Responsible development of penny auction sites

Ever since penny auction sites first emerged on the e-commerce scene they where fault to a lot of accusations from different trading organizations and consumer rights groups questioning whether or not penny auctions use a scam business model to operate.   

It's a complicated debate that even managed to attract the attention of the US federal trade commission as they issued a warning note asking costumers to be extremely careful when using PA sites.  

Now to be completely true in answering this question we have to first understand what penny auctions are in truth and at what levels do dishonest businessman initiate scams models and is there a responsible and legitimate approach to developing and operating penny auctions.  For some reason a lot of people think that penny auctions are discount sites and think of them as of sites like groupon and other daily deal sites. At a first glance this might be true because in both cases the site's lure in customers with extreme discounts on eye catching products.  But the goals the two sites have are completely different and from a costumers point of view might seem somewhat sinister.  

Daily deal sites encourage you to subscribe to the mailing list to stay updated on all the fantastic deals in your aria this in return provides them with a big target audience with personal information that allows them to stay an effective marketing and advertisement platform for companies looking for a fast paced marketing campaign. 

Penny auction sites on the other hand try to attract users because they need high volumes of traffic to stay profitable.   

If we take a short walk back in time the first penny auctions as far as I remember was Swoop and the tag line they advertised was "entertainment shopping" and that's exactly what it is. Penny auctions might offer attractive bargains but they tend to provoke social competitive behavior using for their advantage certain human philology patterns as well as basic game theory principals to achieve high levels of engagement.  

Even the current organizations that present penny auctions and software providers is titled: entertainment auction association. So claiming that the model itself is a scam is unfair, and comes from a misunderstanding rather than rational analysis.  

Scams occur on the operating level when owners use either software methods to scam people (boy bidders, timer lag control etc) or methods that can be met anywhere else and are in no way specific to the industry for instance simply not sending won item to auction winners.  Responsible development  Over the past years the industry matured and managed to learn from past mistakes. Software providers that want to be taken seriously no longer advertise the use of bidbots to ensure success and even more than that don't offer them even when asked advising for alternative methods that give a fighting chance to a penny auction in the longer run.   

A lot of developers have turned their time and effort towards legitimate modules and features that can make a penny auction a truly pleasant experience. For instance a lot of penny auction software providers attracted to offer an Buy now feature or buy now with discount. That allows a costumer to buy the auctioned item at any time via the retail price or with a discount calculated depending on the amount of bids he spent on the auction, so even if you haven't won the end auction you can still get your money's worth.   

For promotional courses penny auction software developers review a lot of possibilities for improvement and occasionally whip up new features to keep the industry healthy and riding on the cutting edge of modern technology. Things like "Virgin" auctions -auctions restricted only to those who haven't won before and social interaction rewards (bids for facebook likes) are being actively developed.  Providing a solid platform for responsible development and operations of a penny auction sites, so I wouldn't say it's fair to red flag the industry as a whole but sadly for whatever reason at this point it seems to attract quite a few dishonest entrepreneurs and caution is a thing well advised.