The Live Auction App Where People Can Bid ‘Til They’re Broke

0:05When Sean Harding was a kid back in the early 1990s, he was obsessed with baseball. I just grew up loving baseball, you know, playing catch, watching baseball, playing baseball. Here's a pitch on the way, a swing and a belt, left field, way back, Blue Jays win it! My favorite team when I was a kid was the Toronto Blue Jays, and they won the World Series. And it was just so cool, and I just loved it. Touch them all, Joe! You'll never hit a bigger home run in your life! And like a lot of kids who love baseball, Sean was also really into baseball cards. When I opened up a card, I would immediately turn it over and just read the stats, right?

0:48Like, when was this person a rookie? What's his batting average? How many home runs has he hit? What teams has he played for? So I just loved being inundated with that knowledge and just, you know, the pictures and getting to know more of the players. It's just all of it. But Sean grew up. He got married, had three kids, and became an accountant. And collecting baseball cards became just another childhood memory. Until 2024, when he walked into a collector shop to buy a gift for a friend. And when I went in there, Jessica, I was like, I was, I felt like I was a kid again. And I looked at the cards and the design of the cards was so much better than it was 30 years ago.

1:34I mean, like the picture, the feel, everything. I was like, oh my gosh, these are so, these are so nice. I love it. So that's how I got back into it. Sean ended up going to that card shop a lot, building his collection up again. And then I found out from a buddy of mine that, it's like, why are you going to a local card shop? You can buy cards online. Like, what? That sounds so awesome. This counter's a$300 to$500 card, fellas, all day. Sean's friend introduced him to live auctions, live streams where buyers can bid around the clock on collectible items like baseball cards. The most popular live auction app in the U.S.

2:15is called WhatNot. It was so easy. It was so convenient. It was very fast-paced, but it was so easy to use. You download it on your phone. Yeah. You put in your payment information, your shipping address, and you just start swiping. Right. Right? Yeah. Come on! Roman and Cags, dual auto to 25. Oh, my. Holy moly. Did you find it fun at all or, like, thrilling? Oh my gosh. Yeah, of course. Right? Like when you have access to that much without leaving your home. Yeah. Yeah, right? It was very fun. But Sean says that what started out as a fun hobby turned into an addiction. Soon, thousands of cards filled box after box in his guest room.

3:10After four months on whatnot, Sean decided to tally up how much he had spent. I went on whatnot and I downloaded my activity to see what that total was. And you added it all up? I, yep, I added it all up. And what was the total that you saw? Almost$1.4 million.

3:35Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, August 14th.

3:48Coming up on the show, the live shopping app where some people bid till they're broke.

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5:39What not is what happens when eBay and TikTok and the home shopping network come together and have a baby. That's our colleague Hannah Kruger, who covers retail. What not took the most addicting qualities of the 21st century and fused it into an app. where there's shopping, there's endless scroll, there's an entertainment aspect and music and things flashing on screen. It's a really captivating, intoxicating experience in the palm of your hand. What is shopping on WhatNot like? It's a pretty overwhelming experience for a newcomer. Can you show me how it works? Yeah, you want to see my WhatNot?

6:24Hannah pulled out her phone to show me the app. Once the app loads, it presents Hannah with live streams for her to choose from. Each one features an auction where a seller tries to entice buyers looking for a deal on things like coins and collectibles. But also everything from beef jerky to designer clothes to horse tack. And you click on one and the party starts almost immediately. You often come in and there's some time of music playing. It's, you know, EDM, metal music. There's a countdown clock happening already. At the bottom, the bid price for that item is going up rapidly. And meanwhile, there's a chat also on the screen where people are talking and fawning over the item that's being auctioned off.

7:10Let's go chat. And the auctioneer is speaking like an auctioneer. It's fast paced. It goes from gentle to sometimes pretty aggressive, like chiding of the buyers to come on, chat, wake up, chat. Are you going to leave me hanging here, chat? Get your pre-bids in. Fight effing now! Oh, I see we're asleep, chat. Oh, you're not going to help me out today, chat. Come on! What are we doing? What are we doing? What are we doing? And you can walk away with something at a discount. It's that hunt for the deal that really animates and invigorates the experience. And if you don't like a particular host or you don't like a particular item, all you do is just swipe up And there's another auction waiting for you beneath it.

