You Never LoseImagine a world of 20-cent lattes, $11 iPads and gas at 19 cents a gallon.

That is the reality that entrepreneur Barry Shore is looking to create with, a penny auction site that offers users the opportunity to buy chances for huge savings -- but unlike similar sites, with this one, you "gamble" without the possibility of losing money.

It may sound like a con -- right up there with the Nigerian banking scam -- but it's actually legit.

The site auctions off gift cards from popular retailers like Gap (GPS), Amazon (AMZN) and Target (TGT), usually at prices far below face value. That's standard for a penny auction site. But every time you buy bids, you automatically get a gift card of equal value. Spend $25 on bids, and you also get a prepaid reward card for $25 to a retailer you chose. Even if you lose every auction you compete in, worst case scenario, you still essentially get back the money you spent.

Naturally, YNL isn't paying full face value for the cards -- the retailers are willing to discount them as a method to get customers in the door -- but for the consumer, it's still a win-win.

Say, What Is This 'Penny Auction' Business You're Talking About?

For those of you who have never clicked on an online ad offering you the chance to buy an iPad for $11.49 , allow us to explain the original penny auction model. In essence, it's a fusion of eBay and a lottery.

In a penny auction, each participant pays a small, nonrefundable fee each time they bid -- a dollar, let's say. Each bid raises the sale price of the item by a penny. When the auction ends, the winner pays the final price and gets the item -- probably at a steep discount. But he, and everyone else, has already paid for their bids.

So, say you want that bargain iPad. You pay your buck to put in your bid, and watch the clock. Other people do the same. You pay and bid again ... and again. The price rises slowly, and time runs down.

Skip to the end of the auction: When time runs out, if 1,149 bids were made, the price for the iPad is $11.49. That last lucky bidder pays $11.49 more, and gets their iPad -- a wild bargain! But the whole group of bidders -- including the winner -- have shelled out $1,149 for their bids. Total revenue for the auctioneer: $1,160.49.

Back to Why Is So Clever

The YNL concept cuts into the penny auction model's margins, but it boosts customer involvement: It's easier to attract customers when they don't have to be afraid they're throwing away money.

In less than three months of operation, the company has saved users some $50,000.

YNL Shore, a former diamond dealer, retired from jewelry to chase his entrepreneurial urges. YNL is his fourth start-up, after a fax business and a telephony business that was a precursor to Skype.

Though he had long been a father, Shore's YNL co-founders Zak Klein and David Winner were quickly growing large families, and they frequently looked to save money by scoring deals on the Internet.

"They have six kids between them and started playing penny auctions," Shore said. "But after losing four or five, their wives said, 'If you do that anymore, I'm kicking you out.'"

But Klein and Winner didn't want to choose between getting deals and preserving marital bliss.

"Instead of grumbling and slamming the computer, they decided to change the model," Shore said.

Losers Keepers

The potential rewards in a penny auction are great, but the odds are slim. The main complaint with most penny auction sites is that it's easy to put a lot of cash into bidding competitively, and then walk away with nothing. Shore, who enjoys the psychological dynamics of playing poker with friends, found the money-loss excruciating.

"Ultimately, somebody's happy, but everybody else lost," Shore said.

By offering prepaid gift cards of equal value to the points you buy, YNL essentially lets you play for free. And if you do end up winning the auction, you also walk away with your prize.

Everybody wins.


Increase your money and finance knowledge from home

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Thanks for this post! I never knew how penny auction sites worked. It has always seemed like a scam, so I've never tried one out before. I guess you really have to decide if penny auctions are right for you because it really is gambling more than a real auction!

November 27 2012 at 10:18 AM Report abuse rate up rate down Reply

my classmate's ex-wife makes $78 hourly on the computer. She has been out of a job for 5 months but last month her payment was $16144 just working on the computer for a few hours. Go to this web site and read more

April 23 2012 at 7:35 AM Report abuse rate up rate down Reply
Kilgore Trout

A little late to the party, but here's a video review of the site:

April 09 2012 at 3:06 PM Report abuse rate up rate down Reply

Online auctions are a scam in general. Unless you have purchased the software specifically for automatic bidding, you will never manually win a bid against them.

March 25 2012 at 10:05 AM Report abuse rate up rate down Reply
Eli Lippman

Hi All-

Your comments are all interesting….and important to YNL. THE YNL model is so simple and you are all making it so complicated. Here is how simple, straightforward , and easy it is: for every dollar you spend on a gift card, say a $25 Gap card, you will receive the SAME amount of POINTS, in this case 25, to play in the auction.

Thanks to everyone who commented: you are all correct……penny auctions that cost money ARE stupid. But when your playing is FREE it might be stupid NOT to try. Am sure none of you have even visited the site. You truly cannot lose on YNL, as you are Guaranteed at least your money in a gift card….and YOU Choose the Gift Card you want. Hey, it’s America and people can say what they want…..even if they have never tried something.

Be well all. It really does work and it is fun.

March 25 2012 at 1:55 AM Report abuse rate up rate down Reply
Len Robertson

If it sounds too good to be true, it probably is. I wonder if that Nigerian prince will ever give me back my money?

March 24 2012 at 8:39 PM Report abuse +1 rate up rate down Reply

Seems like ever since Huffington got involved with AOL ----- things have gone to pot !!! Way way way left leaning on all their sites -- and now promoting SCAMS on the site as well.. I am about ready to bail out and simply use yahoo or some other site.

March 24 2012 at 3:49 PM Report abuse +1 rate up rate down Reply
1 reply to Hi RON's comment
Len Robertson

Actually, it's the far right that's a sucker for scams. As a Boston study last April found, conservatives can't save a dime, no matter how much they earn. When police say that those who buy state lotteries are the ones who can't afford to do, that's who they are talking about.

What about liberals? They make their money the old fashioned way: they don't spend as much as they earn and and they invest it wisely.

March 24 2012 at 8:46 PM Report abuse +1 rate up rate down Reply
1 reply to Len Robertson's comment

Your sources please.

March 25 2012 at 10:07 AM Report abuse rate up rate down

the simple fact that this has you PAYING TO BID is a scam right there in itself.
other sites you just sign in and GO.

March 24 2012 at 10:44 AM Report abuse +1 rate up rate down Reply

can you read SCAM!!!!! Shame on India Online for advertising this as not fraudulent.

March 24 2012 at 1:16 AM Report abuse +3 rate up rate down Reply

Wow! This sounds like a great opportunity... for suckers. I'm sure that it will be immensely popular. Have fun fun with your bids, sports fans.

March 23 2012 at 10:22 PM Report abuse +2 rate up rate down Reply