Shill Bidding on eBay: Case Study #2

He also apparently has the right to shill bid, provided he states that outright:

 

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Hmmm...in all of these links I saw nothing but ambiguity. However, I did see this in link #3-"a misdemeanor antitrust violation." Antitrust laws are so ambiguous that damn near anyone can be prosecuted under them given the right anti-capitalist judge. Sorry. Anti-trust laws are both objectively uninterpretable, but also logically absurd. You still have not come up with a concrete law, but rather the anti-trust law.

 

First has nothing to do with auctions.
Second has nothing to do with law - that is an LLC's regulations.
Third - yes, it is against eBay rules and they can and do prosecute.
Fourth - ????

 

First: Since the thread is about "online auctions", I didn't think to repeat that..."online" = "wire"

Second: I call these links "interesting links" not "law links"

Third: Agreed

Fourth: Just another intestesting link...shows this isn't limited to just coin auctions.

Oh...and Fifth: Check out the first example of Shill Bidding provided by eBay...sounds a bit like our beloved auctions houses, doesn't it?

 

I read the OP other threads also, and I think this thread is a bait and switch of its own. It seems the OP feels that all of the evil of shill bidding is the result of ebay somehow refusing to limit or stop it based on what he/she says.

The cases cited where ebay is mentioned do not in any way say Ebay condoned the activity of the seller(s) who was(were) the defendent(s). Yes there are liars, thieves, and down right dirty ugly scoundrels on ebay. Can they "make" you bid or pay more for an item than what it is worth? no! If you bid $$$.$$ when you wanted to get it for $$.$$, did they make you? NO! Is it wrong for them to shill bid? Yes! even ebay says that. They are a business. If you don't agree with the way they are handling it, you have 2 choices.

1. Don't bid on ebay or
2. Sue the seller yourself with the laws you mention. Don't expect others to do it for you.

It is a bad juvenile pattern to try and ridicule people who disagree with you. It is the old " If you don't agree with me, you must be one too" argumentative tool, and most do not fall for it. If you had a bad experience with shill bidders, learn from it , and go forward in life. May you have good experiences hence forth.

Jim

 

Sorry, but you are reading that first one to fit your desires and wishes, not how it is written.

 

I saw where there was some "back and forth" in this thread about the laws that cover Shill Bidding.

I read a number of independent articles that cite this as the legal source for laws regarding Shill Bidding with respect to online auctions. I'm not a lawyer...I included it as an "interesting link", only.

I have no "desires and wishes" concerning this topic other than to inspire the highest ethical conduct in everyone.

 

Just to chime in for a moment here, guys.

I asked a friend who is a practicing attorney and works for a firm that primary handles business law (contracts, etc) about this. While he states that he does not deal with auctions nor is an expert, he can offer some personal insight on the issue.

His opinion is that there is absolutely NO federal law against shill bidding. NONE whatsoever. The federal fraud section mentioned above is in no way related to shill bidding, as anyone who has legal standing(i might have gotten then terminology here wrong): mentaly aware, over legal age, etc, can bid on lots offered.

However, some States DO have stricter regulations when it comes to auctioneers. In most (some or all possibly, unclear on this) states to hold an auction, one must have a license to do so. And that license can be taken away and the person who violated the state regulations fined and/or imprisoned, depending on local codes.

However, that usually related to the intermediary, aka, the auctioneer, aka the person that facilitates the transaction between the buyers and the seller. It does NOT apply to the seller. There is absolutely NOTHING prohibiting a seller from bidding on his own stock or using an agent to do so.

In regads to Ebay, my friend mentioned that people debating it need to remember that shill bidding is against THEIR rules, not any legislation, laws or precidents. It is a private company rule, not a law of the land. Same with various auction houses.

Furthermore, Ebay operates as an intersate auction house, so it's not liable to have auctioneers liscense in every state it operate sin. This is a legal oversght and has not been addressed in court as of yet. Thus, Ebay and other internet auctions will continue to operate undisturbed until there is a ruling.

Finally, even if you find shill bidding immoral (as it is NOT illegal), it's easely combated: pay ONLY what you feel is fair for an item at an auction. Not more nomatter who is bidding against you or how high the price goes. And consider referring to actual case law and codes when making statements as to what is "illegal". The iunternet has an excellent array of cases that can be scanned for information.