7:55That's the endless scroll coming into play of auction. Probably one of the bigger cards I've ran in my streaming career. One of my favorites. After auction. Brunello size 42, brand new with tags. Guys, you're way too low. After auction. Don't miss out. You got three, two, one. Uh-oh, uh-oh, uh-oh, uh-oh, uh-oh. Sudden death steal. Sudden death steal.

8:17And so how do you bid on an item? There's like a little yellow bar at the bottom of the screen, and it says bid, and then it shows you a price. So to bid, you just swipe your finger across that to bid at the price that they're recommending. You could bid on a price that you've entered yourself, but that would require yourself typing it in, which by the time you've finished typing it in, you've probably already been outbid. So you have seconds to make your bid, basically. Seconds, yeah. Not a lot of time to really think about it, yeah. Exactly. And then so what happens if I win an auction? You know, when I'm online shopping, right, you buy a thing, you put it in your cart, takes you to a confirmation screen, checks your address, your billing information and all of that.

8:58Is that also what happens here? Oh, Jess, no. So you literally will just be on a feed. You want those Birkenstocks and you swipe at the bottom until you win the bid and the next item comes up for sale. And it says, Hannah Kruger or whatever my username is, won the auction and then next item and then next item. And you only really have a sense of what you bought if you check your email or when you open it up at your doorstep in a box. Oh, wow. Okay. WhatNot's auctions, with their high-pressure countdowns and high-energy hosts, encourage buyers to spend. And the app's design gets rid of almost every hurdle they'd normally encounter when shopping online.

9:45Whatnot has removed almost all the friction from shopping. And in doing so, has made it incredibly easy for people to spend their money on this app. For some, that's very fun. And there's a degree of, I don't know, escapism. and maybe there's a potentiality that you're going to get a nice handbag for a fraction of the price that you could get it when you're using a traditional website. For others, that means you might not have as much knowledge about what you're spending, how you're spending it, and how quickly you're spending it. Live auctions aren't unique to Whatnot. Other companies like TikTok, eBay, and Fanatics offer them too.

10:30But according to Whatnot, which has been around since 2019, it holds nearly 60 % of the live commerce market in North America and Europe. The company takes an average cut of 6 % of each sale. In its latest funding round, Whatnot was valued at$20 billion. One of the app's many users was Sean Harding, who you heard from at the start of the episode. He started bidding on Whatnot in late 2024 after rediscovering his love of baseball cards. By then, Sean had figured out that he could actually make money buying and selling those cards. You can just buy singles, like just single cards and potentially send them off to get a good grade and make money.

11:13So at first I go on Whatnot and I'm buying singles. I'm buying singles left and right. I'm not spending too much. But then I start seeing these, what they call breaks. Breaks. These are what generate some of the most feverish, hyped-up auctions on whatnot. All right, guys. Thank you so much for coming in for the first break of the evening. In a break, a seller puts up an unopened box of cards for auction. The box can cost thousands of dollars, with the promise that maybe there are some valuable cards inside. Instead of bidding on the whole box, a buyer can pay for a designated share of the box, like cards for a particular sports team.

11:57In essence, they're buying a chance to get a valuable card. All right, guys, let's do it. Good luck, everybody. Here we go. No one, neither the buyers nor the sellers, knows what cards are inside. How about Clemens? How about Roger Clemens there? That's sick. The rocket. Wow. You could get something very big or you could get nothing at all. And were most of your bids on breaks? Oh, yes. Yep. And some of these channels had breaks where you could win five-digit cards. Like, yeah, tens of thousands of dollar cards. But of course, right, you have to bid more.

12:38Whatnot says that sellers who offer breaks only make up 4 % of sellers on the platform. The company declined to say how much revenue breaks generate. But there is a lot of money flying around breaks. Sean remembers one break where he got cards of the Cleveland Cavaliers. By this point, he'd expanded to collecting other sports cards, not just baseball. And everyone in the chat was like, oh, yeah, great hit. You know, that's a great team that you want. And I said, okay, cool. When the cards were revealed, Sean won a great one. A LeBron James, what they call X-Fractor, rookie card at that time was worth$20 ,000.

