Artificially driving up prices? (Shill bidding)

[WilliamIam]

Hey, I was looking at some razors last night - two I really liked.
I bid on one and am waiting to bid on the other.

The one I did bid on, I set $43 as my max bid. Only two other people bid on it. One bid a single bid of $16, but the other bid about 12 times and only by a dollar or two more each time. It wound up with the bid at $36.

Does that sound like fake bids to anyone else? Or am I imagining it? I had another instance where I bid on something and within the last minute, another account bid within two dollars of my max bid and jacked the price up to triple what it was before. I won the auction then, but it was just like they used a fake account to make sure they got a minimum amount.

Thoughts?

 

[Gustav]

I am convinced that foul play is responsible for a lot of the outrageous prices on ebay. I have a daughter on 10 months and now and again I have been at prams which close to bid closing skyrocket to up to 80 % of the new retail price. Who the hell is stupid enough to buy a used pram at 80% of the price of the new price without the breakage guarantee or the replacement pram guarantee. This is just an example but what is to stop a bunch of people colluding to drive up the price of a product? The only thing they stand to loose is the ebay fee. It is probably difficult to trace and ebay has no interest in stopping it since they earn money on all transactions.

 

[Harvey]

some people are addicted to "winning" on e-bay and do mess around. I find the only way to keep prices down is not to bid too early. If you do you might raise the price yourself. Watch the article and don,t bid until close to the end. If you really want it bid $5.00 higher just at the end (last minute) because most people bid in 0.50 cent amounts. It is a game and if you miss out search specific like "Gillette Red tip" or Star Safety razors and there is other listings ie Gem, ...., Rolls...safety razors under collectibles.

 

[Slash McCoy]

Hey, I was looking at some razors last night - two I really liked.
I bid on one and am waiting to bid on the other.

The one I did bid on, I set $43 as my max bid. Only two other people bid on it. One bid a single bid of $16, but the other bid about 12 times and only by a dollar or two more each time. It wound up with the bid at $36.

Does that sound like fake bids to anyone else? Or am I imagining it? I had another instance where I bid on something and within the last minute, another account bid within two dollars of my max bid and jacked the price up to triple what it was before. I won the auction then, but it was just like they used a fake account to make sure they got a minimum amount.

Thoughts?

Well, of course it is possible, but this is also pretty typical bidding. Some guys will wait until the last few seconds to put in their bid, hoping that nobody has a higher max bid and that nobody will have time to outbid.

The secret is to simply bid only as much as you think an item is worth. If it is shill bidding, the item will be offered again. If someone legitimately outbids you, you still have your money. Be patient. Another one will be out there sooner or later.

 

[Joe Edson]

I've noticed some weird bidding on eBay, but like above I think some people are addicted to winning on eBay. I buy a decent amount of blu-rays and mainly look at eBay and amazon. What always gets me is when I see a used blu-ray go for like $10 more on eBay than you could get by buying the new one on amazon.

That said, I think shill bidding is probably rampant on eBay. If you suspect it you can look at the bidders history and see how many times and what % they have bid on the sellers items. If it is fairly high, you can report it to eBay, but that is about all you can do.

 

[natchez]

As noted above, there is indeed the possibility of using a shill to bid up items. The way it works is to have someone else bid your item up for you against true unrelated bidders. If your shill wins, you lose only the listing fee. If your shill bids it up and an unrelated party wins, you make more than you would have otherwise.

EBay does have a policy against this: http://pages.ebay.com/help/policies/seller-shill-bidding.html They also have programs in place to try and detect these type of actions, but it is hard to police. The same type of activity occurs at live auctions. It is an old game; just a newer format. It is also illegal in some jurisdictions.

The other possibility for your auction was that a person had a price in mind and was trying to flesh out the current top bidders limit. If it is an unrelated person, there is nothing really wrong with this process.

The most effective strategy is to use bidding software, like Auction Sentry, to bid for you in the last few seconds and try and snipe the item.

Just as an aside I recall reading a study some time back that found prices for comparable items ending on weekends and evenings are higher than that of items ending at other times.

