Is it legal to be a shill bidder?

[bushmaster1313]

I have often wondered how sellers have the guts to put excellent guns up for sale with no reserve and a penny for the starting bid.

It makes me think that they have shill bidders making sure the item does not sell for a song.

Does not bother me because I only bid what I am willing to pay and "Buyer Beware".

However, is shill bidding legal?

 

[belercous]

"Shill" bidding has a legal name; "Puffing." It is illegal.

 

[o Unforgiven o]

"Shill" bidding has a legal name; "Puffing." It is illegal.

I understood "puffing" to be exaggeration by a seller. I think you have your "legal names" confused.

 

[langenc]

I guess I was a shill once.

The local Boy Scout troop was having an auction to raise money to go to Philmont reservation in NM.

I was bidding on a new microwave oven-donated. I really didnt want/need it. I thought the other guy would go $5 more-he didnt-I bought it for $145.

 

[belercous]

The seller is in cahoots with the shill bidder. Bidding an item up when one does not intend to actually make the transaction is puffing in the eyes of the law.

Puffing also can mean (legally) a seller exaggerating his product; "sales talk."

I referenced Black's Law Dictionary, 5th Ed. (an older book, but I'm sure the legal deinitions haven't changed.)

 

[bushmaster1313]

As I recall, "Puffing" is advertising something as "the Best" when everyone knows that to be just "Puffing".

Shill bidding is getting someone to bid up an item that you are selling pretending to be a real bidder.

 

[o Unforgiven o]

The seller is in cahoots with the shill bidder. Bidding an item up when one does not intend to actually make the transaction is puffing in the eyes of the law.

Puffing also can mean (legally) a seller exaggerating his product; "sales talk."

I referenced Black's Law Dictionary, 5th Ed. (an older book, but I'm sure the legal deinitions haven't changed.)

I just checked Black's Law Dictionary, and found "puffing" to be described as;

The expression of an exagerrated opinion -- as opposed to a factual representation -- with the intent to sell a good or service.

 

[belercous]

Black's Law Dictionary, 5th ed. (2nd defintion) defines Puffing as; "Term also describes secret bidding at an auction by or on behalf of a seller." See Feaster Trucking Service, Inc. v. Parks-Davis Auctioneers, Inc. 211 Kan. 78, 505 P.2d 612, 617.

Black's Law Dictionary, 5th Ed. defines "Puffer" as; "A person employed by the owner of property which is sold at auction to attend the sale and run up the price by making spurious bids."

 

[bushmaster1313]

The question is whether or not is is legal to shill for someone, or to solicit a shill, for a gunbroker auction?

 

[Ash_J_Williams]

I'm not sure why we're arguing the definition. The word isn't the issue, we all know the practice we're discussing.

Depending on the website, you CAN end the auction early, even if it has bids. I'm unsure how sellers do so on GunBroker, but on Ebay, if I have an item that doesn't seem like it'll reach a price I'm willing to sell it for prior to 12 hours before the end of the auction, I'll unlist it, even with bids. It's my property, and especially in the case of selling something for drastically less than it's worth, I owe no one anything of mine.

ONLINE shilling isn't "illegal," but it may be against the auction site's terms. If Ebay catches you, for example, they may threaten to freeze or block your account. That said, there are sellers (especially in the guitar sale area, such as ReliableFender) who obviously use shill bidders or they'd be selling stuff for nothing all the time, and they haven't been banned yet.

As far as shilling at an auction house, I don't know, but I see the families of the person who's property is being auctioned doing it all the time, sometimes in hopes of getting more money from it, and sometimes, when the money isn't going to them and their loved one's property is being repossessed, out of spite.

 

[belercous]

Puffing/shill bidding is illegal in most, if not every state. I was just giving the legal term used for such practice. The legal profession calls shill bidders puffers.

If an auction crosses state lines (as online auctions do) then federal law gets involved. The UCC prohibits the practice and is federal law.

 

[bushmaster1313]

The UCC prohibits the practice and is federal law.