This is what I got from our conversation and wrote some of the things verbatum, others I had to put in my own words. So, it's not MY legal opinion (not my spehere of study), so don't bite my head off please!

 

I’ll try a nighttime summary:

Ardatirion,

It is not my intention to offend anyone but if anyone truly cannot understand that any form of undisclosed vendor bidding on an auction is a deception and therefore a fraud then I doubt that any explanation that I could give would alter their views on the matter. I will simply presume that such persons are professional dealers who sell by auction and leave it at that.

I think that you will have seen that I have already made a comment on that section 57(4) in the UK Sale of Goods Act 1979 that you above quoted (and which was copied almost verbatim from the NSW Sale of Goods Act 1923). I would maintain that simply because an auction is notified to be subject to vendor bidding there is still deception if the vendor’s bid is not announced as such at the time it is made. The fact that auctioneers in the UK and Australia have been ever using the ambiguity in these Acts to “milk” buyers is not something that the auction industry should be proud of. A vendor bid that is not disclosed as such when it is made is a “false representation” and therefore a fraud and if ever the matter had been tested in the courts I suspect that the wording of such as the NSW Crimes Act would apply.

CRIMES ACT 1900 (NSW)
Section 178BB Obtaining money etc by false or misleading statements
(1) Whosoever, with intent to obtain for himself or herself or another person any money or valuable thing or any financial advantage of any kind whatsoever, makes or publishes, or concurs in making or publishing, any statement (whether or not in writing) which he or she knows to be false or misleading in a material particular or which is false or misleading in a material particular and is made with reckless disregard as to whether it is true or is false or misleading in a material particular shall be liable to imprisonment for 5 years.
​

In any case the point is moot in the UK; the new UK Fraud Act 2006 makes if perfectly clear that shill bidding (ie, undisclosed bidding by the vendor) is criminal fraud, and I quote page 146 of the U.K. OFT publication Internet shopping: An OFT market study, at:
http://www.oft.gov.uk/shared_oft/reports/consumer_protection/oft921.pdf):

“10.56. As discussed at para 10.28, shill bidding was the main form of deceptive practice suspected in our online survey (13.6 per cent). This is where a seller makes strategic bids, for example from an additional anonymous account or by an associate. Undisclosed shill bidding is illegal[309] and most auction sites expressly prohibit it
…
“309 The Fraud Act 2006, which came into force in January 2007, makes it an offence for a person to commit fraud by false representation where the representation is made dishonestly and with the intention of making a gain for himself or another. Under section 57(4) of the Sale of Goods Act 1979, it is not lawful for a seller to bid himself or to employ any person to bid on his behalf at a sale by auction unless the auction is notified to be subject to such a right. A sale contravening this section may be treated as fraudulent by the buyer.”
​

Could I suggest that anyone interested in the matter, read my summary of the UK and Australian statutes with regard to undisclosed vendor bidding on auctions at
http://www.auctionbytes.com/forum/phpBB/viewtopic.php?t=24316

And thanks to the other “googlers”:

As far as the US is concerned, indeed, Title 18, Part I, Chapter 63, §1343. “Fraud by wire, radio, or television” is the applicable Federal statute (State laws also apply):

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
​

MichhiganAuctionSales.Com:

17. Sellers may not bid on their own items for any reason whatsoever. If a Seller is found to have bid on their item(s), or had someone bid on their item(s) with the purpose of artificially inflating the price of an item(s), (this practice is known as shill bidding), that Seller will no longer be able to sell or buy on this site. We do have software that will determine and report common patterns of shill bidding, and all IP addresses are recorded. Shill bidding is a violation of various state and federal laws.
​

Whether or not Michigan Auctions actually polices this condition we will never know. Certainly eBay does not; all eBay’s pronouncements on shill bidding are words only; no action is ever instigated by eBay; I doubt that eBay has ever “reported” a shill bidder to the authorities; those cases that have come to the notice of the authorities have invariably been uncovered by and given publicity to by the media.

