The Crack Cocaine of Auction Sites

Imagine for a second that you set out to come up with an online shopping site that would take advantage of everything we've come to know about consumer behavior to separate people from their money in as efficient a way as possible. What would you do? Well, you'd probably try to draw buyers in with bargain prices. You'd pit them against one another in an auction. You'd ask them to make snap decisions without taking much time to figure out just how much money they're spending. On top of that, you'd ask them for only very small amounts of money at any one time, letting payments of a few cents build up to hundreds of dollars.

Still trying to figure out how you'd put all that together? You can relax. Someone's already beaten you to it: the folks at Swoopo.com. It's an online auction site that fiendishly plays on every irrational impulse buyers have to draw them in to what might be the crack cocaine of online shopping sites.

I discovered Swoopo, as many people do, through an online ad plugging its latest deal, a fancy desktop computer at more than 90 percent off. I don't actually need a new computer, but the words "90 percent off" have traditionally exerted a powerful pull on my family that no number of never-worn double-breasted suits has ever been totally able to alleviate. You say "90 percent off," and I click.

If you are already saying to yourself that surely there is a catch, you are right. Smarter people than me see a site that sells a MacBook Pro for $35.86 or a Nikon digital SLR for $16.03 and turn away, knowing that the bigger the "free lunch" sign is, the more it's going to wind up costing. Trust that impulse, because Swoopo, which bills itself as an "entertainment shopping" site, combines the addictiveness of auctions and the chance element of lotteries into what may be the most devious way to dig into your wallet yet devised.

At first glance, Swoopo.com—which started its life in Germany as a phone and TV-based auction site called Telebid, migrated to the Web as "Swoopo," and launched its U.S. site last year—looks like an auction site patterned on eBay , with prices for most items starting at a penny and rising as members "bid" up the price. Like Ebay, Swoopo has a full panoply of auction tools, such as comprehensive records of all the completed auctions and an electronic bidding system ("Bid Butler") that will put in last-second bids to keep you in the auction. Unlike eBay, however, on Swoopo you need to pay 60 cents each time you make a bid.

Sixty cents? Sure doesn't sound like much when getting a $1,000-plus camera or computer is at stake. Delve into this a bit, though, and you might be stunned at just what that small charge for each bid leads to.

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Consider the MacBook Pro that Swoopo sold on Sunday for that $35.86. Swoopo lists its suggested retail price at $1,799; judging by the specs, you can actually get a similar one online from Apple for $1,349, but let's not quibble. Either way, it's a heck of a discount. But now look at what the bidding fee does. For each "bid" the price of the computer goes up by a penny and Swoopo collects 60 cents. To get up to $35.86, it takes, yes, an incredible 3,585 bids, for each of which Swoopo gets its fee. That means that before selling this computer, Swoopo took in $2,151 in bidding fees. Yikes.

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