Max Loren Designer Auctions – Clever or Cruel?

Looking for a website that sells designer handbags, I have discovered this auction website. I must admit, it immediately caught my eye! Genuine products, low winning prices, free shipping, what else could one wish for? I joined, played with it in the course of about half an hour, but gave up.

Here’s how works:

  • To bid you have to buy bids (haven’t seen this practiced anywhere else, but this is the key to the idea)
  • Each bid costs you $0.60 and you can buy them in batches of 40, 70, 140, 280, etc (interestingly enough, unlike at Chuck E Cheese, you get no wholesale discount regardless of how many bids you buy)
  • The auction prices go up only in increments of $0.02 (i.e. you cannot bid $10, but should either bid 500 times in a row, or wait until someone else bids it up to the $10, and then chime in; either way, it certainly keeps you busy)
  • Every time someone bids within 10 seconds before the end of the auction, the auction extends by 10 seconds
  • Starting prices are always really low, and shipping is always free

I started bidding on this item 9 seconds before the initially posted auction end time, and my winning  was $1.54. At the time of this post (over 4.5 hours after I’ve quit) someone is already bidding $29.48 on it, and the price continues growing.

But let’s suppose someone did buy this $395.00 designer handbag at the $29.48. How much would Max Loren actually get for this “lowest price” item? Since each bid costs bidders $0.60 + $0.02, we want to divide the final selling cost of the item by $0.02, and then multiply the result by $0.62. Let’s do it:

Some math

Wow!! Call it cruel or ingenious, but this is definitely some business model!

17 thoughts on “Max Loren Designer Auctions – Clever or Cruel?”

  1. The above auction appears to have finished with the winning bidder buying the item for $33.18.

    $33.18 / 0.02 * 0.62 = $1,028.58

    Simply WOW.

  2. I joined the site a month ago and have yet to bid on an item. But today I notice the incremental item price has changed from $0.02 to $0.01. Double WOW is more appropriate now.

  3. I found this auction site yesterday and came to the same realization after watching for about an hour. Even my kids got hooked into watching the seconds going up and the bidders going crazy! It cost me $24 and about 3 hours for absolutely nothing. But what a business plan!

  4. The thing is, it is so easy for these sites to run automatic bidders behind the scenes. Do you ever really know if the person who keeps outbidding you is a real person or a shill bot they’ve worked into their program? And the software used by these penny auction/reverse auction/entertainment auctions sites ALL have the ability to turn the robot bidders on if they so desire. I’ve seen many penny auctions start up and most HONEST sites do not get much bids until they get some steady traffic coming in. got something like 800 bids on their very first auction. As someone who has seen many sites like this start up I can tell you that that amount of traffic and activity on an unproven start up site is virtually unheard of. Seeing that I concluded that Maxloren uses the robot bidding to drive their items up to a certain price before anyone is allowed to win. Don’t waste your time or money here.

  5. I’ve been an auction winner and I can tell you that it’s a hell of a deal. I bought $40 worth of bids and won my item for $2.63. All I paid was the cost of my bids and the $2.63. When you complete an auction, you simply pay for the item (which I did). When you add the cost of the item plus the amount I spent in bids, the total was $43…and got one terrific handbag.

    I think where the math example above breaks down is that winner is not paying for every bid…just the ones they personally submit. The auction is winning big time, but the winner is just paying for the 20 or 60 cent bids they place.

  6. Good for you, Laurie, but my math was in no way provided as proof that it is the winner that pays all this money. The calculations were answering the question “How much would Max Loren actually get for this “lowest price” item?”

  7. I don’t care if someone gets a deal or not, what about the hundreds of other victims? I agree, how do we know there isn’t a shell agent or multiple insider sniper bidding to increase the auctions. This is a shell game and I hope that someone will put an end to it before hundreds if not thousands of consumers get taken, especially desperate woman who think they are going to win an expensive purse for $2.63.

  8. Max Loren has been down since the first of the year making me think they had too many auctions where no one was bidding and they actually lost money. Or, that Louie Vuitton which aggressively protects it’s brand threatened to sue them. It’s true that on a day when they had a LV which every one wanted they had lots of traffic and turned a huge profit margin at the expense of the losing bidders. But analysis indicates that there were plenty of days that the interest just wasn’t there and they lost money if they really purchased a new bag at retail and shipped it for the winning bid plus the price of all the purchased bids. Now that they are gone so is their guarantee that the goods were original. There is NO contact information on the site at all. I think this story deserves a follow up about what really happened to them.

  9. Wow. Seems like this one hasn’t lived too long after the above post. Last update in their Twitter feed dates Dec 18th, 2009, and the website is inaccessible. Maybe, after all, the whole setup was more cruel than clever.

  10. Did they file for bankruptcy? Do you have any idea where they were incorporated? I bought bids a few days before the site disappeared and never got to use them.

  11. I have no clue, J.

    Judging by your email address it appears that you’re a lawyer. Would love to hear from you once you’ve had a chance to dig into this.

  12. I have won items on auctions like this. Of course they make a profit or they wouldn’t be in business. Every site that I work with clearly explains the rules, prices, concept, and return policy, as did Max Loren. Yeah, it’s a gambling game, but come on people. Read about what you are doing before you do it. If you read the How it Works, didn’t win, and complain about it, don’t be a sore loser. You want a deal, you have to put in the time and effort. There probably are some sites that have insiders bidding on items because they have no business ethics. That’s why you should check and find out which sites are accredited and which aren’t. Yeah you could play the lotto or hit up Vegas, but your odds are better on legit penny auction sites.

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