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This time, Smokoo really is a SCAM

Marc
  • On October 4, 2011
  • http:/www.marcforrest.com

 

The last time I posted that Smokoo was a scam, I got asked to take the post down. Thanks to a couple of things going on in my life at the time, I didn’t have much of a choice, but to take it down.
But now, I am really confident in saying, they have pulled off such a stupid scam, they really are the laugh of the town.

A while back Smokoo decided to auction off an iPhone5– http://www.za.smokoo.com/auctions/smokoo_iphone5

Yip, you read that. iPhone5. Which didn’t even exist then, and still doesn’t exist now. This evening, Apple announced the launch of the iPhone4s, while Smokoo hapily boasted about an iPhone5 they auctioned off. The winner ended up paying R2.97, foe what is effectively now a cardboard box. Ouch !

If you take a look at the auction page, they go on to give specs which they “think” would be in the iPhone5.

Breaking news – Apple iPhone launch – now it’s official: Invitations have been sent out for the event on October 4, saying, ‘Let’s talk iPhone’. Apple staff have been banned from holidays in the first two weeks of October in America, and tech insiders expect the iPhone 5 from the launch to appear in stores shortly after – on October 14

It doesn’t get more exciting than this!

The iPhone 5 is set to become the best-selling iPhone of them all. Be the first to own one by securing this auction. Place the final bid and the iPhone 5 is yours.

Model: iPhone 5 32GB

Some of the most-wanted features on the iPhone 5 include: Enhanced voice control, Micro-HDMI out, Removable battery, Expandable memory, Biometric security, NFC-enabled, Better home-screen and notifications system, Enhanced cloud-computing support, FaceTime over cellular network, Flash support, Larger screen, Better camera, Dual-core processor, Upgraded 3D graphics and Fewer dropped calls.

Smokoo has garnered a reputation for being the first site to sell the iPad, iPad 2 and the iPhone 4. Our customers save an average of 96% on these items and other high-end items like cars and bikes.

Notes:
iPhone 5 will be shipped after official release by Apple
Product pictures are for illustrative purposes only
Shipping cost includes insurance

 

What the…Seriously. Removable Battery, Micro-HDMI out, Biometric Security. SERIOUSLY. My eyes are bleeding !!! Somebody help me. The only thing they did seem to get right was the release date. Well done Smokoo !

Honestly, I can’t believe that these guys are still going. It utterly pisses me off when companies try and push stuff like this, KNOWING that people will fall for it. It is utter BULLSHIT.
I honestly hope Smokoo gets taken to task for this Smokoo Scam. It is totally unacceptable !!

[Updated] Just seen on their FB page, they also offering you a “chance” to go to New York to “…get your iPhone5 with the Smokoo Team”. Really ? Really !!

 

Comments

  1. Another auction for an iPhone 5 also closed at R136.74 (see link below). A user bids using credits. The iPhone 5 auction have was “1 credit per bid”, which means every time a user bids they pay R5. Ultimately, a user would need to bid quite a bit or use auto-bid to actually have a real chance at being the last bidder. Therefore you pay a lot more than the final bid price and delivery costs.

    What I find really interesting is that there were 3064 bids (at 1 credit per bid / R5) on the auction I mentioned above and 84 bids (at 4 credits per bid / R20) on the auction mentioned in your post. Essentially Smokoo has made R17000 on a product that doesn’t even exist. I know there model has been questioned before, however with this kind of behaviour they have crossed the line and there should be some sort of law they are breaking?

    Link to iPhone 5 auction – http://www.za.smokoo.com/auctions/smokoo__333713

  2. Hey Tyler. Thanks a lot for this. I do recall the previous auction, but couldn’t seem to find it. What I think irritates me the most is that it is complete and total scam advertising. They sucking gullible people into their system

  3. Really well written article, I couldn’t be happier to see something like this arise. I laughed so hard when I saw removable-battery in the description :)

    I have never been a very big fan of Smokoo.. according to me it’s just a legal loophole into an interactive gambling site, the thing I noticed in their Ts&cs, is that everything is governed with the laws of the UK, and that nothing anywhere on the site states that Smokoo employees or family members of Smokoo employees are not allowed to bid, in my eyes they are nothing more than a bunch of hustlers who will try do anything to get a slice of your hard earned money.

