This is not a scam (some homes do get closed) but there are many things that they do that I believe are illegal and in my opinion they need to be sued and humbled. Here are a few of the lawsuits that I think people should look at filing against Auction.com, the seller (bank) and the title companies:
1. Section 8 of RESPA violations - The title company cannot charge for unearned fees. According to an Auction.com employee who I communicated with, the title company that they require you to use charge higher fees as they are recovering the cost for all the pre-foreclosure title work and title report done for the sale. I believe it is illegal to pass this on to the buyer but that is what they do. Purportedly this is spelled out in the agreement between the title company and Auction.com. A good attorney should be able to get this agreement during discovery and find out if Auction.com pays anything for the pre-sale title work.
2. Section 9 of RESPA violations - Under RESPA they can not require you to use a specific title company as a condition of sale but that is exactly what they do.
If you win the suit you get triple the cost of everything paid to the title company (all those high fees x 3) plus attorney fees and court cost.
Finally, everyone who feels that they have a legitimate complaint should file a complaint with HUD, the attorney general and the local real estate licensing board in their state that licenses Auction.com. Google RESPA and filing complaints.
The above is my opinion and my opinion only. I recommend anyone who reads this speak with an attorney of your choosing to ascertain the facts and merits of any case.