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Washington AG Settles with Penny Auction Website

The Washington AG alleged ArrowOutlet.com rigged its auctions for electronics and other goods. Bidders thought they were competing with other human beings. But in reality they were often battling or placing bets against "bots" - people that did not exist.

The Washington AG alleged ArrowOutlet.com rigged its auctions for electronics and other goods. Bidders thought they were competing with other human beings. But in reality they were often battling or placing bets against "bots" - people that did not exist.

ArrowOutlet.com required bids to be purchased in "packs" that cost at least $20. Auctions would generally take place over a period of days or hours. When the remaining time ticked below 15 seconds, each new bid increased the remaining time by 15 seconds. But bidbots were engineered to secretly intervene in the process. The deployed bidbots increased the number of bids required for real consumer to win an auction, a practice that is unfair and deceptive.

The defendant, which voluntarily shut down its auctions before it became aware of the AG's investigation, will provide restitution to its customers. Arrow Outlet paid the AG's $50,000 to run an Arrow Outlet restitution fund for Washington state consumers. Up to $250 will be available for each Washington state consumer who purchased bids between August 1, 2010 through July 31, 2012. Click here to view the Complaint and here to view the Consent Decree.

This is the third penny auction site that ran into trouble with the Washington State Attorney General's Office. In 2010, the office negotiated a deal to shut down PennyBidr. In 2011, the Washington State Attorney General's Office stopped another penny auction site that was failing to deliver items to the winning bidder.

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