Scams Against Buyers
Part 1:
Intro - Scams against Buyers
Part 2: The Empty Box Shipping
Scam
Part 3: The "Expensive
Phone Book Scam" or "Reach Out & Rob Someone"
Part 4: Shill Bidding
Part 5:
Wrong Descriptions: The Old Bait and
Switch routine
Part 6: Bid Siphoning
Part 7:
The
Overpriced Shipping Scam
Shill Bidding
Shill Bidding is when a seller
bids on their own item, for the purpose of inflating the price of the item and
realizing more money at the end of the sale. Sometimes shill bid sellers
act with or without the help of 'confederates' to disguise their crimes.
The bidder thinks he is bidding
against other legitimate bidders, but often, the other bidders (if there even
were any) have dropped out, and now it's just the dealer, pumping the price up.
Shill bidding is always unethical, almost always illegal, and will get a seller
evicted from most auction houses and land them in hot water with the buyer and
sometimes the authorities.
The
shill bidder generally comes in after an unsuspecting buyer starts bidding on an
item. The unscrupulous seller will then try and sense how much they think
that buyer might pay, and bid just up to that hypothetical amount to keep the
buyer in the process.
Usually, shill bidding occurs when
these dishonest sellers don't know how much to charge, or were hoping for more
bids on an item that either hasn't met it's reserve, or that started at a low
price and didn't realize the bids hoped for. It can be tempting for the
new seller in online auctions to get caught up in shill bidding, if they
suddenly find themselves in such a situation- it may be tempting to do it 'just
that one time', but once a seller starts down that path, there's no turning
back.
Bottom line, don't do it.
Don't even think about it. It's a sleazy way to make a buck, and if a
shill bidder isn't caught the first few times, they will be eventually.
Feedback ratings will be destroyed by this type of activity, and these types of
sellers quickly find that they are pariahs in the auction community.
Always report suspected shill
bidding to an auction house's fraud division. Although any
seller could potentially be a shill bidder, buyers should be generally more
cautious of auction users who have low or negative feedback ratings.
Sellers with very high feedback ratings are much less likely to use shill
tactics for a quick buck- they have far more to lose. Besides this, they
usually make great money just by being honest sellers.
Ways to spot shill bidding:
Check for a history of bid
cancellations from the same bidder or bidders in the seller's past auctions.
This can be found by viewing 'other auctions by this seller' and then looking up
their completed auctions- Lots of cancelled bids in past auctions is generally a
fingerprint left by a shill bidder or his helpers. It's the equivalent of
a smoking gun if you can track the 'other bidder's' User IDs back to the actual
seller through some personal identifier (credit card number, name, address,
geographical location of bidders and seller, etc).
Examine descriptions carefully and
get a feeling for the seller and their feedback. Lookout out for numerous
grammatical errors and misspellings or anything else that doesn't feel right.
Other warning signs:
The seller routinely lists
auctions on typically expensive items, and has a habit of ending the auction
early or at the last minute if there are no bids.
There are zero or few bidders in
the auction- Wait until the end to bid.
There is a lot of unrealistic
activity on an item that can be had fairly readily elsewhere. Most bidder
wars are genuine- just use common sense and don't get sucked into a fake shill
war.
If another bidder comes in that
you can't quite shake, and they keep bidding just above you every time you bid,
check them out; look at the recent auctions they have bid on, and check out
those sellers too. Shill groups almost always leave a paper trail.
This may just be a fellow dedicated collector like yourself- You'll have to
trust your instincts and watch for unnatural patterns that develop if you feel
you are being routinely targeted by the same people.
WARNING!
Be especially careful and observant when bidding in auctions in person and in a
live setting. Show no emotions, and don't give any indication of your true
level of interest in the item (this also goes for any e-mail discussions with a
seller during an online auction). Letting an unknown seller know how much
you really want to win that item is like exposing your jugular to the lion while
wearing a blindfold. A totally losing proposition.
Strategies to avoid Shill
Bidding:
While no method is foolproof, in
addition to using common sense and being alert for the possible warning signs
above, we recommend these approaches:
Always bid at the last minute.
Have a maximum price in mind that you are willing to pay before your bid, and
then stick to this amount. This way, no matter what happens you will be
satisfied with the outcome. Once that price is reached, take a walk.
If there is a shill bidder involved, they will be left holding the bag.
If you are concerned that bidding
at the last minute may cost you the item due to a power failure, slow
connection, or other problem, use a bid sniper.
These programs and websites are well suited to this purpose, and part of
their attraction is they help defeat shill bidders.
A bid sniper is a piece of
software or website that bids for you near the end of the auction, to keep your
bids private and avoid a bidding war. These systems are very successful at
helping bidders win auctions.
Bidding wars always favor sellers,
because they bring in more and more bidders caught up in the frenzy. These
are usually honest bidders coming in for a great deal, but a shill bidder can
sniff these bidding wars out like a shark sniffs out an injured tuna.
Enter the bid sniper- How is a shill bidder supposed to know you are interested,
when you never place your bid until the last second? They won't have time
to get their act together fast enough, which means they won't be able to
estimate how much they can drain from you with their fake, inflated bids.
Back to Auction Fraud Part 3:
The Expensive Phone Book Scam
Read Auction Fraud Part 5:
Auction Fraud: Bait and Switch
Routine
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