“Shill Bidding” on eBay… Nemesis of the Frugal Shop Buyer

Posted by CNC Reporter on Dec 27th, 2007.

Online auctions can be a great way to find and purchase supplies and equipment for your shop, especially when looking for good deals or obscure tooling. After inputting a few keystrokes, you’ll usually find exactly what you’re looking for. The only thing left to do at this point is bid on the item and hopefully win the auction at a fair price, but in the “Business and Industrial” category, a fairly priced auctions are not always the case.

Unfortunately, there are sellers who abuse the site and try to artificially drive up auction prices by starting bidding wars through the practice known as “Shill Bidding”. Friends and often times employees bid on items to drive up the prices of auctioned items. If the ploy doesn’t work, all the seller has to really pay is the auction fees.

A shill, by definition, is an associate of a business or politician who pretends not to know the business owner, yet takes on the attitude of a satisfied customer or potential buyer. The practice is most certainly viewed as unethical by many in the auctioning world; shill bidding’s legality is questionable as well. The eBay Terms of Service explicitly prohibit the practice of shill bidding.

Looking out for shill bidders can be tricky on eBay. Some of the biggest and most profitable sellers known as “Power Sellers” practice shill bidding regularly. The people at eBay claim to enforce rules against shill bidders, but it happens all the time. For eBay, enforcement of such rules is a double-edged sword, being that larger and more profitable sales bring in more revenue to the auction site as well.

In the Business and Industrial category, shill bidding can often be rampant. Such specialized machines, accessories or tooling are hard to come by, and shill bidding ensures the sellers that they will make the most profit.

The easiest way to avoid sellers that practice shill bidding is to look into their sales history. Taking a close look at who bids and who wins the auctions can be very telling indeed. Looking into buyers with minimal eBay history can also clue you in to just how they do business, typically those with fewer than twenty transactions can be seen as suspect. Mutual sales and transactions should be a red flag to potential buyers as well.

The absolute best way to reduce shill bidding is to resist the temptation to buy from the unscrupulous seller no matter how much you need or want the item.

2 Responses for ““Shill Bidding” on eBay… Nemesis of the Frugal Shop Buyer”

  1. gm says:

    I had it happen several times then the seller offers you a BS second chance saying the first bidder reneged. Ebay has changed their rules to encourage shill bidding by removing bidders identities with stupid hidden ones. A buyer is left to be preyed upon. I’m to the point where I now just let items pass rather than play games. I bought a car that was obviously being shill bid up. It was amazing how the stuff stopped when I emailed the seller. I think Craigslist has the potential to overtake E-bay, with its less frills.

  2. Philip Cohen says:

    For anyone interested, a detailed case study of a classic, blatant shill bidder on eBay, and a comment on eBay’s attitude thereto, at http://www.auctionbytes.com/forum/phpBB/viewtopic.php?t=24033

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