Online penny auctions and the protection of the consumer under EU law

This paper examines online penny auctions, which currently attract consumer traffic but pose consumer risks also. It discusses pressing questions such as whether they are scams, entertainment shopping or gambling. It shows that though they cannot readily be considered as scams, they are suspiciously risky for consumers. Moreover, contrary to what penny auctioneers suggest, they do not allow for consumer shopping. They also share several characteristics with gambling and therefore, the possibility of legally classifying them as such is worth exploring. If they are not gambling, consumer protection legislation is fully applicable to them and can satisfactorily protect penny consumers. If penny auctions are legally classified as gambling however, protection will greatly be enhanced; they will (additionally) be subjected to strict and detailed gambling laws at least in the UK, where a mature gambling regulatory regime exists. Certain disadvantages of labeling penny auctions as gambling can relatively easily be remedied through suitably adjusting gambling laws. The paper concludes by suggesting possible approaches of legal regulation of this new online phenomenon.