The suit, filed in the Cook County Illinois Circuit Court on Friday, also alleges that the Elk Grove Village, Ill.-based uBid breached its contract with the bidders and engaged in deceptive trade practices.
The suit stems from an auction for Pentium III 733-MHz computers that ended in late April. According to the suit, uBid listed 959 computer systems and received bids from 306 people. The winning bids ranged from $53 to $353.
Via email, uBid confirmed each winning bid and notified each bidder that the order had been sent to a supplier for shipping, the suit said. The company also placed a hold or a charge on each bidder's credit card for the winning amount plus shipping.
But instead of shipping the items, uBid later sent a follow-up email canceling the orders and offering a $50 coupon for another uBid purchase, the suit alleges.
Attorney Brian Murphy, who represents the bidders, charges that uBid canceled the bids because of their low prices. Murphy, of Murray Murphy Moul & Basil in Columbus, Ohio, said that uBid has an obligation to follow its own rules, which state that bidders can't cancel their bids.
If uBid had wanted a certain price for the computers, it should have set a higher minimum bid or should have set a reserve price below which it would not sell the computers, he said.
"There's no justification for them backing out on this contract," Murphy added. "They don't have a right to do what they did."
uBid spokeswoman Nevenka Todorovic said that the computers were offered by a third-party vendor and not by uBid itself. The vendor mistakenly switched the number of computers offered with the beginning price, she said.
uBid never charged the customers' credit cards and has since canceled the vendor's membership, Todorovic said. Although uBid has honored past pricing errors when it was at fault, she said the vendor didn't have enough computers to fill all those that were offered on the site.
"It was human error," Todorovic said. "We didn't catch it until after the auction closed."
Palo Alto, Calif., attorney Daniel Harris said uBid could lose the lawsuit depending on what it promises bidders in its user agreement. But Harris said the company probably reserves the right in its user agreement to cancel auctions if it can't profit from them.
"It would surprise me if they simply canceled the auctions without something to hang their hat on," Harris said.
The lawsuit is the only the latest to be filed against an online auction house. Last month, a group of sports collectors sued online auction leader eBay, claiming it did little to stop allegedly fraudulent auctions on its site. And in March, three leading video game manufacturers sued Yahoo over the alleged sale of illegal game copies on its auction site.