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Iowa City online penny auction site closes down

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News,Business,Iowa,Technology

IOWA CITY, Iowa (AP) — A fledgling Iowa City company has shut down its auction website, upsetting some customers and prompting the state to take steps to recoup a $250,000 award.

Dibzees, an online penny auction business that got its start five years ago from a University of Iowa class project, took its last bids in July before ceasing its auctions, the Iowa City Press-Citizen reported (http://icp-c.com/1m5lV1q ). But some site users say they're still owed merchandise they won in auctions and worry they're out the money they spent buying unused bids.

The business had worked by allowing participants to buy bids at 60-cents apiece, in packages ranging from 45 to 1,000 bids. Buyers then use them to bid on auctioned items — usually gift cards and electronics — which start at a zero cost. Each bid placed raises the price of an item by 1 cent. The last person to bid wins the item.

The company announced online on July 15 that the website would be undergoing maintenance and upgrades. But Dibzees CEO and co-founder Casey Everts said this week the company does not plan to resume auctions and has laid off its eight employees.

Now, the Iowa Economic Development Authority says it will take legal action after Dibzees failed to repay the $250,000 royalty award issued to the company in 2012 to develop new elements for its website.

Tracy Huson of Victoria, Minnesota, said she has yet to receive about $2,000 worth of merchandise and fears she's also out nearly $1,000 she had paid for bids before the site was taken down.

"It's really frustrating, because you put a lot of trust in them by giving them your money," said Huson, who has lodged complaints with the Federal Trade Commission and the Iowa Attorney General's office.

Everts said customers with pending transactions can call their credit card companies to stop payment, and the company won't contest the refunds.

Everts said Dibzees, like other penny auction sites, was unable to get approval from Apple for a mobile app, which left it unable to adapt to the changing market.

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Information from: Iowa City Press-Citizen, http://www.press-citizen.com/

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