Beware of SilverTag.com! It may not have a silver lining....
My Roommate recently told me about a new 'auction' site on the web called SilverTag.com
I've decided to break down the business model so everyone can see what is going on behind the scenes here.
The premise of the site is pretty novel. You get a free membership with X number of bids per day (currently 10) . You can use these 'bids' to place a bid on the items on the site. The items range from video game systems to Gift cards for gas, Best Buy, etc. The lowest Unique bid wins the 'prize'.
Example:
There is a $50 visa gift card up for auction. I bid $ 14.31. Every single one cent increment below this all the way down to $o.o1 receives multiple bids. Since I am the only one who bid this price ($14.31) I am a Unique bidder. I have the lowest unique bid so I win. Hooray for me! or is it??? I pay for the item. The money is donated to charity. I receive gift card in the mail and enjoy. But that's not all....
The Business Model:
I've broken this down into steps to make it as easy to understand as possible. They are doing some pretty tricky things here.
A company put an items up for auction at Silvertag. (Tax Deduction for advertising for the company) SilverTag doesn't disclose pricing for this, you have to send them an e-mail. You must be a private company, and judging by the Current listings, have some deep pockets.
During the course of the Auctioned Item, if you have placed a bid on an item the sponsor can send you an Unlimited amount of solicitation. I'm almost positive that this is where SilverTag generates their Revenue. They don't sell the items, they sell the right to contact the bidders via e-mail.
From the TOS:
"A few minutes after you submit a Bid you will receive a notification from Sponsor. The notification will inform you of the status of your Bid in relation to all other Bids that have been received. During the Eligibility Period, Sponsor, at its discretion, may send entrants unlimited additional email notifications." EEK!!
If you win the Auction the winnings are donated to charity. (Tax Deduction for SilverTag)
Why this plan could be bad for you (the Bidder):
1. You are responsible for all Taxes. From TOS: "All federal, state, provincial and local taxes are the sole responsibility of Winner, and Winner acknowledges that the value of the Prize may be considered taxable income"
2. You are forced to give a Testamonial. From TOS: "the Winner must complete the following in order to receive the item: 1. Submit to Silvertag a written testimonial. 2. Submit to Silvertag an Audio testimonial 3. Within 7 days of receipt of the winning item, submit to Silvertag a Picture of himself or herself with the item they won. If the picture of the winner with the item they won is not received within 15 days, the winenr will be notified. If no picture is received within 30 days, the winner may be required to either return the item, or pay the full retail price of the item."
3. They can Fine you Into Oblivion if you don't cooperate. From TOS: Any member found to have been a owner, founder, co founder or partner of a competing auction website shall become immediately liable to SilverTag.com for an amount up to $100,000 for the breach of contract.....If a Member for any reason disputes any charge from PayPal or Silvertag, the Member will be deemed in breach of this contract and will be subject to fines of $500 per hour that the amount is disputed with PayPal and the complaint is live up to a maximum of $5000.00.....anyone who is suspected and further proven to be in breach of this contract or has engaged in any type of manipulation will immediately become liable to SilverTag.Com, LLC for the sum of $10,000.
4. You give up all reasonable expectation of privacy to SilverTag and it's Sponsors. From TOS: By participating in the Promotion, entrants hereby agree to Sponsor’s collection and usage of their personal information
Summary:
There is no free lunch. You are locked down into a heavy duty contract here by signing up for SilverTag, effectively surrendering all of your arbitration rights. Not to mention the potential fines, forced testamonial, or tax implications.
I would recommend treading very carefully if you are thinking about joining SilverTag. The company is the client, the user is the product..... and the user has no rights....
Don't forget that SilverTag can effectively manipulate the final price through the number of bids allowed and the length of the auction. They know what the item is selling for within a few pennies before they even put it up.
This looks like a cool idea a bunch of lawyers ruined. Not to hate on lawyers, I know some great ones
I've decided to break down the business model so everyone can see what is going on behind the scenes here.
The premise of the site is pretty novel. You get a free membership with X number of bids per day (currently 10) . You can use these 'bids' to place a bid on the items on the site. The items range from video game systems to Gift cards for gas, Best Buy, etc. The lowest Unique bid wins the 'prize'.
Example:
There is a $50 visa gift card up for auction. I bid $ 14.31. Every single one cent increment below this all the way down to $o.o1 receives multiple bids. Since I am the only one who bid this price ($14.31) I am a Unique bidder. I have the lowest unique bid so I win. Hooray for me! or is it??? I pay for the item. The money is donated to charity. I receive gift card in the mail and enjoy. But that's not all....
The Business Model:
I've broken this down into steps to make it as easy to understand as possible. They are doing some pretty tricky things here.
A company put an items up for auction at Silvertag. (Tax Deduction for advertising for the company) SilverTag doesn't disclose pricing for this, you have to send them an e-mail. You must be a private company, and judging by the Current listings, have some deep pockets.
During the course of the Auctioned Item, if you have placed a bid on an item the sponsor can send you an Unlimited amount of solicitation. I'm almost positive that this is where SilverTag generates their Revenue. They don't sell the items, they sell the right to contact the bidders via e-mail.
From the TOS:
"A few minutes after you submit a Bid you will receive a notification from Sponsor. The notification will inform you of the status of your Bid in relation to all other Bids that have been received. During the Eligibility Period, Sponsor, at its discretion, may send entrants unlimited additional email notifications." EEK!!
If you win the Auction the winnings are donated to charity. (Tax Deduction for SilverTag)
Why this plan could be bad for you (the Bidder):
1. You are responsible for all Taxes. From TOS: "All federal, state, provincial and local taxes are the sole responsibility of Winner, and Winner acknowledges that the value of the Prize may be considered taxable income"
2. You are forced to give a Testamonial. From TOS: "the Winner must complete the following in order to receive the item: 1. Submit to Silvertag a written testimonial. 2. Submit to Silvertag an Audio testimonial 3. Within 7 days of receipt of the winning item, submit to Silvertag a Picture of himself or herself with the item they won. If the picture of the winner with the item they won is not received within 15 days, the winenr will be notified. If no picture is received within 30 days, the winner may be required to either return the item, or pay the full retail price of the item."
3. They can Fine you Into Oblivion if you don't cooperate. From TOS: Any member found to have been a owner, founder, co founder or partner of a competing auction website shall become immediately liable to SilverTag.com for an amount up to $100,000 for the breach of contract.....If a Member for any reason disputes any charge from PayPal or Silvertag, the Member will be deemed in breach of this contract and will be subject to fines of $500 per hour that the amount is disputed with PayPal and the complaint is live up to a maximum of $5000.00.....anyone who is suspected and further proven to be in breach of this contract or has engaged in any type of manipulation will immediately become liable to SilverTag.Com, LLC for the sum of $10,000.
4. You give up all reasonable expectation of privacy to SilverTag and it's Sponsors. From TOS: By participating in the Promotion, entrants hereby agree to Sponsor’s collection and usage of their personal information
Summary:
There is no free lunch. You are locked down into a heavy duty contract here by signing up for SilverTag, effectively surrendering all of your arbitration rights. Not to mention the potential fines, forced testamonial, or tax implications.
I would recommend treading very carefully if you are thinking about joining SilverTag. The company is the client, the user is the product..... and the user has no rights....
Don't forget that SilverTag can effectively manipulate the final price through the number of bids allowed and the length of the auction. They know what the item is selling for within a few pennies before they even put it up.
This looks like a cool idea a bunch of lawyers ruined. Not to hate on lawyers, I know some great ones
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