The only shill bidding that eBay is even remotely interested in is those cases inconveniently reported by those nuisance users. If you want reasonable “proof” of that, read my two case studies of shill bidding on eBay. Have a look at that spreadsheet and then tell me that eBay actually has the “proactive” and “sophisticated” tools to detect shill bidding that they claim to have. They don’t call “Noise” Donahoe “Ho Ho Ho” for nothing.

jallengomez

Agreed, most of the problem on eBay are of eBay’s own making. We in Australia can only put a reserve on items in the Motors section, so that encourages sellers to shill bid even more than might be the case elsewhere …

MissSasha

If ever you have a real legal problem I would get myself another lawyer. What do you think was the legal basis for the many highly publicised prosecutions that have taken place in the past number of years for exactly that, “shill bidding”?

An undisclosed vendor bid is a false representation for the purpose of making a gain and that is fraud. It’s black and white. Frankly, that any lawyer could state otherwise boggles the mind.

 

I haven't been able to find a specific Federal law, either...just a few references to Title 18.

However, I've found quite a few State laws that address "shill" bidding. One of the links I already posted gives a number of prosecutions carried out in New York state.

The common thread in state law seems to be "disclosure". As long as proper disclosure is provided prior to the auction, seller bidding is permitted.

Btw, in the New York State cases, I see the Donnelly Act cited quite often. I see the Federal Sherman Antitrust Act and Federal Trade Commission laws cited on the federal level. Again, it's tough to find specific details.

 

Let’s break that matter down a little further. It does not matter what the activity is called, it’s the result or the intention of the activity that counts.

If you make a “false representation” for the purpose of making a gain, that is fraud. An undisclosed vendor bid on an auction (ie, a vendor bid that is not disclosed as such at the moment that it is made) is such a “false representation,” it not being a bid from a genuine bidder for the purpose of fairly establishing a value on the day for the item up for auction, and such activity is therefore fraud.

I suspect all civilized countries have laws proscribing such activity and even if not I have no doubt that the “common law” would arrive at the same conclusion. The alternative view is that unscrupulous sellers or their agents are entitled to subvert the legitimate purpose of the auction process, ie, the establishing of a market value of an item on the day.

If sellers don’t like the way the auction system is intended to work then they should set a reserve (if able), or set the starting price at the minimum you are prepared to accept, or sell by fixed price (and join the very many other sellers who are selling very little of their listings on eBay). Times are tough but that is no excuse for such fraudulent activity which has become since the introduction of “hidden bidders” so demonstrably rampant on eBay that buyers are staying away.

Ultimately, neither sellers nor eBay can survive without the confidence of buyers …

 

Now let me see, you are saying that American lawyers' opinions are wrong, but an Australian's opinions (who admittedly does not know American law) should be believed. Your opinion that shill bidding is fraud, your opinion that it is against civilized society, your opinion that fraud sets the market price on eBay, and you opinion that fraud on eBay is rampant - all of these you present without one whit of facts to back it up. And, no, because you believe that shill bidding is fraud does not make it a fact.

 

Market sets the price...

I remember back in the early days of Ebay, you could get some outstanding deals on stuff. I wasn't into coins, but I did pick up some hard to get electronics for a great deal.

As time has gone on, enough business folks and non technical people have gotten access to Ebay that it's very difficult to get a good deal at all. It's still possible, but it requires a lot of work and patience. You might as well just go to one of the big online dealers or go local because ebay "deals" are far and few between.

The only stuff I look for on Ebay are items I just can't find anywhere else. Used specialty or other.

Mike

 

So is anyone here going to answer this part, or we just going to pretend this was never written?


stainless

 

​

Now let me see. Your response raises a number of questions that I will put to readers:

Are you seriously suggesting that §1343 “Fraud by wire, radio, or television” does not cover shill bidding on on-line auctions in the US?

Are you seriously suggesting that there are indeed no laws against shill bidding in the US?

Are you seriously suggesting that shill bidding is not fraud?

Are you seriously suggesting that shill bidding is an acceptable practice?

Are you seriously suggesting that it is quite appropriate for a seller to surreptitiously influence the outcome of an auction by placing shill bids?

Did you indeed bother to look at the “facts” in the spreadsheet that I supplied of a random selection of “professional” sellers auctions?

Quote: “… all of these you present without one whit of facts to back it up.” Are you serious?