  4. Pete

    Perhaps a slightly different take on this issue. I don’t think for a second what Smokoo are doing is right or ethical, and I’m fully behind Marc on his views on Smokoo. It is worth noting though that they do cover their asses with plenty of weasel words to ensure that they’re not technically lying.

    They didn’t claim those specs on the supposed iPhone 5 – on careful reading they said those were the “most-wanted features”. Whether it’s an outright scam also comes down to whether they’ll honour their promise to fly the winning “bidders” to NY and whether an iPhone 4S (which is technically the 5th iteration of the iPhone, whatever it’s called) is actually shipped to the winning suckers.

    Overall, I think if this promotion were done by anybody but Smokoo it wouldn’t have felt so dodgy. Had Vodacom or Core for example run a promo where I could get flown to New York to pick up the next iPhone (whatever it’s called), I might’ve been tempted to enter. Instead, it’s the usual problem of Smokoo itself being more dodgy than most.

  5. Hey Pete.
    Totally hear you, and see what you saying. Still think the fact that they had 3 separate promotions specifically trying to promote the model of iPhone called iPhone5, seems to be really unethical and really more like a blatant advertising/marketing scam/gimmick.
    Most non tech-savvy consumers would have fallen for it given the hype and the name, but the fact they started promoting it almost 3 months before the fact still leaves a bad taste.

    Anyways, going to be interesting to see how the come back from this one. Let’s see :)

  6. Adrian

    Anyone feel like running this one past the Consumer Protection Act?

  7. Pete

    @Marc – in terms of the blatant exploitation of the gullibility of your average consumer, I agree 100%. I have a very strongly dislike for marketing that uses weasel-ly language to convey a message you know will be read wrongly. If you can’t use plain, straight-forward language to convey your point to consumers, your point probably shouldn’t be made.

  8. Sid

    Hi,

    Well done, well said..

    Iphone 5 was sold on smokoo for 136.74,
    http://www.za.smokoo.com/auctions/smokoo__333713

    all together it took 13674 bids to take it’s price to 136.74.

    1 bid = R5, 13674 bids = R 68370……. :)

    I can’t stop laughing but we(South Africans) paid collectively R 68370 for a product which doesn’t exist :)))))))))

  9. Justin

    A great post Marc, and really worth pursing. There is a moral obligation for businesses to operate in a way that does not deceive the consumer or make promises they cannot deliver. While we can dance around fine print and smart marketing the nuts and bolts are that we should always have the consumers best interests at heart…I sense this isn’t the case with smokoo.

  10. joeyhza

    LOL – LOL – LOL
    Smokoo are a bunch of losers – complete idots. Fly to NYC to get the IPhone 5 and what happens????

    THERE IS NO IPHONE 5. I wish these people would burn for this sort of advertising. This sort of thing brings companies to their knees – its time people woke up and realised that smokoo are a bunch of con-men.
    Like flies on crap gullible people were enticed – I wonder what Smokoo has to say now.
    What i can say now is – BUNCH OF LOSERS!

    I wonder if they’ll reimburse anyone for the bids that were placed for a product that doesnt exist. Scam Artists! Knowing their business strategy – PROBABLY NOT!

  11. Petrus

    Why don’t you re-post it now? See if they phone back again?

  12. Brad Vincent

    Yes Marc, put the old post back up! They have no grounds now to get you to take it down!

  13. Mario Puzzo

    I don’t understand your post or the concern.

    What we now know to be the iPhone 4s was last week thought to be named the iPhone 5. Not rocket science here! Winners of the “iPhone 5” will simply be receiving the new iPhone 4s.

    Please explain how this is a scam?

  14. Leb

    Really Mario?

    After doing a serious amount of research into “penny auction systems” one system USP ( unique selling point ) that was damn close to across the board, is that most of them come with a built in threshold bot system to boost the total revenue with effectively fraudulent bids …

    Get a company to do a complete system audit and have an external adjudication team and then smokSCAM can talk.

