How eBay Sellers Fix Auctions

Boj writes "The Times online is carrying stories on fraud carried out on eBay using shill bidding. Citing eBay's changes to security as aiding the shill bidders and this fraud: "Last November eBay changed its rules to conceal bidders' identity — making it even more difficult for customers to see whether sellers are bidding on their own lots.""

Reserve Not Yet Met

[eldavojohn]

Am I the only one failing to see the damage done here?

Ok, so I've used eBay and I know there's a "Reserve Price" option for an auction. You set it when you start the auction and if the bids never crest that benchmark, you are under no obligation to provide product/service for amount tendered.

Now, that said, I will concede that a "Reserve Not Yet Met" sign on an auction will cause me to over look an auction. I feel less like I'm getting a deal if that phrase is staring me down. I will also mention that the more bids on an auction the more desirable it is to me (childish, I know, but hey I'm human).

Now, on the other hand, if I were an seller, I could think of a thousand ways to simulate bids. Configure a friend's computer on the other side of the country to forward my internet traffic, for one. And then the cat and mouse game between eBay and I would begin. And what would happen? eBay would have to spend a lot of time investigating this stuff. A lot of time and resources. Only to do what? Send me a nastygram asking me to use Reserve Prices next time? Place a black star next to my name to let bidders know I've been known to use shill bids? Social stigmas of some other sort?

In the end, who cares? eBay should keep it in their TOS & simply let people know that professional seller often practice this. You're not going to find the same deals on eBay that you'd find at some middle of nowhere country farm house liquidation auction where you have to show up in person and stomach 8 hours of farm tools and the worst BBQ lunch sandwiches you've ever tasted.

Hmm

[Anon-Admin]

I don't have a problem with it. It has happened and will continue to happen. What I have the biggest problem with is the "Second Chance Offer." I have bid fair price on many (one of a kind) items only to get out bid by something that looks like a shill account. After the auction ends the seller makes a second chance offer to me at the price of the highest bidder.

So I bid 10$ on an item that I am willing to pay 10$ for, Some one outbids me and the number goes to $11, I up the bid to $15 and am again outbid 1$ at a time. At this point I walk away. I then get a second chance offer to buy the item for the 17$ high bid. What makes me even more suspicious is when the same item is then relisted and the pattern repeats itself.

In all honesty, it's e-bay, It is not worth getting worked up over! You win some and you loose some. If you think the seller is a ripoff, add them to your favorite sellers list and put a note stating your opinion of them. Then make sure you do not buy from them again. It would be nice if E-Bay offered a way to tag sellers you do not want to do business with and let you ignore there listings.

Re:Ebay - Where there is a sucker born every minut

[Annoymous Cowherd]

Grammar policing aside, eBay is really doing more damage to the younger generation than we would care to imagine.

In my county, we have petitioned the authorities to put a blanket ban on the site. Why? It appears that suddenly the youth have 'spending power'. Therefore, we're seeing more and more young people, and I'm talking 5th graders, devoting a greater deal of their energies to buying and selling items online using their elder sibling/parent's credit cards than studying or playing outside.

What used to take place on the playground for items of equal value has now moved online for money. Parents are talking about groups of youngsters threatening others into bidding for their items.

All in all, I think eBay is definitely something our community can do without.

Re:now wait a sec...

[Se7enLC]

Let's say there's an auction for an item you want. Nobody has bid on it, yet, so you throw in a $50 bid. You would pay $50 for it, but for the moment, it's sitting at the $10 starting price.

You end up winning the auction for exactly $50. Is it because the other guy only wanted to spend $49.50 and you happen to have outbid him? No, it's because the shill bidder put in increasingly higher bids until they outbid you, then canceled the bid saying "oops, I put in the wrong amount". Or they keep the bid, default on the payment, and the seller will use eBay's "Second Chance" bid to allow you to pay for it at your previous bid (which was the $49 or whatever).

If the seller wants to guarantee a minimum price, they should use the reserve price. Or better yet, use the STARTING BID. You're not fooling anyone listing an item at $1 and then setting a reserve for $30, just start it at $30. If it's worth $30, somebody will buy it. In my opinion you should be required the validate by address, credit card, bank account or other form before you are allowed to have an eBay account. That way fraudulent bidders can be held accountable.