Your comment contains all the logic that I would expect from that very type of professional dealer selling on eBay of which I am critical …


stainless

I thought that statement was rhetorical. However, the situation of the “auctioneer” anonymously bidding on his own stuff is a corruption of what the English auction system is supposed to be about. If the auctioneer does not want to sell for less than $30 then he should simply indicate that fact, not falsely suggest that there is genuine interest in the item at a higher value. The English auction system is supposed to be a mechanism for fairly establishing a market value for an item on the day, it was never meant to be a mechanism whereby a seller (or his representative) can, by the placing of phoney bids, manipulate the outcome to get the price that he wants. That is fraud—although clearly some will disagree with this concept.

There is, in most jurisdictions, no problem with the auctioneer bidding as long as the bid is disclosed as a vendor bid when such bid is made; in such circumstances the genuine bidders are not deceived: there is no “false representation”.

 

Facts. I see no facts. As for 1343, if you ASSUME that shill bidding is fraud, then it might (but I doubt it), but you have nothing to show that shill bidding is fraud except Australian law.

 

Mr Cohen, may I ask you what we at cointalk have done to draw your ire? Why do you insist on insulting us when we question your flimsy arguments?

RLM - Although I unfortunately can't offer citation, I am fairly sure that internet fraud (Nigerian type scams and whatnot) is prosecuted under wire fraud laws.

 

​

Not one answer to any of the questions I have put to you!​

You see no facts! Do you know what the dictionary definition of a "fact" is?

fact / n.

1 a thing that is known to have occurred, to exist, or to be true.​

2 a datum of experience (often foll. by an explanatory clause or phrase: the fact that fire burns; the fact of my having seen them).
3 (usu. in pl.) an item of verified information; a piece of evidence.
4 truth, reality.
5 a thing assumed as the basis for argument or inference.
​

The spreadsheet that I have presented contains "facts". From those facts some people are capable of drawing certain logical conclusions. Not you, apparently.


Do you know what the dictionary definition of “fraud” is?

fraud / n.
1 criminal deception; the use of false representations to gain an unjust advantage.
2 a dishonest artifice or trick.
​

If you still cannot come to terms with the concept of shill bidding being fraud, can you at least tell me what law was used to pursue those people in the US that have—in fact—been prosecuted in recent years for such activity? Or, are they all currently appealing their convictions on the basis that there is—in fact—no law against shill bidding in the US?

Once again, Your comment contains all the logic that I would expect from either an eBay representative so giddy from “spinning” that he does not know what day it is, or that particular type of professional dealer, selling on eBay, of which I am critical …

Give me a break. If you don’t mind I will hereafter ignore your illogical conclusions. ​

 

Fine, I'll answer:

Are you seriously suggesting that §1343 “Fraud by wire, radio, or television” does not cover shill bidding on on-line auctions in the US?
Yes. I have seen no proof. In the only two cases of prosecution for shill bidding that I've been shown, the defendants were charged with "Combination in Restraint of Trade," under an offshoot of the Sherman Anti-Trust Act. Any lawyer with half a brain could tear that apart.

Are you seriously suggesting that there are indeed no laws against shill bidding in the US?
Yes. Mostly because you haven't shown me anything conclusive. Like a law specifically prohibiting shill bidding.

Are you seriously suggesting that shill bidding is not fraud?
Yes. Its annoying, I know. But for the life of me I cannot see how an auctioneer or auction house should be restricted from bidding while anyone and their mother are allowed to.

Are you seriously suggesting that shill bidding is an acceptable practice?
Not necessarily. You just haven't done a damn thing to convince me its wrong. Other than shout "IT'S FRAUD!" like some mercantile Chicken Little.

Are you seriously suggesting that it is quite appropriate for a seller to surreptitiously influence the outcome of an auction by placing shill bids?
This seems suspiciously like the previous two questions. Please see my earlier responses.

Did you indeed bother to look at the “facts” in the spreadsheet that I supplied of a random selection of “professional” sellers auctions?
You've proved that shill bidding occurs on ebay. I never doubted that. Hell, I never even question that its prohibited on ebay.

Quote: “… all of these you present without one whit of facts to back it up. ” Are you serious?
Stop repeating yourself, please.

 

Ardatirion,​

If you want an understanding of where I am coming from read my linked post on auctionbytes.com and have a look at the spreadsheet of “facts” further linked thereto.​

I’m sorry but I am predominantly a buyer on eBay and I have no time for sellers who appear to believe that shill bidding is an acceptable way to get the price they want on an eBay auction.​