| The act of Shill Bidding is condemned by most who | | | | article. In the interest of ensuring that there is |
| partake in the pleasure of online bidding. This | | | | absolutely no confusion, let's take two steps back |
| unforgivable attempt of artificially raising prices on | | | | and clarify exactly what an 'auction' is. An auction is |
| auction items is not only cheeky, but deviously | | | | when an item is listed for sale (more specifically, for |
| self-serving. | | | | bid) with a set starting price and in some cases have |
| To fully understand the concept of shill bidding, you | | | | a reserve price where the buyer is required to place |
| need to take a step back and ensure that you | | | | bids according to the bid increment set in the auction. |
| comprehend the business of auctions - and for the | | | | Before we get ahead of ourselves, let me clarify that |
| purpose of this article, online auctions specifically. | | | | a bid increment is the value by which each bid placed |
| An auction website is a platform which is best | | | | increases during the auction, and a reserve price is |
| explained as being a virtual shopping channel that | | | | the minimum price that a seller is willing to accept for |
| enables sellers to sell their products to autonomous | | | | an item. A successful sale is concluded when the |
| buyers. Many are of the perception that the auction | | | | minimum required price has been met (otherwise |
| websites themselves are responsible for the sales | | | | known as a 'reserve' price which is set at the seller's |
| process, including stock control, shipping of items and | | | | own discretion). |
| receipt of payment. This is a misconception. While an | | | | Now that we have clarified the relevant auction 'lingo' |
| auction website is a place of trade, the process is | | | | you can appreciate why most condemn the act of |
| very different to an e-tailer (i.e. online retailer) in that | | | | Shill Bidding. It is regarded by most online auction |
| the stock that is sold via online auctions are sourced, | | | | website owners as a deceitful and underhanded |
| sold and shipped solely by the seller who is making | | | | tactic used mostly by conniving scam artists. Each |
| use of the online auction tool to facilitate the sale. It | | | | auction website will have their own set of terms and |
| is easier to explain what 'Shill Bidding' is now that you | | | | conditions, however most reputable online auction |
| know want an online auction website is. | | | | websites have a strict policy against this sort of |
| Quite simply put, Shill Bidding is when sellers place bids | | | | behaviour and would usually blacklist any seller from |
| (whether blatantly or under a disguise) on their own | | | | using the site in future. In some countries, shill bidders |
| listings with the intent to raise the bid price in the | | | | have been criminally prosecuted for Shill Bidding |
| hope that other bidders would feel forced to bid for | | | | where such prosecutions have resulted in both |
| that item at a higher price, thereby artificially inflating | | | | misdemeanor and felony convictions and large |
| the perceive market value or desirably of the | | | | penalties including fines and restitution of damages. |
| product that is on auction. | | | | Online marketplaces rely heavily on the integrity and |
| In some instances a relative or family member living | | | | reputation that is reflected in its community in order |
| with the seller may really want to buy the item that | | | | to become and remain successful. Shill Bidding can |
| is being sold. The reality however, is that these | | | | destroy the credibility of such marketplaces very |
| bidders are in a situation where they are usually able | | | | quickly. Not only does it damage the trustworthiness |
| to communicate directly with the seller, thereby | | | | of the website itself, it completely distorts the |
| creating a unique scenario that is unfair to other | | | | bidding process and hurts the buyer. |
| bidders that do not have direct contact with the | | | | Online auctions are certainly not doom and gloom. In |
| seller. It would therefore not be fair if these potential | | | | fact, one of the beauties of selling products in an |
| buyers were to bid on the seller's price in an auction. | | | | auction is that you allow the market to determine |
| Should a family member or friend genuinely be | | | | the true value of a product, based on the demand |
| interested in purchasing the product, the seller should | | | | and desirability of that particular item, rather than |
| resort to listing the item as a straight-forward sale | | | | dictating to the marketplace what the price should |
| with a fixed price (usually called something like a 'Buy | | | | be. Very often this price exceeds the seller's |
| Now' on the online marketplace). This removes the | | | | expectations - as what the seller may have regarded |
| risk of misleading other potential buyers about the | | | | as trash may very well be considered a treasure to |
| market value of the product, as the price is specified | | | | the buyer, who will quite happily pay an above |
| and can therefore not be inflated at any point in time. | | | | market price for the simple purpose of becoming the |
| By now you may feel a little overwhelmed by the | | | | new owner of that rare find. |
| terminology that has been thrown around in this | | | | |