Auction House Transparency in Theory - Pros and Cons
otwcards
Posts: 5,291 ✭✭✭
Since a certain board member harbors the desire that auction houses offer transparent transactions and insists that it is possible and is better for collectors, I figured I'd offer up something that he refuses to do . . . a plan. I'll make this simple and brief without going into too much detail.
Auction House Transparency: All bidder names and/or ID's will be available and noted on each active auction item up to and including closing of the auction.
PRO: Identifies the bidder on the lot, provides a record of the bidder's purchase(s), allows bidders to see who they are bidding against or lost to, provides peace of mind to proponents that suggest such transparency will stem the tide of shill or false bids
CON: Provides purchase history and price point of attached to bidder, allows others to run up selected bidders, allows auction houses to create bidders/identities to use as shills which defeats the purpose of intended transparency
Scenario 1: High profile bidder, known to many in the hobby, is identified by his bidder name/ID and others, knowing high profile bidder will not be outbid, run up the item (in essence, shill bidding)
Scenario 2: Bidder wins lot or group of cards to break up and sells them. Bidding patterns and bidding strategy can then be identified and copied.
Scenario 3: Major dealer or another auction house bids and wins and resells item. The CU Investigative Team springs into action and calls out a conspiracy.
Scenario 4: A bidder wins a lot(s) and another bidder takes exception and makes a point to harass through eBay/message boards or outbid against the winner in the next auction.
Scenario 5: A bidder wins and no one cares.
Scenario 6: A bidder (fictitious auction house shill account) wins the auction after multiple shill bids and the auction house eventually offers the item to the under bidder or runs in again in the next auction while the "realized" price stands as a point of record.
I'm sure there are many other scenarios, but I really don't see how such transparency would cut down on shilling or false prices as all the auction house has to do is create false accounts (they could even utilize consignor names or addresses to camouflage this in the event of inquiry).
I know that I wouldn't want anyone knowing certain lots that I would buy for break up or having immediate access to the price points that I paid for the grouping before breaking it up.
I'm pretty sure the member championing this cause will take issue with the scenarios or the program, but will offer no reasonable alternative. Just the same useless rhetoric about how the hobby is getting scammed.
Auction House Transparency: All bidder names and/or ID's will be available and noted on each active auction item up to and including closing of the auction.
PRO: Identifies the bidder on the lot, provides a record of the bidder's purchase(s), allows bidders to see who they are bidding against or lost to, provides peace of mind to proponents that suggest such transparency will stem the tide of shill or false bids
CON: Provides purchase history and price point of attached to bidder, allows others to run up selected bidders, allows auction houses to create bidders/identities to use as shills which defeats the purpose of intended transparency
Scenario 1: High profile bidder, known to many in the hobby, is identified by his bidder name/ID and others, knowing high profile bidder will not be outbid, run up the item (in essence, shill bidding)
Scenario 2: Bidder wins lot or group of cards to break up and sells them. Bidding patterns and bidding strategy can then be identified and copied.
Scenario 3: Major dealer or another auction house bids and wins and resells item. The CU Investigative Team springs into action and calls out a conspiracy.
Scenario 4: A bidder wins a lot(s) and another bidder takes exception and makes a point to harass through eBay/message boards or outbid against the winner in the next auction.
Scenario 5: A bidder wins and no one cares.
Scenario 6: A bidder (fictitious auction house shill account) wins the auction after multiple shill bids and the auction house eventually offers the item to the under bidder or runs in again in the next auction while the "realized" price stands as a point of record.
I'm sure there are many other scenarios, but I really don't see how such transparency would cut down on shilling or false prices as all the auction house has to do is create false accounts (they could even utilize consignor names or addresses to camouflage this in the event of inquiry).
I know that I wouldn't want anyone knowing certain lots that I would buy for break up or having immediate access to the price points that I paid for the grouping before breaking it up.
I'm pretty sure the member championing this cause will take issue with the scenarios or the program, but will offer no reasonable alternative. Just the same useless rhetoric about how the hobby is getting scammed.
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Comments
I posed this question in a thread that was quickly removed.
If you want to bid on items in a major auction house what are the rules in regards to not paying for an item that a bidder wins?
One of the inherent problems with EBAY is that you can quickly retract a bid after becoming the high bid or you can simply not pay with little consequences.
It would seem to me that it could be quite risky to try and run up an item in an auction house if you must take delivery.