The UCC is just a compendium of what certain lawyers who thought they knew something said the law should be.

Many of the compilers knew nothing of the subject they worked on.

Many states have enacted most if not all of the UCC as their state law.

I was not aware that the UCC has been adopted by Federal Law.

 

[Ash_J_Williams]

Puffing/shill bidding is illegal in most, if not every state. I was just giving the legal term used for such practice. The legal profession calls shill bidders puffers.

If an auction crosses state lines (as online auctions do) then federal law gets involved. The UCC prohibits the practice and is federal law.

It's also incredibly hard to validate. If someone is willing to pay in the case that they win, it's difficult to prove that they were only doing so to increase the bid, unless that's their express and only purpose at that auction.

Again, online... not so much, and judging from the OP's post, I assume he's talking about those.

 

[belercous]

It certainly is hard to prove puffing in an auction. In the case of online auctions it gets easier. Track previous auctions of the seller & the suspected puffer's bidding activity. Also check how far apart the two live. See if the seller relisted the same item at a later date (after it was supposedy sold to the suspected puffer).

That's only circumstantial evidence one says. Yes, it is. Circumstantial evidence is enough to convict someone of murder. Finger-prints and DNA are circumstantial evidence. Direct evidence is an eye-witness. Circumstantial evidence is often stronger than direct evidence.

 

[ArtP]

I'm not sure why we're arguing the definition. The word isn't the issue, we all know the practice we're discussing.

Depending on the website, you CAN end the auction early, even if it has bids. I'm unsure how sellers do so on GunBroker, but on Ebay, if I have an item that doesn't seem like it'll reach a price I'm willing to sell it for prior to 12 hours before the end of the auction, I'll unlist it, even with bids. It's my property, and especially in the case of selling something for drastically less than it's worth, I owe no one anything of mine.

Can I correct you? Shill bidding involves a partner who bids on your behave to drive up the price. The partner never buys the item, yet drives the price up to those who *will* buy -- better be careful the Shiller had better not be the winner.

Can I also correct your practice?

If a seller lists an item with a minimum bid, they're letting the market determine the proper price for the item to sell for. With a minimum opening bid, you're choosing to let the market decide the price. It's simple economics. Low seller vs. high bidder.

If you -- as a seller -- withdraw your item, because it doesn't garner the attention you think your item deserves, it SHOULD cause you to lose credibility. IMO you should let the item sell for "market value" -- unless you stated a starting price.

IMO, you should lose a considerable amount of credibility for offering an item -- then retracting it. Make a starting price you're willing to sell for.

The easy way to make all parties happy is to make a starting bid at the smallest price the sellers is willing to let it go for.

Look ladies, if your item doesn't get the dollars you want, it's either just not worth it, or you have your item on the wrong site.

 

[bigfatdave]

The question is whether or not is is legal to shill for someone, or to solicit a shill, for a gunbroker auction?

Let me get this straight, you want there to be a govermental intervention in private business between citizens?

Smacks of Authoritarianism somehow ... most of us don't need or want big daddy government to come interfere in every little thing we do.

 

[WardenWolf]

It is, in its simplest form, fraud, and would be considered theft because you are causing someone to pay more than they would without your intervention, particularly on sites that autobid up to your maximum amount. So yes, it is illegal. And since it involves interstate commerce, Federal racketeering laws come into play.

With online auctions, shill bidding is stupidly simple to do and get away with. If the shill wins, no money changes hands and the seller is simply left paying the auction fee. Not ideal, but certainly better, in their eyes, than selling it for far too low a price. The shill bidder does not need to live anywhere near the seller.

The best way to detect a shill bidder is to check auction histories. If you see a lot of interactions between two users, for items that would normally be one-time-only type transactions, you probably have a shill bidder. For example, the same person has left feedback or won auctions for several different rifles from the same seller. This is abnormal behavior. Normally a person on an auction site would go with whoever had the best deals on a particular product and thus not make a lot of repeat purchases from the same seller. When you see lots of repeat purchases on unique items, that's your red flag.

