E-Auctions refer to the transactions taking place between auctioneers (sellers) and the bidders (buyers) on an electronic platform. The majority of people are adapting to this shift in the process and also buying items as per their budget. Alternatively, it becomes easier for the sellers or the auctioneers to dupe the buyers. Get the detailed information about shill bidding in this article.
When the prices are artificially inflated from the seller’s end it is termed as Shill bidding, tantamount to fraud. While bidding live in front of people, it is easier to spot a fraud seller. However, when the process is based on an algorithm it is difficult to find out. Thus, it becomes easy for the seller to inflate the bid prices artificially, and in return, the buyer pays high value for the product.
What is Shill Bidding?
Shill Bidding is an electronic fraud that happens on websites such as eBay, where the sellers put out their art or any other product and start accepting bids for that product. Now, when buyers start bidding for the product, these sellers with their artificial accounts place bids to outbid the buyer and thus inflate the rates.
Generally, to make it look more genuine, sellers insist their family members and friends to outbid the current bidder and inflate the bidding price of the product. Due to this, the price of the product rises to higher levels, which would not be possible if there was a legitimate buyer.
eBay Shill Bidding Scam
The biggest e-auction website, eBay regularly comes out with several Shill bidding cases. eBay shill bidding scam is very popular among eBay users. Many of the users have reported to eBay regarding the uncertainties and irregularities which take place in the bidding process.
One of the most recent shill bidding scams that eBay reported was with the largest auction card seller, PWCC. This shill-bidding eBay scam was reported on Aug 17, 2021. When eBay sent out Emails stating that the shill bidding regulations have been violated. PWCC, after denying charges, has filed for defamation against eBay.
However, within the rights, eBay has restricted PWCC’s selling and listing privileges. As per eBay’s policies and standards, it ensures a trusted and transparent marketplace for the users. It focuses on gaining the confidence of the user, and thus, strict actions are taken against malpractices.
PWCC shill bidding cases have been reported, and a shill bidding case can rise to an actual level of a criminal offense. Moreover, those who commit shill bidding can be arrested on Federal charges u/s 18 Code Section 1343 for Wire Fraud.
Statement Of PWCC On Shill Bidding
PWCC and eBay have been in a partnership for 10-years. And, PWCC has used eBay as the primary market for its products. However, now PWCC has shifted its major consignments from eBay to its own premier auction website. In July alone, PWCC sold over 37,000 lots on its own website.
Moreover, PWCC claimed that the company was shocked to see eBay’s email stating the involvement of PWCC in shill bidding. The company said “As per PWCC’s knowledge, the employees have never engaged in any behavior that violates eBay’s agreements and policies. PWCC goes to great lengths to ensure that its employees follow eBay’s rules and PWCC employees do not have any information regarding eBay’s bidding records and information.”
Moreover, PWCC has just learned about this case and no proof or document supporting these allegations has been provided by eBay. Despite this denial of providing proof, PWCC has stated that they will continue their internal audit and investigation to ensure that their employees have not violated any of eBay’s rules.
Penalties for Shill Bidding on eBay
The penalties for eBay shill bidding cases depend upon the type of charges the accused may face, such as state charges or federal criminal charges. If the accused is involved in various money laundering, or the sale of counterfeit goods, then the charges and penalties become more serious.
The Donnelly Act is an antitrust law and anti-price fixing law that prohibits price rigging and works in the favor of the bidder.
The accused, under the New York’s General Business law code section 340-337, The Donnelly Act. Can face up to four years in prison, including a fine of $100,000 for individual sellers and $1 million for institutions.
Also Read: How to Use PayPal on Amazon: Know it Today
Penny Bidding As Another Form Of Shill Bidding
Penny auction is when the bidders and the sellers transact for an item that is priced very low. However, in this case, the bidder has to pay for every bid he places. As a bidder, first, you have to buy “bids” and then place the bids. Once the bidder places his/her bid, the false bidder or the scam bidder will enter, and outbid the previous bidder.
Now, when the bid price has increased, the first bidder will again have to buy a “bid” and place a new one at a higher price. Even if the bidder eventually ‘wins’ the bid, then he or she might have to pay more than the actual value of the product. That is, after including the sum of the bid amount and the end price of the product, the item would be worth more than the actual price.
Now let us throw some light on how to find out that you have been swindled with fraud on eBay?
Simply, go on the order and bid history on eBay’s website. eBay keeps a record of literally everything, which makes it simple for you to check the fraud if any. Once you open up the “listing” tab, it will show you all the bids placed for the item, and how many of them have been retracted. Moreover, you can also check the bidder’s bid history. By checking the bidder’s bid history, you will be able to find out whether he or she is a rational bidder or a fake one.
For instance, if the bidder has placed six bids in the last six months, and all to the same seller. Then that makes it suspicious. Moreover, if the majority gets retracted then it confirms that something is fishy.
If you find an irregularity when the auction is live, you can report the item by clicking on the report item link on the webpage. On the other hand, if it closes down, then you can email the support team.
As a bidder it is important for you to responsibly place the bid. Not all sellers are genuine. Therefore, check the seller’s history regarding booking and retraction rate, and then place your bids. Also, it is very important to know the meaning of “shill bidding”, to protect yourself from this kind of fraud.
But, as a reporter make sure you only report the ones that you are sure of. Otherwise, an innocent seller might face restrictions from the marketplace.
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