Consumers should be wary of the DealSave penny-auction website which runs auctions for electronics products, the Commerce Commission has warned.
DealSave auctions items such as cameras, tablets, phones and televisions with very low or no reserves. Examples of bargains that the website claims to have sold include a 65-inch LED television for just $17.34 and an espresso coffee maker for $9.47.
But there's a catch.
Before users can bid in the auctions DealSave requires them to purchase acccount packages costing between $129 and $499.
Commerce Commission consumer manager Stuart Wallace said the commission had received a number of complaints about the website.
"Almost all those who have expressed concerns to the commission have found that their credit cards have been charged even though they have not bid on anything," he said.
"While the website states that registration is free, users are encouraged to enter their credit card details as part of the registration process.
"Users who have done so have reported being charged up to $370 even though they have not made a bid. When they have queried it with DealSave they have been told they have made a purchase and no refunds will be given."
The commission said consumers were being drawn to the DealSave website mainly through advertisements on Facebook.
"At first glance consumers may think DealSave is a New Zealand-based website as it has a New Zealand contact address and a New Zealand flag and dollar currency sign," Wallace said.
"'However, our inquiries show that the website appears to be hosted overseas. The company behind the website also appears to be based offshore and has no connection with its advertised New Zealand address."
Penny-auctions are auctions where items are put up for sale with very low, or no reserves and a fee is charged for bidding on the auction. The fee paid by the bidder is the amount bid, whether they win or not.
Some penny-auction websites also charge a fee to register. If you do not win the auction, you do not get the money you have paid to bid refunded.
The Commerce Commission said the process was not illegal provided the website clearly outlined the process and its fees.
Because the website is operating overseas, the commission said its ability to take action against it was "constrained".
It advised anyone who believed they had been wrongly charged by DealSave to contact their bank or credit-card company. Depending on the individual situation the bank or credit card company might be able to refund charges that have been improperly incurred, the commission said.
- Fairfax Media