cell phone number so that monthly service fees may be charged to the consumer’s cellular phone bill.

If your cell phone bill has contained a charge for an unauthorized service, then please contact us to discuss your experience.

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On October 5, 2009, the FTC announced approval of final revisions to the guidance it gives to advertisers on how to keep their endorsement and testimonial ads in line with the FTC Act.  The new guidelines, as explained in the official press release, require advertisers to affirmatively disclose when promotional claims regarding a product or service is not typical, and also make it clear that celebrities have a duty to disclose their relationships with advertisers when making endorsements outside the context of traditional ads, such as on talk shows or in social media. Perhaps the most significant revision, however, relates to the use of company sponsored research to promote a product or service. This practice has been a favorite tool of drug companies and the tobacco industry who seek to leverage sponsored research to promote the benefits of their products, or create the appearance of a scientific “debate” over risks. Under the new guidelines, the promotional reference to the findings of research sponsored by the company must be disclosed to the consumer.

A more detailed discussion of the New FTC Guidelines is addressed at the Bailey Class Action Daily at the link here.

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