    Until then.. Put your old post back up mark.

  15. Mike

    “I can’t stop laughing but we(South Africans) paid collectively R 68370 for a product which doesn’t exist :)))))))))”

    It’s not necessarily just South Africans, have you noticed that there are now 5 countries that you are bidding against? How they get away with that is what I would like to know

    http://www.smokoo.com/ – United States
    http://www.fr.smokoo.com/ – France
    http://www.uk.smokoo.com/ – United Kingdom
    http://www.za.smokoo.com/ – South Africa
    http://www.ru.smokoo.com/ – Russia

  16. Sid

    :) Feeling happy now as I am not alone… got people from 5 countries together to pay their hard earn money to smokoo.

    not sure if there is any regulation to control this, this is clear gambling and should be categorised as gambling site.

  17. Spugoo.com has been monitoring all of Smokoo’s auctions since February 2011.

    We have the ability to identify auctions that ended prematurely or having suspicious bidding activity – for which there has been none we have noted so far.

    Spugoo.com gives bidders a global view of the bidding activity on the website and counts user bids and spending activity on the website for every auction and every user.

    Currently you are able to register on the website and monitor current auctions in progress.

  18. hendrik

    I bid on a Rolex watch auctioned at smokoo. After about R300 worth of bids the auction closed and i was announced the winner. Within a few minutes i received an email that there was an program error and the auction closed prematurely and that i did not win the auction but can continue bidding on it. I send them emails etc but they were adamant that i there was n program error.

  19. Anyone with half a brain

    If Spugoo are monitoring Smokoo and have yet to find evidence of suspicious bidding behaviour, then I’m afraid Spugoo are evidently as incompetent as Smokoo are misleading. (Could the clue be in the similar domain names, could they even belong to the same entity?)

    One recent “auction” had an IMAC (valued at R22,000) sold for R326.41
    Bids cost 8 credits, credits cost R5
    A sale price of R326.41 means 32,641 bids were placed.
    32,641 x 8 x 5 = R1,305,640 generated for a R22,000 item – a tidy profit of at least R1,283,640 on a single item!

    So far, this would just suggest a very clever business model (if a little sneaky).

    BUT…..I watched one bidder place more than R200,000 worth of bids on this item (and maybe more, I didn’t watch the whole show) and fail to win. Smokoo would have us believe that this bidder paid his/her own hard cash for these credits, and then blew 10 times the value of the product in an attempt to “win” it, rather than go down the shops and buy it. (Coincidentally, the same bidder, at the same time, wasted >R7,000 trying to “win” a R3,500 kettle)
    I’m afraid I simply don’t believe that anyone that stupid exists, or for that matter that anyone has spent that sort of cash on Smokoo credits, the only reasonable conclusion would be that Smokoo (or affiliate with access to free credits) are bidding on their own items, and that Spugoo are part of the same family of websites – and that is not clever, or even sneaky, but wholly dishonest.

  20. Anyone with half a brain

    Update to above – according to Spugoo.com the bidder in question actually spent a total of R463,480 trying to win a R22,000 item. Nothing suspicious about that then………

  21. Anyone with half a brain

    Also, according to Spugoo, the winning bidder spent R68,960 on a R22,000 item, but on the results page on the Smokoo website they show the winning bidder as having made a saving of R7,760.59! Interesting arithmetic at the least, more likely, intentionally, dishonestly, misleading.

  22. Wow. This is insane. This really goes to show that Smokoo is a huge scam and should be considered a form of gambling !!! SHOCKING !!

  23. What surprises me, is that Anyone with half a brain should be able decipher the arithmetic used in this business model.

    1.) Last bidder wins
    2.) The selling price increments by 1c after each bid
    3.) To bid on an item costs a credit or more
    4.) It costs R5 per credit

    Smokoo neglects to add the value of your bids you have cast for an item in order to secure it – which represents the true value of money spent.

    This is synonymous with Smokoo’s concept of adopting a strategy to secure an auction, as it may take you as little as 1 bid or as many as 1000 bids or more to secure an auction.