 

[JohnBT]

"if I have an item that doesn't seem like it'll reach a price I'm willing to sell it for"

You knew the minimum you'd take, why not start the bidding there and quit wasting peoples' time?

John

 

[dogtown tom]

Ash_J_Williams: ....on Ebay, if I have an item that doesn't seem like it'll reach a price I'm willing to sell it for prior to 12 hours before the end of the auction, I'll unlist it, even with bids. It's my property, and especially in the case of selling something for drastically less than it's worth, I owe no one anything of mine....

Not only unethical, but a violation of Ebay policies.

Please do a bit of research and learn what a "reserve" means in an auction.

Unbelievable.:banghead:

 

[vanagon40]

Shill bidding is specifically prohibited on gunbroker and ebay (and I would suspect it is also prohibited on other major auction sites, although I have not searched for the specific prohibition). I am not certain whether it is a violation of any federal or state law, but I suspect it would be rarely (if ever) prosecuted.

As for no reserve auctions, I suspect the seller is willing to accept the final bid and trusts the bidding process to garner a fair price. With the few items I have sold on ebay (I have never sold an item on gunbroker), I usually use a no reserve, one cent auction and have not had a problem with my item selling for a fair price. Personally, I believe such an auction has a tendency to produce a higher final price as the potential buyers become more “attached” to the auction item, having made a “winning” bid in the early stages of the auction. The potential buyer already has a sense of “ownership” that does not exist when the bid result is “reserve not met.” Of course, I could be completely wrong, but that is my speculation and reason for not using a reserve auction.

 

[bikemutt]

I believe one of the reasons that may be selected for ending an eBay auction early is the "item is no longer for sale". There could be many reasons why that may be the case; it broke, got stolen, sold it to my Dad, or I just no longer wish to sell it. In any event, I don't believe it's against eBay policy to do so. It's not necessarily unethical for a seller to change his mind.

I don't care for reserve auctions because every time I've done one I get the endless inquiries as to what my reserve price is. Now I just enter the minimum starting price I'll accept and let it rip from there. If the item is also for sale locally, I'll state that in the description.

 

[brickeyee]

Do not get caught shilling in Virginia.

See (4).

http://lis.virginia.gov/cgi-bin/legp604.exe?000+cod+8.2-328

§ 8.2-328. Sale by auction.

(1) In a sale by auction if goods are put up in lots each lot is the subject of a separate sale.

(2) A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner. Where a bid is made while the hammer is falling in acceptance of a prior bid the auctioneer may in his discretion reopen the bidding or declare the goods sold under the bid on which the hammer was falling.

(3) Such a sale is with reserve unless the goods are in explicit terms put up without reserve. In an auction with reserve the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time. In either case a bidder may retract his bid until the auctioneer's announcement of completion of the sale, but a bidder's retraction does not revive any previous bid.

(4) If the auctioneer knowingly receives a bid on the seller's behalf or the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. This subsection shall not apply to any bid at a forced sale.

(1964, c. 219.)

As for government involvment, they already set weights and measures, certify scales, and

http://lis.virginia.gov/cgi-bin/legp604.exe?000+cod+15.2-1114

§ 15.2-1114. Auctions; pawnshops; secondhand dealers; peddling; fraud and deceit in sales; weights and measures.

A municipal corporation may regulate the sale of property at auction; may regulate the conduct of and prescribe the number of pawnshops and dealers in secondhand goods, wares and merchandise; may regulate or prohibit peddling; may prevent fraud or deceit in the sale of property; may require weighing, measuring, gauging and inspection of goods, wares and merchandise offered for sale; and may provide for the sealing of weights and measures and the inspection and testing thereof.

(Code 1950, § 15-77.30; 1958, c. 328; 1962, c. 623, § 15.1-866; 1997, c. 587.)

 

[Bubbles]

I don't care for reserve auctions because every time I've done one I get the endless inquiries as to what my reserve price is. Now I just enter the minimum starting price I'll accept and let it rip from there.

Exactly, though once there are bids if someone local wants it we tell them that they have to go through GB.