In theory the house could work against you but you would see so many items re auctioned off.
I have followed this discussion for a while and I have never engaged in auction house activity and I think this is a very key issue in this discussion.
If there is real accountability of bidders in terms of making good on bids then I would see it as very real threat to shilling the vast majority of auction house listings.
<< <i>Scott you are a hobby vet.
I posed this question in a thread that was quickly removed.
If you want to bid on items in a major auction house what are the rules in regards to not paying for an item that a bidder wins?
One of the inherent problems with EBAY is that you can quickly retract a bid after becoming the high bid or you can simply not pay with little consequences.
It would seem to me that it could be quite risky to try and run up an item in an auction house if you must take delivery.
In theory the house could work against you but you would see so many items re auctioned off.
I have followed this discussion for a while and I have never engaged in auction house activity and I think this is a very key issue in this discussion.
If there is real accountability of bidders in terms of making good on bids then I would see it as very real threat to shilling the vast majority of auction house listings. >>
Your bid is binding and irrevocable in virtually all auction houses. In the event that you don't pay, litigation can be filed for losses and/or damages. Typically, the auction house will do one of three things, either return the item to the consignor, reauction the item and file for damages on the difference (including buyer's premium) or offer it to the under bidder and file for damages on the difference.
Most auction houses are on the up and up. There will never be 100% certainty that you are outbid by another willing buyer, but in most cases (especially those of 4 figures or less), the risk of shilling on lots outweighs the additional income an increment or two will garner the house.
Dodgers collection scans | Brett Butler registry | 1978 Dodgers - straight 9s, homie
The accountability of bidders isn't the major concern that I believe Paul has been preaching. It is the potential of being shilled by the house via a fake account or standard incremental bump on items they feel are too low or if the assume the bidder is willing to pay more. But in that respect, as I said, in most cases (especially those of 4 figures or less), the legal risk of shilling on lots outweighs the additional income an increment or two will garner the house.
<< <i>Scott, you're completely wrong regarding scenario 4, and you know you're wrong. With true transparency, the AH would protect itself by providing insurance and passing the cost on to the underbidder. >>
I said it was fixed price with free shipping and totally independent of Scenarios 1-3 or the base point price structure. It was just another option...
Is your disdain for auction houses predicated on the fact that that last two Ozzie Smith PSA 10's went for 20k?
It seemed like an anomaly on the first one but the second one did too.
It would seem to me that you are of the mind set that those cards from the sets you chase would have never achieved those price levels had they not been manipulated.
I have no way of knowing who bids on those cards but with that card being such a rare card there is a very real chance those were legit battles at auction and as I have said many times you never know who wants the card when it is that rare.
I have no dog in the fight as I have never participated in this type of auction format but I can guarantee you that if you bid actively on a certain genre or year of cards the others bidders will quickly notice who you are on EBAY.
<< <i>BBG I have truly appreciated your intense dedication to card collecting.
Is your disdain for auction houses predicated on the fact that that last two Ozzie Smith PSA 10's went for 20k?
It seemed like an anomaly on the first one but the second one did too.
It would seem to me that you are of the mind set that those cards from the sets you chase would have never achieved those price levels had they not been manipulated.
I have no way of knowing who bids on those cards but with that card being such a rare card there is a very real chance those were legit battles at auction and as I have said many times you never know who wants the card when it is that rare.
I have no dog in the fight as I have never participated in this type of auction format but I can guarantee you that if you bid actively on a certain genre or year of cards the others bidders will quickly notice who you are on EBAY. >>
Be careful. You might get a "This is your one and only warning" PM from Paul and he'll block you so that you can't reply...
Sadly, Paul is too stubborn to accept or admit many of the other shenanigans that have taken place with cards that he now holds in his inventory. I'll leave it vague as many can fill in the blanks on the sheet...
I just think there is some reason why there is such a strong dislike for auction houses and one of the things that quickly comes to mind is the strong finishes of these two past auctions.
I think you must take into consideration why some of the top collectors in the hobby keep their sets actual cards private.
There are certain sets where there are strong hands collecting them and if a card has a low pop and others know that person needs it the card is definitely selling for more regardless if there is shilling taking place.
Lets face it if Donald Spence for example needs a card that is low pop others may try and win the card to essentially hold it hostage and hope for a higher price.
They may also want to move up the selling price on a low pop cards to help establish a higher expected final price for other rare cards in the set.
