Finally a little justice for shills

jimtb

"Mon, November 8, 2004
EBay bid-riggers hit with big fines

By AP
ALBANY, N.Y. -- Eight EBay sellers were ordered to pay nearly $90,000 US in restitution and fines after admitting they bid up products online to inflate the prices. New York Attorney General Eliot Spitzer said more than 120 people will receive restitution in the settlement of the three cases, which wrapped up last week in state courts.
Spokesman Darren Dopp said the cases stemmed from specific complaints, but the office has not conducted a broad investigation of the online auction industry and doesn't know how widespread the practice of phoney bidding is.
One buyer, Brad Clarke, 48, of Peachtree City, Ga., has already received a cheque for $3,089 after overpaying for a 1999 Jeep Cherokee he bought in 2002.
"I'd always been suspicious because it seems like an easy thing to do, to just keep bidding up," Clarke said. "But I was still just completely shocked and very surprised."
Three sellers were accused of making 610 bids on 106 of their car auctions under the user name Mother's Custom Automotive NY Dealer. They are paying more than $28,000 in penalties and restitution, Spitzer said. Their lawyers declined to comment.
In another case, the operator of an art auction house and two former employees were accused of bidding on more than 1,100 of each others' EBay items for more than five years to drive up the prices.
Spitzer said one of the sellers pleaded guilty to a felony charge, the other two to misdemeanours. They were ordered to pay more than $50,000 in restitution and fines.
The other two defendants were accused of making 170 phoney bids on their sports memorabilia items. They agreed to pay $10,000 in penalties and restitution. "

Link

MRyanF

This is just the tip of the iceberg. Shill bidding is spreading like a cancer. Should the shill happen to win the item, then they leave each other positive feedback and relist it a while later. This also builds up their rating and makes others more likely to trust them and less likely to suspect shill bidding. I am sure that we have all be victimized by it or some other ebay fraud at some point.

Its good to see some of them getting caught and having to pay up though.

gtbeaker

This is a good first step in putting an end to this practice. Unfortunately, it will probably be a LONG time before they get down to the smaller dollar items like our little cardboard children.

Buccaneer

I don't understand something. Why would anyone end up paying more than they would for a particular item? I understand shilling up items beyond what you would want to buy it at, but shouldn't there be some measure of personal responsibility and discipline to not bid beyond your limit?

gtbeaker

Buccaneer- The issue was the sellers had people they knew " bid up" their auctions, meaning the person who won would have gotten the auction for alot less had it not been for the shill bidders.

jimtb

Hi Steve,
To answer your question, yes everyone should have the personal responsibility to set a maximum as to what they are willing to pay for an item, but that's not really the point. A shill is a person that artificially inflates the selling price of an item. For an example, a card auction opens at $5.00. You put a maximum bid of $25.00. The shill bids up the amount a few dollars at a time. You could end up paying $22 bucks for a card that you may have gotten for $7. The seller ends up getting more money for the item than they should have.
Jim

MorrellMan

The argument for shilling is that, if you weren't willing to pay $25 for the item, you shouldn't have put that as your max bid. That argument is a load of crap. Hammer prices should reflect legitimate bids for a number of reasons - one of which is, personal responsibility aside, auctions create excitement and, in the heat of a closing auction, a legitimate bidder may not realize he's bidding against the house. Further, all bids should be considered values that someone is willing to pay for the item. This kind of market is the only true way of valuating anything, as long as the bids are legitimate. In other words, in the foregoing example, there is a difference between winning a card for $23 when the underbidder is, say, Mickey's Sportscards or if the underbidder is "initforthefun" with 3 feedbacks. Shill bidding is just plain wrong, immoral, illegitimate and a few other things I can't post on this board.

SOM

These are all good reasons why I deal striclty with the DSL's, 4-Sharp's and Joe Tuttle's of the world. And gladly pay their "heinous" s/h charges.

Buccaneer

I take issue with that every non-shill auction sets a "legitimate" price. Many of pay inflated prices (via bidding wars) because you really NEED to have the card NOW. Is this really so much different than paying inflated prices because of shilling?

I am playing devil's advocate here because I believe shilling is immoral. But one only has to look at many products that are sold commercially in stores and dealers to see inflated, hyped, extraneous charges, etc. built in to what we have to pay as consumers. We should not have to pay $$$$ for Nike gear just so they can justify Lebron James contract. We shouldn't have to pay $23,000 for a Toyota Rav4 in SoCal when those in South Caroline pay $17,500 for it.

I need to go, I'll be more coherent later...

MorrellMan

Take issue if you like, but there is no other way of determining a "legitimate" value for a product than to survey what at least two people are willing to pay, regardless of whether it's a NEED TO HAVE IT now scenerio or whatever - all these factors go into figuring value, and this is the way competitive pricing has always worked. There is no statistical or valuative benefit in running one buyer up with a proxy who exists solely for the purpose of fooling one individual into thinking there is another dog after his bone. This is not a stalemate argument - there is NEVER a justification for shill bidding. It has no socially redemptive value and serves only the purpose of deceit and fraud.

