The main DealDash lawsuit, a 2017 federal class action in Minnesota, accused the penny auction site of running illegal lotteries and inflating the value of products tied to its own founder, but the plaintiffs voluntarily dismissed the case in January 2018 before any court ruled on the merits. No successor suit has been publicly reported, and no federal or state agency has announced enforcement action against the company, though consumer complaints and advocacy pressure have continued into the mid-2020s.
The 2017 Class Action in Minnesota
California resident Grant Pstikyan filed the complaint in April 2017 in the United States District Court for the District of Minnesota, where DealDash keeps its principal office. The case, Pstikyan v. DealDash, Inc. (No. 0:17-cv-01164), went to Chief Judge John R. Tunheim.1Courthouse News Service. Pstikyan v. DealDash Class Action Complaint An amended complaint in July 2017 added Carole Bennett and Ken Ford as plaintiffs.2Truth in Advertising. Pstikyan v. DealDash First Amended Complaint
The proposed class would have covered every U.S. resident who bought bids or merchandise on DealDash, with more than $5 million in controversy. The primary statutory claim was under the Minnesota Consumer Fraud Act.1Courthouse News Service. Pstikyan v. DealDash Class Action Complaint Pstikyan himself said he had spent $5,923 on 44,250 bids between November and December 2016.
The Illegal Lottery Theory
The plaintiffs argued that DealDash’s pay-per-bid format met the legal definition of a lottery: users pay for bids (consideration), the winner cannot be predicted or controlled by any single participant (chance), and there is a prize. The complaint said bidders had “no way of knowing, or even reasonably guessing” how many bids competitors held or had already spent, or whether they were bidding against humans or the site’s automated BidBuddy tool. It described DealDash as running “unlawful lotteries on a daily basis” and called the platform a “fraud-induced pursuit of sham merchandise.”1Courthouse News Service. Pstikyan v. DealDash Class Action Complaint
DealDash’s attorney Michael Tuteur responded that the auctions were not gambling because they lacked an “element of chance” like dice or a random number generator. The winner, he said, is decided by willingness to place the highest bid, much like a traditional auction.3NBC News. DealDash Auction Site Accused of Running ‘Perverse Lotteries’
The Founder-Linked Brands
The more distinctive part of the case was about the products themselves. The complaint alleged that DealDash marketed items under names like Bolvaint, Kamikoto, The Barrel Shack, and Wilson & Miller as luxury or high-end goods with inflated retail values, when they were in fact “cheap, generic” products with no substantial retail presence outside DealDash.2Truth in Advertising. Pstikyan v. DealDash First Amended Complaint
According to the complaint, the trademarks for those brands were held by Galton Voysey Limited, a Hong Kong company chaired by DealDash founder William Wolfram, meaning Wolfram effectively controlled both the auction platform and the goods sold on it. That connection was never disclosed to consumers. In one example, a plaintiff spent roughly $878 in bids and cash to win a “Bolvaint – Paris” handbag that DealDash listed at a $2,900 retail value; the complaint noted that comparable bags from Kate Spade and Michael Kors sold for far less. Reporting by Consumer Reports’ Consumerist, cited in the complaint, found that Bolvaint’s listed Paris address was actually a Patek Philippe salon.2Truth in Advertising. Pstikyan v. DealDash First Amended Complaint
The complaint also pointed to language in DealDash’s own terms of service acknowledging that “most customers will not win auctions and you are on average unlikely to save money using this Site.”4Truth in Advertising. Consumers Continue to Report DealDash for Deceptive, Predatory Practices
How the Case Ended
DealDash moved to dismiss the amended complaint, and the motion was referred to a magistrate judge for a report and recommendation. Before that process finished, the plaintiffs filed a notice of voluntary dismissal. On January 17, 2018, Judge Tunheim signed an order dismissing the case without prejudice, with each side bearing its own costs.5Truth in Advertising. Pstikyan v. DealDash Order of Dismissal
The court never decided whether DealDash’s auctions were illegal gambling or whether its advertising was deceptive.6CourtListener. Pstikyan v. DealDash Docket Because the dismissal was without prejudice, the claims could in principle be brought again, but no follow-on lawsuit against the company has been publicly reported.
