Tuesday, 6 March 2012

Welcome !

WELCOME to our blog dedicated to

This blog protocolls the latest news and updates to our struggle to bring one of the largest scam websites on the UK internet down.

We are database professionals in London who do data analysis and data mining as daily job.

A time ago we have set up a monitoring solution to monitor all publicly available activity on MadBid.

We protocolled all bids, usernames bidding, auction parameters and site failures in a Microsoft SQL Server database, around every 0.5 seconds, over a couple of days. The data is enough to give a precise picture on what happens on MadBid.

We also protocolled the timing of the auctions, which is key in understanding how MadBid scams and why we must WARN against it in the strongest terms.

After professional analyzing the data we found, here are the results of our findings.

1. General overview

MadBid.com is the penny auction website uk.madbid.com. Users, after registering, can start bidding on auctions. Bidding costs roughly between 30p and 80p PER BID, but the user only has to pay if he LOOSES the auction (of course this is the fact for the vast majority of all unsuccessful bidders).

Here is how the site explains this (website info taken from madbid.com on 06/03/2012:

Regular Auction: Every auction has a countdown timer, usually between 10 seconds and 1 minute. When the timer reaches zero, the highest bidder wins. If someone bids, the timer restarts. Bid increases are made by 1 penny at a time. You can bid by SMS (text message) from your UK mobile or through your MadBid Online Account. On winning you pay the closing auction price plus shipping & handling.

Please note: this says the highest bidder wins, not necessarily the last bidder or the current bidder !

This term "highest bidder" is crucial to understand the scam.

Now, when an auction is over, the winner has to pay the auctions price, which is substantially less than the items price. Example:

Camera, retail price 600 pound
MadBid price: 14.08 pound.
Price per bid: 0.80 pound.
winners bids: 10 a 0.80 pound = 8.00 pound
winner has to pay 14.08 minus 8.00 pound he already has paid in bids : his price to pay 6.08 pound.

Now, MadBid got 1408 bids paid with 0.80 each, so around 1100 pound.

And, most important, they can claim the the item was auctioned away with 14.08 pound. This is the most important point in understanding the MadBid scam.

2. Claims about "bots"

Of course, many people believe that MadBid uses bots, computer programs that would bid automatically on behalf of MadBid to keep an auction alive and to increase their already massive revenues from auctions.

We have found many things in the data that could be explained by "bots", but the findings are not conclusive. It is hard to PROOF it and this blog is about PROOFING the scam. So, currently we do not have 100% hard evidence about the usage of bots by MadBid itself.

Of course a lot of people use automated bidding, which is also a build in feature of MadBid, but this is functional similar to manually klicking a lot of times on "Bid" when the auction is almost over.

We will post here if we can proof it. Please feel free to contact us on madbidisscam@gmail.com if you have information for us.

3.  How the scam works

Now here are the results of our analysis.

We carefully monitored a lot of MadBid auctions from cheap stuff to expensive things.

At the beginning of the auctions, this works as stated. You can bid and you are the current bidder. Shortly before the time is up and you would win, somebody else bids. All fine.

If no other people bid, you win the auction as stated. On simple & cheap things everybody can win auctions since people do not bid on a silicon watch for 2 pound if they already have one.

Now, when it comes to auctions of more value, like cameras or cars, the game changes.

Of course, a lot of people bid for expensive stuff, especially when the price goes up, because the higher the auction price comes the more likely it seems to be the auction closes, so they think the higher is the chance to win.

Now, we have protocolled in all auctions of substancial value people are bidding intensly just before the auction closes. The timer will not reach zero.

MadBid states that an auction closes when somebody has bidded and no other bidder is bidding until the time is up.

This is clearly wrong in all bigger auctions. The auctions close NOT when no other people bid, because in reality auctions close during intense bidding.

We have hints that closing time is just randomly selected by the MadBid system, meaning that a bidder can NOT stop the clock ticking to zero by bidding when the time is up ! In fact we have hard data evidence that despite people bidding on the last seconds of an auction the auction clock ticks down to zero, deliberately selecting a winner.

There is no way you win a larger value auction by bidding, the winner is deliberately selected by the MadBid system.

The system will stop accepting bids and select a "winner".

There is a very very small chance that you are the deliberately selected "winner".

The primary hints that this is about to happen are:
  • the auction time slots go down from 30 sec to for example 5 sec
  • many different people are bidding almost to the same time shortly before the auction closes

We have hard evidence on many many auctions that bids are ignored by the system from a specific point in time, a few secondes before the winner is selected by MadBid and the auction closes.

Now, this could explain the phrase "the highest bidder" wins. If the MadBid system chooses to stop an auction, maybe the MadBid system selects the "highest bidder" in a list of recent bidders. We have found no evidence how this list could be sorted hence who could be expected to be the "highest bidder".

Here are reasons for MadBid to stop an auction deliberately even if many people still bid.

a) The revenue is enough to pay the item auctioned and to have a big profit.

b) The main MadBid marketing tagline is the claim that stuff is auctioned away by around 85% under retail price. If they would let the auctions run they would not achieve this since people would continuously bid. It is thinkable that the auction price would even be near to the retail price if always new people start bidding - they have not paid much in bids so far and would get the item still under retail price.

c) The auctions would run a longer time. It is more interesting for people to participate in short auctions.

Call for lawyers

If you are a good lawyer and see chances for some or all scammed bidders who believed in the "terms an conditions" of MadBid.com, who are clearly breached by this company, and given the fact that we have the hard evidence about this, please contact us on madbidisscam@gmail.com

Thanks for reading. Please feel free to comment.

The madbidisscam team.

*** of course we have had no connection to madbid whatsoever, and given the fact that some former Goldman Sachs guy is running their finances, we have no wishes to change that, so MadBid paid internet trolls, keep away ! ***