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