Scams & Auction Business Frank Ross on 02 Nov 2006 07:40 pm
Shill Bidding - Detectable Fraud or Gray Area
Shill Bidding is a fraud problem found in all types of auctions. It’s a problem of collusion, where a group of people bid to artificially inflate an auction. Wikipedia describe shill bidders as follows - driving prices up with phony bids, they seek to provoke a bidding war among other participants. It’s not limited to eBay; it’s been around for probably as long auctions have.
But eBay has a substantial methodology in place for detecting this kind of activity. They look (at among other things) the IP Address of the bidders and the feedback record. New user IDs with Zero feedback are considered suspect as well as a pattern of the same group of users bidding on different auctions of one seller.
There are legitimate eBay users with Zero feedback. There are also legitimate reasons that the same group of users might bid on different auctions of a seller. If that seller has attained loyalty from his or her bidders, they may keep coming back - that’s just good business.
It would seem that shill bidding, unless done on a large scale, would be difficult to prove. Large scale would be like that of Kenneth Walton. But the occasional shill would probably go unnoticed by eBay.