Regulatory Complaints and the BBB Downgrade
Alongside the lawsuit, the advertising watchdog Truth in Advertising (TINA.org) ran its own investigation. It sent a warning letter to DealDash on May 25, 2017, and on June 5, 2017, filed formal complaints with the Federal Trade Commission and the attorneys general of Minnesota, New York, Connecticut, Pennsylvania, Massachusetts, and the District of Columbia.7Truth in Advertising. DealDash Brand Page
The complaints alleged that DealDash’s marketing hid the actual cost of winning items, the odds of winning, key refund terms, the real price of bid packs, and Wolfram’s financial link to the products on sale. TINA.org called the platform an “illegal form of gambling” and characterized the “fair and honest bidding site” tagline as part of a “widespread deceptive marketing campaign.” At the time, the FTC had already received more than 600 consumer complaints about the company.8GlobeNewsWire. Auction Site a Losing Bet for Consumers According to Ad Watchdog TINA.org
The same day the complaints were filed, the Better Business Bureau downgraded DealDash from A+ to “NR” (No Rating) after being notified of the allegations.7Truth in Advertising. DealDash Brand Page The FTC confirmed receipt of TINA.org’s petition but declined to comment.3NBC News. DealDash Auction Site Accused of Running ‘Perverse Lotteries’ No public enforcement action by the FTC or any state attorney general against DealDash has been reported.
Why the Gambling Question Stays Unsettled
The Pstikyan dismissal left the underlying legal question about penny auctions where it started. No federal regulation specifically governs the industry, and no U.S. court has issued a definitive ruling on whether the format is gambling. The FTC said in 2011 that “in many ways, a penny auction is more like a lottery than a traditional online auction,” but did not call the model illegal.9Cato Institute. Should Penny Auctions Be Regulated Under Gaming Law
The few cases that have tested the theory against other operators have gone different ways. In Mendelsohn v. BidCactus (D. Conn. 2012), a federal judge denied a motion to dismiss and let gambling claims proceed, finding the plaintiff might prove that “chance predominates over a consumer’s use of bidding skills.” BidCactus later settled by adding disclosures to its site rather than litigating the classification.10Bloomberg Law. Penny Auction Website May Be Liable for Deceptive Trade Practices, Illegal Lottery An Oklahoma federal court dismissed an illegal-gambling claim against QuiBids in 2013 without analyzing whether the auctions actually qualified. A separate court accepted the argument that bids are “entry fees” rather than wagers because the money is “certain to be lost” regardless of outcome.11Penny Auction Law. A Penny for Your Auction
What Consumers Have Reported Since
Complaints have kept coming in the years after the dismissal. In November 2021, a consumer told TINA.org that his retired mother had lost $21,000 on the site, with $17,000 of that on bids. In April 2024, another said his father, who had advanced Parkinson’s disease, had lost over $150,000, mostly on bids for electronics and gift cards.4Truth in Advertising. Consumers Continue to Report DealDash for Deceptive, Predatory Practices
Complainants have described the site as “deliberately addictive” and reported trouble closing accounts. One said DealDash refused to suspend his father’s account despite claims the father was not of sound mind. Others have alleged auction manipulation, saying they appeared to be holding the winning position when the countdown timer hit zero and still lost.4Truth in Advertising. Consumers Continue to Report DealDash for Deceptive, Predatory Practices
TINA.org has reported that DealDash spent $22 million on television advertising since April 2023. A current television ad now carries fine print noting that the cost of bids is factored into the advertised deal, but TINA.org maintains the savings claims are still misleading.4Truth in Advertising. Consumers Continue to Report DealDash for Deceptive, Predatory Practices The company had reported spending over $50 million on advertising in 2016 alone.8GlobeNewsWire. Auction Site a Losing Bet for Consumers According to Ad Watchdog TINA.org
For a would-be plaintiff, the practical takeaway is narrow: the biggest case against DealDash ended before a court weighed in, the theory that penny auctions are illegal gambling remains untested at any appellate level, and the questions raised in the 2017 complaint about the site’s advertising and its founder-linked brands remain, in a legal sense, open.