Re:Reserve Not Yet Met

[corbettw]

You'd be surprised how poorly that tends to work. First off, when you set a higher starting price, you pay higher listing fees. Second, when the price is set low initially, it can help trigger a bidding frenzy. Especially when someone decides they're willing to pay $100 for your item, so they put that in as their max bid, but their initial bid only shows up as $1. So when someone else enters a bid, it quickly starts going up and up and up. Next thing you, people are bidding hundreds of dollars because they're now emotionally invested in getting *that* item.

The psychology of eBay is pretty fascinating. I used to buy and sell on there quite a bit, and have a friend who started his own sell-it-on-eBay company, using just the tactics I described above. Sometimes you'll end up selling for less than you wanted, but more often than not you make a killing.

Re:Ebay - Where there is a sucker born every minut

[maxume]

They have to keep peoples perception of how trustworthy they are high enough that they will do business on ebay(especially buyers...). I think I might have bid on a few auctions a few years ago(I don't remember anymore), but I never won, and I have never offered anything for sale on ebay, and everything I see says that the risk of fraud is much higher than I am willing to deal with. The worst part is that it ends up operating as a fairly efficient market, with lots of people bidding even on obscure items, and stuff goes for 'market' price anyway. This takes away the incentive to try to play the game and makes Newegg and Amazon that much more attractive.

(Amazon is winning the checkout/shipping battle handily as far as I can tell, but buy stuff like ram and cameras at newegg because amazon has horrible prices and generally doesn't rotate stock fast enough)

Re:Shill bidding backfires half the time anyway...

[vita10gy]

The problem with shill bids is that there's no similar recourse for the buyer.

Sure there is, don't bid $200 for the radio in the first place. Bid $5, keep an eye on it, and each time you bid decide "Am I still getting a deal?". If you're opening bid is $200 and it just so happens to be going for $5 at the moment it doesn't really matter. You've decided it's still worth it to pay up to $200, regardless of how it approaches that number.

Re:Ebay - Where there is a sucker born every minut

[Poruchik]

Not (entirely) true. Ebay makes MORE money if your products sells for more. It's called Final Value Fee, which is a percentage of the final price. If you item sells for $1, they get $0.05. If your item sells for $25, they get $1. They are in fact interested for this practice to continue.

Re:Reserve Not Yet Met

[91degrees]

You've changed the playing field. You've gained an advantage. Yes, I am willing to pay the higher price, but you were willing to sell at the lower price. The fair price in a market economy is not the highest I will pay, or the lowest you will sell for, but somewhere inbetween. Auctions have evolved because they set up a fair price.

By artificially making the buyer pay towards the higher end of this "inbetween" range, the seller gaining a financial advantage. He does this by abusing the system, and by deception. I believe, fraud is defined as gaining a financial advantage by deception.

Re:Yep... seen it a couple of times.

[787style]

I had that happen, except the "Second Chance" email was a very real looking eBay message, however instead of PayPal, it directed you to Western Union. Total scam. I wrote eBay about this, and of course they did nothing.

I decided to start shopping for season tickets for UT football games. I found a few, however none were on the west side. I finally found a pair on the west side in section 7. It was at $1,000, I put my max bid in at $1,200. I was high bidder until close to the end, where one person outbid me. Then another person outbid him, for $1,825 [flickr.com]. I thought there was a chance since all the bidders except myself had a bad rating [flickr.com], I'd get a second chance offer. That's how I scored some tickets last year.

I did. However, it was the day after the auction closed, which set up flags in my mind. Two people outbid me, and one of those people was only outbid by $25. So he would have had 5 days to refuse the offer, and less than a day had passed. So there was warning sign one.

So I got this email. Looked official enough. It had been a while since I had done a second chance offer, so I contacted the seller and gave him my address and phone number [flickr.com], and was told to expect an invoice [flickr.com]. I got it. (Part 1 [flickr.com], Part 2 [flickr.com], Part 3 [flickr.com], and Part 4 [flickr.com]). I knew I was getting scammed when I hit reply [flickr.com]. Was I to really believe eBay was staffed by dyslexics who used yahoo's web client?

I sent it all to eBay's fraud department, I sure it went into a black hole. But thought I'd document it anyway. Finally, another email from him [flickr.com]. How nice of him to discount the fees that Western Union will charge.

Re:Ebay - Where there is a sucker born every minut

[Anonymous Coward]

I hate snipers. I know that it's the "most effective method" for winning an auction. As usual, "I am so much more successful when I'm an asshole than when I'm a decent person." If you tried to snipe in a real auction, you'd just extend the auction.

Re:My real story.....

