An Adsense ad that was displayed on one of my sites caught my attention last night. I’ve seen this ad around on many sites over the past few months but last night I needed to take a break so I checked out the site. What I found was an amazing business model that I would guess may be pulling in six figures in profit a day, but I’m questioning the legality of it.
The site I’m talking about is QuiBids.com (horrible domain name if you ask me… though they probably fell into that gray area where they’ve spent money branding the domain and now that it is successful do they want to jump to a better domain name) and the concept is very simple. They auction off items, from gift cards to TVs to homegoods to “bids” on their site. How’s it work? All auctions start off at a penny and the bid increments go up one cent at a time. But before you bid, you must purchase “bids”. A bid will cost you $0.60. The starter pack is 100 bids for $60. The reason why people buy bids is because there are items worth thousands of dollars selling for a purchase price of less than $200. Here’s an example from last night where a lucky person got a $1,500 MacBook Air for $135.63.
But if you did the quick math in your head you’d see why I’m questioning the legality of this site.? To reach $135.63 bid, there were 13,563 bids that were placed.? At $0.60 per bid that means $8,138 worth of purchased bids were placed by people.? Now it shows in the screnshot that the lucky winner only spent $30 worth of purchased bids (so the $30 of bids plus the final ending price of $135 means that person walked away with a $1,500 laptop for less than $200 out of his pocket), but there were over $8,000 worth of purchased bids that wound up doing nothing but going in QuiBids’s pocket.? So QuiBids essentially sold a $1,500 laptop for $8,100.? Great business model, huh?? But is it legal?
To determine legality you ask yourself is this a game of skill or a game of chance, and if it is a game of chance than you might be crossing the line between legal and illegal.? Consider this an online raffle.? It would be a great business model if I could buy a 2012 Mustang for $30,000 and than sell 400 raffle tickets online for $100 each.? Someone will get a $30,000 car having only spent $100 and I’d get $10,000 in profit.? Why can’t I do that?? Because it is not legal.? I’d view QuiBids to be doing the same type of action in a different format.? It will be interesting to see if business model stays alive and healthy or if one of the attorney generals catches on and questions the method.