    As Spugoo.com has no affiliation with Smokoo.com, my aim is to make the actual costs incurred more transparent to the end-user. With this information at hand, you are able to make more informed decisions in your bids against other users.

    As the sole developer to the Spugoo.com website I incur all maintenance costs personally.
    Please donate to maintain the website should you find the Spugoo.com service of benefit or contact me should you require any software or web development.

  24. Anyone with half a brain

    Yup. Although I think ‘form of gambling’ maybe a little gentle…’form of theft’ may be nearer the mark.

    A lot of their results do not accurately reflect the truth – 1 or 2 could be misprints, but the volume of misleading results would suggest that they are intentionally misrepresenting.

    Also, I’m pretty sure that the ‘unlucky’ bidder above who blew nearly half a million on not getting an IMAC was an auto-bidding bot as referred to by LEB above.

    I think it’s time for a submission to the National Consumer Commission and perhaps the Gaming Board. If this activity can be deemed as gambling it will be easy to shut down the za site at least, the Gaming Board are now in a position (since the Piggs Peak Poker ruling) to prosecute any entity deemed to be facilitating online gaming, this includes the ISP hosting the site and even the banks who are facilitating deposits to the site. If there is any likelihood of the banks being prosecuted, they (the banks) will quickly pull the plug.

  25. Anyone with half a brain

    Sorry Spugoo, your original post of Oct 31, stating “We have the ability to identify auctions that ended prematurely or having suspicious bidding activity – for which there has been none we have noted so far.” – seemed a little disingenious, given the copious evidence suggesting suspicious bidding behaviour.
    Having properly looked at your site, you would seem to be on the side of the punter here, not the house. I withdraw the previous inference of complicity.
    Apologies.

  26. sean

    Hi Marc,

    I have been watching Smokoo today. Having spent R250 buying credits to be allowed to bid I am now aware that there is very little chance I will actually win anything.

    There is currently a Blackberry Torch 9860 on “auction”. Two user (Humilis and Manou78) have dragged the price of this item from the low R50 region to over R74. This amounts to R24 which is 2400 bids, and each bid costs R5. Between them they have spent nearly R12,000 to purchase a phone which is worth R6,999!

    Surely nobody can be that naive, or ignorant to realise that this is ridiculous economics? There is now a third party who is bidding on the unit which just adds to the pot. Each of these bids is placed via an auto function so the bidders are probably not actually placing the bids. And this has been going on since just after 11h00 this morning, over ten hours!

    It looks a lot like insider trading to me. Bids placed within the organisation to drive up interest in the website. If the bids are legit at the present price of R74.25 the company has earned a profit of R30,625 selling the unit.

    They’ll continue denying it no doubt, but the doubts will not disappear. If it looks like a scam, and smells like a scam …

  27. sean

    Okay, now it has gone to far. The same guy is still bidding on the Blackberry Torch – 24 hours later.

    This has to be a setup fictitious account! They are heading towards R88.00 which breaks down to total income of R44,000 for a R7,000 phone. Ridiculous.

    How stupid do they think the general public is? Sadly though there are many who will be sucked in.

  28. slamz

    So where is Spugoo.com now?

    i agree with the laddies above, Smokoo is seriously ripping people off. apart from the obvious reasons laid out in this forum, who the hell in these times of hardships goes and spend almost half a million rands on an online auction for a flippin pc?!?!?!

    i was also on their site earlier on, and the same guys have been bidding for the same thing over the last 24hrs… i mean really now? autobid or not, nobody’s got the time to continuously watch an online auction unless instead of holding the headboard he holding a pc screen whilst doing the nasty…

    Smokoo needs to be shutdown for misleading the public and working on peoples emotions and minds thinking they can actually get something cheap when all the while they getting a stick up the sun hole.

  29. Wow. This is crazy. Just watching it on http://spugoo.com/ now and they have already profited R44K from it, and one guy has spent over 16K on this phone valued at 6K. CRAZY !!!

    Smells like bots to me for SURE !!

    Such a scam !!!

