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Article #313: The Evil Act of Shill Bidding

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






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