The internet has made things so much more transparent. I just do not see how it is possible that all auction house listings are shilled.
There are smart people in this hobby too and some just want the product and realize it takes a strong bid to win.
<< <i>This response is not meant as a shot at BBG.
I just think there is some reason why there is such a strong dislike for auction houses and one of the things that quickly comes to mind is the strong finishes of these two past auctions.
I think you must take into consideration why some of the top collectors in the hobby keep their sets actual cards private.
There are certain sets where there are strong hands collecting them and if a card has a low pop and others know that person needs it the card is definitely selling for more regardless if there is shilling taking place.
Lets face it if Donald Spence for example needs a card that is low pop others may try and win the card to essentially hold it hostage and hope for a higher price.
They may also want to move up the selling price on a low pop cards to help establish a higher expected final price for other rare cards in the set.
The internet has made things so much more transparent. I just do not see how it is possible that all auction house listings are shilled.
There are smart people in this hobby too and some just want the product and realize it takes a strong bid to win. >>
Be careful! Logic and rational thought with regard to auction houses can be dangerous. Wouldn't want you to become part of the mob...
<< <i>Is your disdain for auction houses predicated on the fact that that last two Ozzie Smith PSA 10's went for 20k?
It seemed like an anomaly on the first one but the second one did too. >>
The hobby's top collector needs one for his postwar HOF rookies registry set.
If I were to guess, I'd say it's likely that the aforementioned collector bid ~19k on the last two examples and was outbid both times. I'd also say it's unlikely that anybody else is going to be able to get one for less than 20k until after he has secured one.
Another idea might be to combine the above with the sellers username being available during/after the auction so you could know which sellers to avoid. Surely there's a middle ground that offers an improvement?
It's all about the max bids. And I might even go as far as saying that many of these auction houses exist solely for the purpose of being able to see the max bids.
There's a reason why these auctions are designed to go until the wee hours of the morning: the whales need their sleep.
<< <i>otwcards has made some great points. I would disagree, however, with his comment that most auction houses are on the up and up.
It's all about the max bids. And I might even go as far as saying that many of these auction houses exist solely for the purpose of being able to see the max bids.
There's a reason why these auctions are designed to go until the wee hours of the morning: the whales need their sleep. >>
Since Mastro was made an example of, you would hope other AHs don't want to follow their footsteps and grab their ankles in a Federal pen.
<< <i>Since Mastro was made an example of, you would hope other AHs don't want to follow their footsteps and grab their ankles in a Federal pen. >>
Perhaps my memory is failing me but I don't recall any direct charges brought against Mastro for shill bidding. I believe the bidding records were destroyed or lost.
Wasn't it a mail fraud charge that was related to the Peter Nash trophy ball?
<< <i>
<< <i>Since Mastro was made an example of, you would hope other AHs don't want to follow their footsteps and grab their ankles in a Federal pen. >>
Perhaps my memory is failing me but I don't recall any direct charges brought against Mastro for shill bidding. I believe the bidding records were destroyed or lost.
Wasn't it a mail fraud charge that was related to the Peter Nash trophy ball? >>
Link via FBI
<< <i>William Mastro, who owned the former business that once billed itself as the “world’s leading sports and Americana auction house,” together with Doug Allen and Mark Theotikos, both former executives of Mastro Auctions, were indicted on fraud charges for allegedly rigging auctions through a series of deceptive practices, including so-called “shill-bidding,” designed to inflate prices paid by bidders and to protect the interests of consignors and sellers at the expense of unwitting bidders. >>
My point was an overall CYA to AHs going forward. Even if they don't get popped for shilling, other illegal practices could send the Feds their way (ie Capone going down for tax evasion).
<< <i>BBG care to comment? >>
I think he/she/it would rather bump old threads instead of responding to new ones like this.
<< <i>
I have no dog in the fight >>
Fair enough, but, do you have any skin in this game?
<< <i>
Be careful. You might get a "This is your one and only warning" PM from Paul and he'll block you so that you can't reply...
>>
No chance, these dudes have been dating for too long. Except DPeck has been pretty quiet while Paul makes his bed.
There is only one person who makes my bed and I am married to her.
I wasn't inferring that you were married to BBG, I was inferring you were dating her.
Nice post. I read what you wrote.
<< <i>So is this gonna turn into a PSA boards WAG (wives and girlfriends) pics thread? >>
It better not, unless there's a little more transparency than we've seen so far...