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Bidding on your own auction
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Started by BlackOut21,

177 posts in this topic

BlackOut21

BlackOut21

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So, super random but is bidding on your own auction really that bad ?

I know you can easily say start the auction higher. No answer to it.

But if a person really wanted to bid in the middle of an auction, especially a person who is always buying and selling, should it be considered bad business practice?

No judgement please, but curious what you think. 

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Funnybooks

Funnybooks

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Shill bidding is illegal in most states....

Shill bidding then would involve falsely advocating a position in attempts to entice others do follow that lead by bidding at an auction.

What shill bidding involves is bidding without the genuine intent to purchase, and rather with the intent to ensure price protection for the seller by one of two methods:.

  • The shill bids with the intent of influencing others to bid, hoping others see his level of interest in the item, and gauge value based upon his bidding. In this scheme, the hope is that if the shill bids an amount, the other interested bidders sense one more higher bid as reasonable.
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shadroch

shadroch

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I'm not sure what ethics has to do with it.  

Suppose I consign a book to Auctionsareus.  I agree to a 10% consignment fee. It's a $500 book but everyone is sleeping and it is at $50 with one minute left.  I bid $70 and no one tops it. I pay the $70, the auction house gets it's $7 commission and I don't lose hundreds on the sale.  I have a contract with the auction house and honored it.  What contract or obligation do I owe the other potential buyers?

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shadroch

shadroch

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On 6/26/2024 at 6:01 PM, Funnybooks said:

Shill bidding is illegal in most states....

Shill bidding then would involve falsely advocating a position in attempts to entice others do follow that lead by bidding at an auction.

What shill bidding involves is bidding without the genuine intent to purchase, and rather with the intent to ensure price protection for the seller by one of two methods:.

  • The shill bids with the intent of influencing others to bid, hoping others see his level of interest in the item, and gauge value based upon his bidding. In this scheme, the hope is that if the shill bids an amount, the other interested bidders sense one more higher bid as reasonable.

Or, the owner puts in a bid that assures him he gets X for the book. If it sells for less than the minimum, the owner simply pays the commission and keeps the book. It's a way to avoid no-reserve auctions.  

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Funnybooks

Funnybooks

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On 6/26/2024 at 9:02 PM, shadroch said:

I'm not sure what ethics has to do with it.  

Suppose I consign a book to Auctionsareus.  I agree to a 10% consignment fee. It's a $500 book but everyone is sleeping and it is at $50 with one minute left.  I bid $70 and no one tops it. I pay the $70, the auction house gets it's $7 commission and I don't lose hundreds on the sale.  I have a contract with the auction house and honored it.  What contract or obligation do I owe the other potential buyers?

wow

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Funnybooks

Funnybooks

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CHICAGO — The former owner and CEO of a sports memorabilia auction house was sentenced Thursday to 20 months in federal prison for using phony bids to fraudulently inflate the price of his company’s listings at auction.

As the owner and chief executive officer of Mastro Auctions, WILLIAM MASTRO and several colleagues placed fake bids to drive up the prices of various listings, a process known as “shill bidding.” 

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Funnybooks

Funnybooks

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Shill bidding is considered a form of Internet auction fraud as it "illegally drives up prices and defrauds consumers."[4]

  • In 2004, Jerrold Schuster, Darek Szydlowski and Francis Komsisky, Jr. pleaded guilty to shill bidding under New York's Anti-Trust Legislation, specifically Combination in Restraint of Trade and Attempted Combination in Restraint of Trade.[4] Schuster faced up to 4 years in prison for Combination in Restraint of Trade and $50,000 in restitution.[4]
  • In the UK, a man could have been fined up to 50,000 pounds, 10,000 pounds for each violation, due to eBay shill bidding under the Business Protection from Misleading Marketing Regulations and Consumer Protection from Unfair Trading Regulations.[5] However, he was only fined 3000 pounds and sentenced to community service.[6]
  • In 2010, within the domain name industry, SnapNames settled a class-action lawsuit due to shill-bidding auction practices for $2 million.[7]
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ageofsilver

ageofsilver

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This depends on the auction contract, which should conform to applicable laws and be made known to buyers. If it is legal for the seller to buy his own book back and proper under the written auction agreement, shadroch’s scenario seems reasonable to me. Of course, those wanting to buy a nice Baker at 50% off might be a bit miffed. The best plan for a seller would be to have a reserve, but the auction house may not allow this. 

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masterlogan2000

masterlogan2000

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On 6/26/2024 at 8:02 PM, shadroch said:

I'm not sure what ethics has to do with it.  

Suppose I consign a book to Auctionsareus.  I agree to a 10% consignment fee. It's a $500 book but everyone is sleeping and it is at $50 with one minute left.  I bid $70 and no one tops it. I pay the $70, the auction house gets it's $7 commission and I don't lose hundreds on the sale.  I have a contract with the auction house and honored it.  What contract or obligation do I owe the other potential buyers?

On 6/26/2024 at 8:06 PM, shadroch said:

Or, the owner puts in a bid that assures him he gets X for the book. If it sells for less than the minimum, the owner simply pays the commission and keeps the book. It's a way to avoid no-reserve auctions.  

On 6/26/2024 at 8:18 PM, shadroch said:

Did the OP ask about bidding on eBay? eBay allows you to set minimums and reserves.

 

I have major concerns with this.

1)  How do you know that your bid of $70 will be the top?  What if you are outbid, and you are the 2nd highest bidder?  You have now shilled the bid up and cost the legitimate buyer an extra $20 + the next bid increment.

2)  If you put in an absurd bid to ensure you win the auction, and another buyer comes in at the last second and places an equally absurd bid to add the item to their collection, they either pay waaayyy more for the item, or you win it outright for a price that it should have never reached.

 

Are the results of these auctions public knowledge?  Your shill bidding changes the hammer price in both of your examples above.  What is to stop someone from continuously winning and relisting their item to make it appear that an item is worth more and has more liquidity than what the actual market will support?

Sure, you are paying the auction house to use their platform to manipulate a free market, but that doesn't make it right.  If you are concerned about not meeting your minimum, then next time choose a platform that does allow for setting minimums and reserves.

IMO, shill bidding is HIGHLY unethical.

 

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