  30. sean

    Blackberry Torch 9850

    “Humilis” has been bidding on this item since around 11h00 on Monday, that is about 57 hours!

    In this time the price has increased from R55 to R118. The price increases in 1c increments, and each bid costs R5. In my mind this means that the R63 increase has cost the bidders 63x100x5! Is this correct? If so they have spent R31,500 to acquire a phone worth R6,999.

    Being the one bidder who has taken on all comers “Humilis” has spent half of this which is nearly R16,000. It is hard to believe that he is not a fictitious client, created in the back room by one of the Smokoo staff members. If this is the case they may be in trouble as this auction certainly sets off a lot of alarm bells.

    Can’t wait to see who eventually wins the phone. I see there is an exact same item for auction starting tomorrow at 09h00!

  31. tom

    I dont think you can call it a scam. The person bidding knows it costs them credits to bid.

    The oppertunity is to get an item for the fraction of its value.

    I understand that people are happy to bid more than the item is worth becasue on some auctions the winning bidder gets the cost of their bids back. Clever system.

    I dont think its a scam though. By the time you place your bids you should understand how it works or you are quite stupid.

  32. Chona

    Such a blatant scam that makes use of the no tool of internet scammer GREED.

    Its obvious a company wont risk loosing R5000 or even mounts to 600 000 on the risk that only a handful of people will bid, without some safety mechanism (Like a bot that bids against actual players to ensure something turns a profit, if the bot wins they circulate the prize every 3 days), or else a shareholder should be more likely to invest in the gambling industry.

    Thing is a team of auditors will need to look at the system

  33. Charl

    I think the problem is people’s definition of scam. I think Smokoo and any other pay-to-bid site is a gambling site that looks like a buying site. They state the whole process on their website, so whoever is using the site have all the info at their finger tips. It is not a scam – it does however play on the stupidity of the human race, who aren’t bother to understand the process and just think ‘OOOOH i can buy a phone for R2.50’ – No. If you win the bid, that’s what you pay and every bid costs you money – read people, it was on their website.

    Concerning this post, I know it was written quite a while ago, but I stumbled on it today. And you comment that they gave the iPhone new feature, which is not really true. Their exact words are: “Some of the most-wanted features on the iPhone 5 include: ” They are not saying the phone has those features, they are saying this is the features that most people want from the phone. Yes is is clever and playing on the ability of people to forget certain parts of what they read, because they are too excited about the awesome features they are mentioning, but still the problem is that people don’t read.

    Regarding the name, yes, they did not have the right name, but no body did. ‘The iPhone 5’ was what everyone in the tech world was calling it, so they took a stab and called it that. That is what you get when you sell a product which hasn’t been officially announced yet. After the announcement from Apple they did correct the product name.

    As for the New York competition. They ran that whole campaign. After the phone was released they gave their followers the choice to pick what they wanted:

    1 Winner – Goes to New York and buy an iPhone 4s
    or
    3 Winners – Each gets an iPhone4s

    A lot of people voted and the 3 winner option won by around 70%. I also voted for that one, and I’m glad I did, because my name was drawn 2nd out of the hat. And I got my iPhone 4s about 2 months late (I was a bit pissed that I had to wait so long) But the iPhone 4s I received wasn’t a scam. Seems like spamming my own Facebook and making a series of New York, Smokoo & Me photos paid off.

    I don’t work for them, I never have. I have tried bidding on stuff on their website. I won a large bid package once somewhere at 3am in the morning, but failed to win any of the other items I tried bidding on – which I also realised was because I only allowed myself to spend about R100 on items (at R5 per action that was 20 bids) So my strategy wasn’t good either, which I realised. Instead of blaming them, I knew the rules of their game and I didn’t play it wisely.

    They might fool people, because they play on the stupidity (and laziness to read) of the human race, but they are not a scam. They don’t steal from people. People need to buck up and take responsibility for their actions and failures.

    A lot op people moaned about how that competition was a scam as well and how no one should enter – thank you to all who did that, it gave me less entries to compete with. Now I sit with a free iPhone 4s and you sit with nothing.

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