Outrageous prices are a very different issue. They have nothing to do with the auction process. If you don't want to pay $23,000 for a Nike shoe, you don't have to, but at least you know what you're dealing with right up front. There's nothing wrong with a seller asking whatever price he wants to ask. Our option is to walk away. Apples and oranges, my friend, apples and oranges.

Buccaneer

First off, Mark, let me agree with your statement, "there is NEVER a justification for shill bidding" so we can be clear on that point.

In thinking about this on the way home, I thought of these points. Systematic shilling for the purpose of raising auction prices is obvious wrong and the courts agree. But how many auctions have you won where there wasn't a shill bid? How can you be sure (if there were at least half a dozen bids)? In your example of competitive bidding for a bone, how can be certain that your fellow competitor is not just running up the price because you are willing to pay whatever it takes to win? In any auction, we have the freedom of choice not to bid. You categorically dismissed the point about a maximum buy price but if you ended up paying $3,000 more than you "should" for a Cherokee, can it be argued that your demand for that product was at least that price since you were willing to pay it? There have been times where I paid more for a car than I should have because I let the dealer "shill" me into believing I needed to pay more. I could have walked away but my demand for the car made me pay more. I have not seen any auctions on eBay where the buyer was forced to pay a higher price than what was bidded or BIN. If I know that a Cherokee is worth $25,000 and the price is currently at $27,500 because of shill bids (or competitive bids or whatever since you can't really know for sure), what would make you put in a bid for $28,000?

MorrellMan

<< <i> can it be argued that your demand for that product was at least that price since you were willing to pay it? >>



I had to read this a number of times, and I must admit, Steve, that I still don't get your point. I think you're mixing analogies here, but I'm not sure. A retail situation is an orange; an auction situation is an apple. I've always been told that an "auction" is a market established by two or more people vying for the same item. These two or more people are the high bidder and the underbidder. If the underbidder is not really vying for the item, but is simply running the high bidder to his highest number, it is not a legitimate auction. My feeling is the underbidder should be immediately killed. Some would say I am under-reacting. Has the underbidder committed a crime? Perhaps not. Is it morally reprehensible? Absolutely. Will I defend a shill's right to be because it's only immoral? Never.

SOM

Was not the smoking-hot California real estate "market" based in large part on shilling? "Sorry, sir, but your offer has been trumped by a nameless bidder who is paying $$$$$ over the asking price."

Was that a true market? In many cases, it was nothing more than a real estate agent fishing for a buyer's top price!

What's the difference? None, really. $600,000 homes as opposed to $60 baseball cards is the only difference.

Somehow, it's socially acceptable for the former; for the latter, it's ten-to-life.

I am IN NO WAY a fan or supporter of shilling. But, I still maintain...in 75-cent baseball cards or 75-unit apartment buildings...that the buyer, not the seller, has the complete and final say so:

NO

Nick

Buccaneer

<< <i>running the high bidder to his highest number >>



Mark, that is my point. There is a "highest number", regardless of how one arrives at that. You appear to view such auctions as pure market-established price points. I view auctions simply as supply and demand with the demand being what you are willing (not wishing) to pay for an auction item. I look back on the auctions that I have won and cannot conclude that I was not shilled. It does not matter, I did not pay one more dollar for any item that I wasn't willing to pay. The onus is completely on me to set that price - not others. But perhaps I am not being clear again so I apologize, it's a hard point to bring across on a forum.

jrdolan

When a couple of zero-feedback bidders pushed me up an extra $100 on a card, many people on the boards felt that shill or not, I shouldn't complain because I was willing to pay that much. That's easy to say when it's not you getting jobbed, and I'm glad the court decided that having a high bid doesn't entitle the seller to milk you for every last dollar.

MorrellMan

High bid is like an absentee bid at a live auction. I'd be pretty steamed if, time after time, I was told I'd won the lot right at my max bid. The deal is that auctioneers aren't allowed to do that. This is not the same as setting a sell price for an item based on artificially fluffing the value. However, it's clear that some of us see this issue one way and some of us see it another way and I guess we just have to agree to disagree.

NickM

In any auction, a seller is supposed to take a risk that the item may not sell for much. Shilling eliminates that risk for the seller.

Nick

Virtualizard

Anyone ever hear of sniping? This takes out the "shill" factor completely and creates a true, sealed bid type auction. The current ebay format cannot really be considered an "auction". Sniping by every potential bidder is the only way to make it fair to all (i.e. - a sealed bid that is only revealed at the end).

JEB.

NickM

Even sniping allows for victimization by shilling - a shill bid can be used to create a hidden reserve price or to keep someone from getting a bargain if he is the only real bidder.

Nick

jimtb

I agree, a shill can still drive up the price and cause a sniper to pay more than they would have without the shill.

Buccaneer

<< <i>I agree, a shill can still drive up the price and cause a sniper to pay more than they would have without the shill. >>



I view this in a slightly different slant: without shills and other contrivances that drives up prices, we would end up getting a product at more of a discounted or bargain price than what we were willing to pay. A max bid (snipe or otherwise) is the price we should expect to get the item, otherwise you would not have set that price. Getting it for less is considered a bonus.