Hundreds of thousands of dollars in fraud plagued Zeekler's penny auction platform by mid-February 2012. Zeek Rewards, the parent company, issued a press release advising members it had implemented "extra fraud detection measures" to address the problem.
The company stated that thieves used hundreds of stolen credit card numbers to create fake customer accounts. These stolen cards purchased retail bids, allowing the fraudsters to earn a 20% commission. They requested commission payouts via STP or AlertPay. By the time card owners or their banks contacted Zeek Rewards, the funds had already been disbursed.
Zeek Rewards admitted it had no recourse to recover these paid-out funds. But the company indicated its members would ultimately bear the financial impact, as the hundreds of thousands lost to fraud would be deducted from the daily profit share. Despite Zeek Rewards' stated efforts to counter this, a review of recent Zeekler auctions suggests the fraud continued, raising questions about the effectiveness of those new measures.
A perusal of Zeekler's more recent penny auctions, particularly the cash auctions, revealed suspicious bidding patterns. These specific auctions, with numbers in the 22,900s, concluded within the last week of the article's publication. In one example, an auction for $100 cash, the recorded winner, identified only as "angielieu," placed 1,241 retail paid bids. Each bid cost 65 cents.
The total cost for angielieu amounted to $806.65 in bids plus the final auction price of $58.77, totaling $865.42 for $100 cash. This activity stands in stark contrast to another $100 cash auction, which closed at just $5.49.
"Angielieu" appeared again as the winner of a $150 cash auction. This time, 1,574 retail paid bids were placed. The combined cost of bids at 65 cents each and the final auction price of $43.05 came to $1066.15 for $150 cash.
Other auctions also raised red flags. A $100 cash prize, for instance, sold for $482.47. A $75 Walmart gift card went for $214.86. Angielieu also purchased a dinner set with a stated retail value of $354 for a suspicious $609.61. The platform offered a "send me cash option" in lieu of the physical dinner set, making the true intention behind this particular win unclear.
Some might argue these patterns reflect high-stakes gambling or addictive behavior among participants. However, paying hundreds of dollars over the retail or cash value for items fundamentally changes the economic logic of a "penny auction." These were not free bids; they required direct purchase from Zeek Rewards, making the losses tangible and immediate.
The consistent appearance of such economically irrational outcomes, particularly from a single user like "angielieu," indicated Zeekler's "extra fraud detection measures" had not fully stopped the exploitation of its system.