Remember, caveat emptor

 

[johnmrson]

If you only bid as much as your willing to pay then it stops prices being forced up. Sellers will end up not selling anything and will soon get the message.

 

[Patrik]

I'm not sure if this is honorable, but I find the only way I can ever win anything is by bidding my max bid in the final seconds of an auction. I wouldn't leave that task up to software - I do believe I'd end up incurring the wrath of SWMBO.

Bidding early seems pointless to me, unless you can afford to put in a crazy high max bid - which you're likely to end up paying since other bidders will inevitably drive the price up.

 

[Freedom]

I have to agree with the above post, I decide what my max price is and bid it in the last 15 seconds, so if what I posted is the max amount great, if not then I don't have time to bid again and I lose it.

Every time i have bidded early on an item (not at home at the finish time) I have either lost it or paid the maximum amount of my bid and I'm sure foul play must be at foot because this has happened multiple times.

 

[SliceOfLife]

Shill bidding the lazy way happens to me a LOT. I bid a very high price on an item I really want (most recently a Fil 14 in sterling silver scales). Last second I get outbid, nothing strange in that. Then a few minutes or maybe an hour later I get a second chance offer from the seller. For my max bid (rather than the price that it would have been, the next highest bidders bid +$2.50) of course.

Needless to say I usually pass on principle.

 

[Desdinova]

Shill bidding the lazy way happens to me a LOT. I bid a very high price on an item I really want (most recently a Fil 14 in sterling silver scales). Last second I get outbid, nothing strange in that. Then a few minutes or maybe an hour later I get a second chance offer from the seller. For my max bid (rather than the price that it would have been, the next highest bidders bid +$2.50) of course.

Needless to say I usually pass on principle.

it's a gamble for buyer and seller.

I agree with you that you should walk on principle. What I have noticed is that shill bidding has increased exponentially since eBay went to the anonymous bidder set-up. Now you can't see if the other bidder is an established, long-term buyer with no wins on their record (an obvious shill account) versus a new buyer that just bids $1 at a time versus throwing in their highest bid right away.

 

[michiganlover]

I don't think what the original poster witnessed was necessarily an example of shrill bidding. I think it was the bidding of someone using a Automatically bidding service, which bids only at the last few seconds, which is why the winning bid is typically only a few cents higher than your max.

The nature of Ebay, is that it is entirely pointless to bid until the last few minutes of an auction. Any bids before that just falsely drive the price of the item up.

This is why you will see an item you are watching, that has gone zero bids throughout the auction, all of a sudden have 20+ bids by the time the auction finishes, with the vast majority of those bids happening in the final seconds.

A item with zero bids doesn't necessarily mean there are not 100 people watching it.

 

[taffy]

Yep, decide your max price and bid late, if someone bids early others follow shooting up the ptice, this happens with any item on the bay, the number of times i see someone buying a fender guitar for a lot more than what you can get a new one for, and i am not talking about vintage fenders here, beats me.

 

[mparker762]

I've seen legitimate bidders bid like that, basically they're trying to bid as little as possible to win the item, instead of just bidding what they're willing to pay. I don't know if it's because they're uncomfortable letting ebay's computers do the bidding for them, or what their problem is. But it isn't necessarily shill bidding, although it certainly *could* be. Your other examples sound like ordinary sniping to me. It annoys guys that see their winning bid up there day after day, then suddenly they lose at the last moment. But that's just the breaks.

What I've seen happen with shill bidding is the shill will bid up in small increments like you describe until he exceeds your max bid, then retracts his last bid, leaving you paying your max. This happened to me a few years ago (before the new anonymous bidding scheme) and it was obvious what happened because the suspicious bidding was done by a new account. They made me pay the seller and wait 15 days after the auction ("to give the item time to arrive") before allowing me to file a complaint about the shill bidding, and though they canceled the shill account (big deal it was clearly a newly created throwaway account) they did nothing at all to the seller. After that I switched to a sniping program, which reduces a shillers opportunity to hit my pocketbook. I can still get hit if a shill bidder targets an earlier bidder with a lower max bid than mine, but I try to check a few minutes before closing and cancel the snipe if there's evidence that a shill bidder has been working the auction. This is another advantage of sniping programs, you can modify or cancel a snipe at your discretion without sending up flags on ebay.