13:19How did you feel? Oh my gosh, amazing, right? Like, you won. Yeah. Felt like a winner. I just, yeah, I felt a feeling I haven't felt before. Not every break came with a win. Sometimes, Sean would blow thousands of dollars on a dud. But he found himself bidding again and again. Was there a moment where you were like, I think I should just stop? Oh, yeah. Eventually, all the time. But I kept talking myself out of it. I kept chasing that feeling of winning. Sean told me that ultimately, his bidding on whatnot started to feel like gambling. So was it? That's next.

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15:18After he discovered breaks, Sean Harding's spending on whatnot skyrocketed. By the end of January 2025, he was spending as much as$12 ,000 a day. How often were you bidding on breaks? It got to the point, Jess, where I was on the phone bidding every night. Every night. On these high-end breaks every night. As soon as the kids were in bed, I would either go in the office or I would hide in my guest room and just be on whatnot. I would be folding laundry, my kids' laundry, with my phone on my lap watching auctions. So, yeah. Every minute I was awake. Did it feel good still to do that? To know that you were looking forward to those moments?

16:08Oh, yeah. I was looking forward to it. Yeah. I knew deep down that there was probably something going on. Like there was, it was a problem, but you know, the bad conscience over here is like, nope. Right. Right. Like, you know, you can win again. You've already done it before. Right. Win some more cards. Yeah. Yeah. My state of mind was I have to keep bidding because I've spent so much money. I didn't know how much because I didn't want to look, but I spent so much that I need to figure out a way to win it back. Right. Almost like that gambler's mentality, right? You know, that I'm chasing, I'm starting to chase losses.

16:52Other whatnot users have also said that the app enabled their gambling addictions. Earlier this year, a consumer protection attorney filed arbitration demands against the company on behalf of more than 70 clients. The complaint alleges that Whatnot's card breaks constitute illegal lotteries under California law and that the company is operating a criminal enterprise in violation of racketeering laws. The complaint also claims that Whatnot operates an online casino, quote, without providing the safeguards required of regulated gambling operations. Here's our colleague Hannah again. That's the thorn in Whatnot's side at the moment is that there are lawsuits that are claiming that it's a gambling enterprise.

17:32What has the company said about this comparison to online gambling? Like the line between live auctions and gambling as Whatnot sees it. Whatnot categorically rejects that gambling happens on its site. And the distinction that it often points to is that people on Whatnot will always walk away with a physical item. whereas in a casino you can pull the lever on a slot. You can show up to a blackjack table and walk away with literally empty hands. So that is the distinction. Obviously, that card that the person's walking away with could be worth$1 and they could have paid$1 ,000 for it. But at the end of the day, they're not empty-handed and that is the line that whatnot strikes repeatedly when it comes up to this.

18:22And how does that argument hold up in the eyes of, you know, gambling regulators? It's really something that's only started percolating in the last couple months. And it's not something that's really they've had to contend with in court quite yet. So it'll be interesting to see how it plays out and if judges believe that distinction is really meaningful. What Not says that addiction and overspending haven't registered as significant problems in external and internal data.

18:54To keep up with his spending, Sean tried selling some of the cards he'd collected. But it wasn't enough to cover his losses. Soon, Sean was tapping his credit cards, taking out personal loans, and borrowing from his friends. He used that to place more bids on What Not, hoping to win money back. Then he came across a break he couldn't pass up from his seller he bought from often. And they said, hey, how about I make you this great deal on these teams? I was like, oh, man, I don't have the money. And then I remembered, I'm like, oh, I have my company credit card. Using his company's credit card, Sean spent$10 ,000 to buy into the break.

19:36I'll just do it one time. I'll just put it in one. I'll just put it in one time. It'll be fine. And, you know, I'll win some cards and then I'll take it out and I don't have to worry about it again. And I put it in the app and I had some big cards. I had some really good cards. I said to myself, oh, my gosh, like I can I got away with it the first time. I can just do it again. Right. Sean's employer didn't suspect a thing. In fact, he was the accountant in charge of keeping an eye on the company card. But his wife was getting suspicious. She had asked Sean for a credit report after he had used their joint credit card to make bids on whatnot.