 

[Ash_J_Williams]

Can I correct you? Shill bidding involves a partner who bids on your behave to drive up the price. The partner never buys the item, yet drives the price up to those who *will* buy -- better be careful the Shiller had better not be the winner.

Yes, I understand what shill bidding is.

Can I also correct your practice?

If a seller lists an item with a minimum bid, they're letting the market determine the proper price for the item to sell for. With a minimum opening bid, you're choosing to let the market decide the price. It's simple economics. Low seller vs. high bidder.

If you -- as a seller -- withdraw your item, because it doesn't garner the attention you think your item deserves, it SHOULD cause you to lose credibility. IMO you should let the item sell for "market value" -- unless you stated a starting price.

IMO, you should lose a considerable amount of credibility for offering an item -- then retracting it. Make a starting price you're willing to sell for.

I appreciate your opinion, but as Ebay permits this behavior, and the only way to track someone's "credibility" is their feedback rating, which can only be placed by someone who had a completed transaction with a seller, the point is moot.

I generally let an item run it's course, but if someone is hoping to get an item for hundreds less than it's worth during a time of low traffic or when an item otherwise just isn't getting noticed, sorry, it's still my personal property and I'm not in the business of charity.

Until that auction is complete and there is a definite buying party, the only "parties" involved are the seller and Ebay.

Look ladies, if your item doesn't get the dollars you want, it's either just not worth it, or you have your item on the wrong site.

Calling a group or individual that you know, or can assume to be, mostly or entirely male is nothing more than patronizing, and really doesn't make your opinion or contribution to a discussion seem any more credible. In other words, you come off as a jerk. You might want to see to that.

 

[Ash_J_Williams]

Not only unethical, but a violation of Ebay policies.

Please do a bit of research and learn what a "reserve" means in an auction.

Unbelievable.:banghead:

I understand what a reserve is. They also turn away the majority of bidders. Plain and simple, sellers avoid reserves for three reasons:

1. They put off a large number of bidders. I generally assume a reserve is higher than I'd be willing to pay.
2. Combative, back-and-forth bidding is what a seller hopes for. This is less likely at the seller's lowest willing value of sale, and more likely when the auction STARTS low, even if it soon gets higher. Low starting prices attract watchers, plain and simple. Reserves do the opposite.
3. A reserve doubles your listing costs, just about.

I'll let someone else below counter the rest of your statement, because all I would do is essentially repeat them.

I believe one of the reasons that may be selected for ending an eBay auction early is the "item is no longer for sale". There could be many reasons why that may be the case; it broke, got stolen, sold it to my Dad, or I just no longer wish to sell it. In any event, I don't believe it's against eBay policy to do so. It's not necessarily unethical for a seller to change his mind.

I don't care for reserve auctions because every time I've done one I get the endless inquiries as to what my reserve price is. Now I just enter the minimum starting price I'll accept and let it rip from there. If the item is also for sale locally, I'll state that in the description.

The "item is no longer for sale" is most often used by sellers who have storefronts, as well. I sell the majority of my stuff (musical instruments, usually) on forums. Because of the high fees, Ebay is my last ditch effort. If someone else wants it while it's on Ebay, I sell it to them and unlist it. It's my property, that's my right, and it's in no way against Ebay's policies. That's why the option is there.

All this said, we're getting pretty off topic, and talking about two very different policies (shill bidding vs removing listings).

"if I have an item that doesn't seem like it'll reach a price I'm willing to sell it for"

You knew the minimum you'd take, why not start the bidding there and quit wasting peoples' time?

John

Plain and simple, low starting prices garner interest. Usually, it'll result in the item being pushed higher than the lowest price I'd be willing to sell it for. On rare occasions, though, people just aren't looking for what I've listed, and that doesn't happen. In that event, I have the right not to sell my personal property for pennies on the dollar. There's a significant difference between a real-world auction and Ebay; Ebay's lack of interest in holding any buyer to their highest bid, or any sale at all, and the inability to leave negative feedback against buyers is a perfect example of that.