And I never, ever, take up a seller on a second-chance offer. Maybe he's shilling, maybe he isn't, but it's a major warning sign to me.

 

[Joe Edson]

Shill bidding the lazy way happens to me a LOT. I bid a very high price on an item I really want (most recently a Fil 14 in sterling silver scales). Last second I get outbid, nothing strange in that. Then a few minutes or maybe an hour later I get a second chance offer from the seller. For my max bid (rather than the price that it would have been, the next highest bidders bid +$2.50) of course.

Needless to say I usually pass on principle.

Ahh, I love the second chance offers hours after the auction ended. I like you will pass on these and make sure to never buy from seller again. This is an obvious shill bid when that happens.

 

[pz93c]

On the flip side of this, I have sold an item, some dude won it then said he didn't want it. Said it wouldn't fit.

Ended up reauctioning the item. Like y'all, the runner up declined the second chance.

Alot of new bidders go up like that, thinking it's only a buck more..... I'll bid again. I know I did, back in 2002.

 

[Robxcarlson]

Ahh, I love the second chance offers hours after the auction ended. I like you will pass on these and make sure to never buy from seller again. This is an obvious shill bid when that happens.

While second chance offer might be fishy on a vintage item. I have had sellers who auction new items offer me a second chance offer for my max bid when I've been outbid and lost the auction. It simply means they have more than one on hand and are willing to accept my bid even though I wasn't the highest in that auction. Not really any cause for alarm in that scenario.

 

[bluefoxicy]

That's a stupid second chance algorithm. Let's look at bids:

• $1
• $5
• $8
• $11
• $15
• $25
• $28

Now, if someone between the $8 and the $11 bid bids $10, the price goes up to $10 but the earlier bidder (who put $11) keeps the bid (so the "current bid" is $11). When the $15 bid goes in, the bid is now $15; the sale will be for $11.50 of course, unless someone later bids like $13.

So, when you bid $25, you'll win the item for like $15, right? Except someone bids $28, then rescinds, then you get a "second chance."

Now here's the dilemma: what "second chance" do you get?

In the one hand, you could get a "second chance" at $25, your max bid. This is stupid. This is blatantly stupid; you're now affected by an invalid bid, and that bid should be ignored.

Following this logic, we immediately determine that we can rebase the problem: discard the rescinded bid. Now we give you your $25 item at whatever the prior bid left it at, which is say $15. Right?

This leaves another dilemma.

If several bidders tried, pushing the price to $22 before the rescinded bidder threw $28, then obviously, we give you the item for $22 (since you're still offering up to $25). However, what if the result was a bid war between you and the prior bidder?

One school of thought could say that well, maybe we'll discard the bid war. That creates odd forms of collusions between buyers though.

The most obvious solution would be to put some of the focus on the buyer, but this is still not complete. Say, if you bid $25, and they bid up $18, $20, $22... and then rescind, we yank all their bids between your top bid and whatever previous bid was made by ANYONE else, including you. So if they outbid you, and you bid higher, and then they start walking up to your bid, well... then you get your item at your prior bid, not at the price you would have before they got in the game.

I could point out holes in this logic, psychological effects of bidding, time constraints... I could go on, but there's no real solution. All considerations presented, for example, don't account for a second shill. Still, the solution of "offer at the final bidder's max bid" is stupid.

 

[Uncle Erik]

I usually throw in the most I'll pay a few days before the auction ends. Sometimes I'll win, sometimes not. But I'm *not* going to wait around to bid at a particular time or employ a bid program. If a second chance smells fishy, I decline.

Also, I wish that bids received in the final hour would extend the closing by two or three minutes. That would make sniping irrelevant and would also function more like a real auction.

 

[mparker762]

Also, I wish that bids received in the final hour would extend the closing by two or three minutes. That would make sniping irrelevant and would also function more like a real auction.

And would give shills time to work their magic on those snipes.