20:21Before he gave her the report, Sean removed two pages that showed two personal loans. My wife was an auditor. We actually met as we were both accountants to start. And she came down and she said, Sean, why are there two pages missing? And of course, I tried to deny it. And I eventually told her, yeah, there were two personal loans on there. I didn't want you to worry about it. Whatever excuse I can make up. And then she said, you just need to tell me everything that's going on. Sean came clean and confessed everything. The next day, he went to a Gambler's Anonymous meeting. Soon after, Sean resigned from his job and his marriage fell apart.

21:05Sean also downloaded his purchase history from Whatnot and tallied up the money he had spent in just four months. $1 ,362 ,687.31 What went through your mind in that moment? How did you feel? Oh my gosh. Oh my gosh. I'm pretty sure I broke down and we... I basically, I don't, I had no idea. I was so disconnected from what was actually going on. It was like my mind and my body were in two different places. So I had no idea what to do. I feel like up until recently, and when I say recently, like the last couple of decades, there was infrastructure to shopping that had restraint elements to it, right?

21:59Like the store closed at six. You had to drive to that store. You waited in line sometimes. You had to remember to bring your credit card or cash. But Whatnot has none of that. There's no restraint built into the app. It is frictionless, as we've described. And Whatnot has succeeded in making this as convenient as possible. And I feel like that's a trend among just the economy and any type of experience that you can have in America right now. is that we're trying to make it as convenient as possible. But I think whatnot begs the question of at what cost? And do we need things like spending our money on slime or$1 ,000 cards to be so convenient that we don't even remember how much we spent?

22:45Yeah. But at the end of the day, though, right, it's the buyers who are making these purchases. What does it say about the app that it can encourage people to spend so much? It's interesting, yeah. Yeah, I mean, I think it says that it shows that if you add the intoxicating elements of TikTok and endless scroll and the social chat room of Instagram and you put all these things into the shopping experience, you can make people actually want to part with their money, even for junk that they've never seen or might not use and or didn't even know they wanted 30 seconds ago.

23:30As for Sean, he says he still thinks WhatNot is a good shopping app for people who want to find deals. But I feel like there needs to be some guardrails or things in place that help users, right, know what they're getting into. Because it can be dangerous. What do you think would have been helpful to you? Like, what kind of guardrails would have been useful? I think that having a confirmation, right? Maybe even just an extra second to think, all right, is this the right? Am I making the right decision? I don't know if that would have necessarily changed anything for me. Maybe it would, maybe it wouldn't.

24:12You know, something or some sort of limit, right? Like I know a lot of online sports books and betting apps, right, have a limit on how much you can buy in a day. You know, something to help protect consumers. Recently, Whatnot has been trying out some of these measures. Last year, the company introduced optional spending limits and watch time caps. And last month, it rolled out an additional tool that pauses spending immediately. Whatnot says it also plans to test an option to add a passcode before purchases to add more friction. It will also test out flagging information to users who show a sudden spike in spending.

24:52For over a year now, Sean has been in recovery. He hasn't participated in a break since April, 134 days. And he's working to pay back his debts, including to his former employer. I'll probably be paying him back for a long time. So, yep. But at least with the cards, I sold my house, emptied out my retirement, my savings. So it was a start. And luckily I had at least something to pay him back. He also leads meetings at CollectorsMD, a peer support group for collectors struggling with compulsive spending. Right now I just want to be there for my kids, really.

25:40But yeah, I want to, I guess, just be better going forward and help wherever I can, right? Like part of recovery is giving back. So that's where I'm at.

26:04That's all for today, Friday, August 14th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Sarah Nassauer. The show is made by Catherine Brewer, Evelyn Fajardo-Alvarez, Pia Guidcari, Max Green, Sophie Codner, Ryan Knudson, Matt Kwong, Colin McNulty, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jivika Verma, Catherine Whalen, Tatiana Zamis, and me, Jessica Mendoza. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Catherine Anderson, Peter Leonard, Bobby Lord, Emma Munger, Nathan Singapok, Griffin Tanner, So Wiley, Epidemic Sound, and Blue Dot Sessions.