[jseeley]

I primarily do buying from eBay, and although I can't attest to the actual inner workings, when attempting to bid on guitar/musical instrument items since they instituted this Bidder 1, Bidder 2, etc. hidden identity system, EVERY auction that had hidden bidder IDs resulted in a sale price that was in excess of the real value of the item being sold.

By this I mean an individual could go to an online or bricks-and-mortar retail store and buy the same item for the same price or less.

Re:Shill bidding backfires half the time anyway...

[simm1701]

Look at the distance selling act for the uk - if you bid on an item, but then choose not to buy it... well you just excercise your rights under the distance selling act - say you don't want it and dont pay. You can even ask for yout money back up to 7 days after the day it arrives - and unless their ts&cs have said otherwise its up to them to arrange to pick it up. (exceptions if its custom work)

No admittedly getting a refund is going to be hard work if they dont want to give it - but saying you wish to cancel your purchase - they could try to fight it in court but I doubt they would have a chance in hell of winning - especially since they can't even claim costs of the auctions as ebay offers them a refund of sellers fees and a free relisting if a buyer backs out (mutual withrawal agreement is the prefered way of doing this)

People will often say that the distance selling act (and the sale of goods act) don't apply to auctions... technically thats true, but both acts specify auctions with an auctionier (where the auctionier is assumed to be a human not a computer)

Re:Ebay - Where there is a sucker born every minut

[JudgeFurious]

ebay is a great place to find automobiles but admittedly you have to be careful and you have to be willing to get up off of your butt and go look at the car. I've bought two cars off of ebay and in both cases it took me a long time to find the vehicle I was looking for. When I did I was entirely comfortable paying that sellers "Buy it Now" price and in both cases I went to look at the car in person.

  For basic transportation it's not necessarily the way to go. Chances are most people have at least as good a selection within driving distance of them at various dealerships in their area. If you want something a little out of the ordinary though it's a good place to find it.

Ebay's Shill Bidding is even WORSE than that

[arete]

I had a shill bidder push me up, then literally bid OVER my price, winning the bid themselves. And I stopped bidding. Then they RETRACTED their bid (which is supposed to already be suspicious) to make sure they didn't win.

I reported them to Ebay, back when the names showed, along with various evidence that the accounts were tied together. (The previous-name of one of them was real-name type username with the same last name as the real-name type username the other one was using... from the same city.)

I did not get my money back - although it was only $1, and it was still a reasonable deal on the item. And I wasn't willing to refuse to pay because I didn't want to screw up MY feedback, and I didn't have enough transactions to make it unimportant.

Been going on since forever

[ajs318]

The practice of shill bidding has been going on since forever, anytime anyone has ever sold anything for a negotiable price. One strategy is to place a phone call from a pub or café, ostensibly begging to borrow some money to purchase an item from a nearby antique shop or market stall which is claimed to be on offer at a price much lower than its true value (which is invariably mentioned, possibly along with the name of a potential purchaser) and about which the caller is clearly rather excited. Of course, the "caller" is part of the scam, in league with the seller; and fully expects to be overheard by someone, who then departs quietly and purchases the item (in reality worth very little and marked up) before the loan can be completed.

Of course, the scam only works because of the eavesdropper's greed -- they get so carried away by the thrill of listening in on a private phone call and discovering a little secret that they weren't supposed to know about, that they totally forget that it might not even be for real. You can't con an honest person.

Just remember, fools and their money are soon parted. Treat eBay just the same as any other form of gambling, and never spend more than you would be prepared to lose. If the bidding goes above what you wish to pay, walk away. If the seller does win their own item back, they will still have to pay the listing fees, plus PayPal's cut, which can provide some measure of disincentive against shill bidding ..... but only if buyers keep their cool and don't get auction fever.

Re:It isn't illegal - nor is the cure

[AtomicBomb]

I do academic research on online auction (although not on the legal side). I believe I have a bit to say upon this topic.

Shill bidding is illegal at least in UK. In fact, making any artificial distortion to an auction market is illegal. I can make two examples and most will agree while collusion between bidders/sellers *should* be classified as a crime. First example: in a fish market, the fish buyers form an illegal cartel. Only one of them bid for the whole lot of fish at the min price and divide the loot amongst themselves afterwards. The poor fishman gets $1 for his boat load of fish. Clearly it is a rid off to him. Second example: auction exists in many different from in the financial market. For example, stock exchange uses continuous double auctions which match the bids with the asks. Suppose a client want to buy 100 shares of Googles right now at the market price, an unhonest broker can instruct a collaborator to buy 100 shares first and immediate resell that to his client at a higher price.

In the above two examples, the victim (and the loss) can be identified easily. But, in the eBay / flea market shilling example, it is not that clear who is the victim. Just like those $9.99, $29.99, $999.99 price tag, you can consider that as a marketing plot. One may be tempted to ask the rationale behind that law. I believe the paradox is caused by the confusion between pricing of the goods: the fish/stock is a common value good while most eBay items are private value goods. People values a common value good the same way as the next person. Therefore, manipulating its price affect everyone. But, for private goods (e.g. special edition of your college newspaper in 1980 may be valuable to the alumnus in your school, more so to some people, but clearly I have no interest in this), everyone has his own value. So, one can just bid up to his private value. If the shill bid turns out to be unrealistically too high, let the seller burns himself. Because of this reason, I see little point to legislate against shill bid against private value items.

Technically, it is often difficult to classify which item is private/ common. Therefore, the law is in place. But, I would say it is mainly focusing on the big fish esp in financial market (and to a lesser extend, the agriculture/fishery markets. Controlling the auctions used to be the lifeline of many Mafia/Triad groups in various part of the world). No one really cares about eBay even until now.

More to the point

[goldcd]

not only has the seller lost a sale as he got greedy, he's then got to pay ebay their cut of the sale (or embark upon reporting his alias for non-payment and enter the general hell that is ebay support)

Re:Hmm

[chuck]

Let's work on your logic skills:

So I bid 10$ on an item that I am willing to pay 10$ for

...

I up the bid to $15

f'n why???

Re:Getting ripped off and Fixing are two diff. thi

[gr3gpc]

Shill bidding is worse than simply getting ripped off. Shill bidding means that the seller - and associates - decided to create a fraudulent bidding environment. It is illegal and is prosecuted in real-world auctions. It ought to be on eBay as well. The first few people who have warrants served on them for this would send a good message.

Re:Ebay - Where there is a sucker born every minut

[The-Bus]

I still fail to understand the argument about overpaying for stuff on eBay, at least on a personal level. If you have perfect information on the item (which is impossible but easier for some items than others) then you can never get ripped off. Let's say I'm a complete assbag and thus want the new Rod Stewart CD. I could get it for about $9 shipped from one of the Amazon marketplace sellers. I could also go to my local Jerk Store NBooks & Coffee and get it from the douchelord CD section for $15 with tax. If someone is selling it on eBay and I bid up to $8 (with shipping) on it, shill-bidding or not, I get it cheaper than my other two options. Sure, I could've gotten it for $6 had the shill bidder not appeared, but the end result is still positive to me. I, a (supposed) total dickhat, got my Rod Stewart CD for under than $9.

In this (fictional) recreation, shill-bidding is only a nuisance and honestly not much of a problem. If you bid your max, you can never pay more than the maximum you'd want to pay. In the example above, it is impossible to be "ripped off" and to get something for a price higher than the value to you. If the Rod Stewart CD gets shill-bid up to $11, then my (fictional) titface self never buys it. I simply get it elsewhere.

The problem isn't individual, it's collective. If a single Rod-Stewart-loving cocktard loses $2 in a transaction, it's nothing to get concerned about. But when this is happening to millions of Rod-Stewart-loving shitwads, it becomes a real problem.

Re:Here's why shilling hurts you

[paeanblack]

Imagine your wife's grandma's heirloom china set is worth $400 on the market, but priceless to her. You have recently dropped one plate, and it's irreplaceable. The plate is worth $80 on the market. 6 months later, you see the plate on Ebay, drawing insipid bidding, reflecting relatively low demand, stuck at $40. Your web design business has been doing well, and you can afford $200 to get back in grace with your wife. You therefore bid $200, raising the current bid to $42. On the final day, you see a series of bids in , all by the same person, raising the price to $160. This is the point at which the shiller did not dare to raise the bid for fear of outbidding you.

The same trick works in reverse..you short-sell the very item you want to buy.
If that $40 plate is worth $200 dollars to you, you could make a new listing for it and bid $50. The real seller can no longer shill you up to $160, because, from his perspective, he's in competition with another seller. You'll have to eat the listing fees on a $50 item, but that's cheaper than what the shilling could cost you.

Just make sure that your listing closes after the original and you win the first auction. This covers you in case someone walks in at the last minute offering $10,000 on your listing...you'll actually have a plate to sell.

Re:Getting ripped off and Fixing are two diff. thi

[slashkitty]

It's well known that setting a low or no reserve on the item can net you a higher price in the end. The main reason for this is people get caught up in the action when the price is low, then turn it into a game to win the item.