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eBay Scam: Shill Bidding

Discussion in 'Ebay' started by unity006, Jan 6, 2017.

  1. unity006

    unity006 Newbie

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    eBay Scam: Shill Bidding

    This is a guide for someone who wants to learn more about what shill bidding is and then understand the necessary steps required to protect yourself from being a victim of shill bidding.


    The full video with additional detailed information can be found on ConceptFeed YouTube Channel. (Dont forget to like and subscribe if you find it useful!)



    What is shill bidding?
    Shill bidding is a method of placing artificial bids on an eBay auction in order to generate false sense of competition in the hope of increasing the price of the auction. Needless to say this practice is both illegal and is against eBay rules. In 2010 there was a first criminal case of a UK seller taken to court to receive a £5,000 fine and 250 hours community service for shill bidding.



    Who does shill bidding and why?
    Shill bidding scam is done by the seller and there are three reasons:


    1. Seller wants to avoid the reserve fee:
    eBay charges a 4% fee on reserve prices and some sellers choose to work around this by placing a fake high bid on their listing. For example if a seller is selling a smartphone and wants to start the auction at 99p with a £400 reserve, there will be a 4% of reserve (£16 fee) for reserve functionality alone. The seller is avoiding this fee by starting the auction at 99p and putting a fake bid of £400 at some point during the auction, this way seller gets his “reserve” but does not pay any fee.


    2. Seller wants to generate more traffic to their listing:
    By starting the auction at 99p any listing will get more traffic, it is a proven fact, eBay also puts auctions with low prices higher in the search results. This traffic can either be used to promote sellers other listings or start a bidding war if a high value item is being sold in auction format at 99p start. More traffic can mean more potential buyers and a high chance of a “bidding war” starting. These bidding wars often result in item selling for the higher end bracket of the typical price. However if the bidding war does not start the seller can always put in his “fake reserve” bid and prevent his expensive item selling cheap.


    3. The seller wants to get a higher final auction price:
    The seller is looking to maximize his profits and therefore will log into another eBay account and bid on his own listing to increase the price. The seller will often bid up in small increments to increase the bid to just below the maximum bid of the real bidder, or outbid the real bidder by a small amount to encourage the real bidder to bid higher amounts.



    How to detect shill bidding?
    There are numerous ways to detect shill bidding. However no way is 100% guaranteed to provide concrete evidence due to the limited information that is available to an eBay end user.


    1. The first and most obvious is check sellers feedback for any Neutral or Negative reviews with comments relating to shill bidding. Obviously avoid any seller who has such reviews in their feedback history.


    2. Check the bid history of an auction and the bidders who are participating in it. This will allow you to see some limited information about the various bidders that are participating in the auction. Two very important metrics are as follows:
    Bid activity (%) with this seller – most sellers who commit this fraud are too lazy to make new fake accounts so they will likely use the same fake account to repeatedly bid on their own items. However also review how many items in total the seller has bid on. If he bids on many items and the bid activity value is high e.g. close to 100% this gives a high chance shill bidding activity occurring. However if the bidder has 100% bid activity with this seller and he only bid on one item, this of course does not give any solid evidence of shill bidding.
    Bid retractions (6 months) – this metric can also highlight shill bidding activity, because fake bidder will often outbid the highest bidder to check what his maximum bid is and then bid again, just below this amount to push the price all the way to the maximum amount. This will be logged in his bid retractions history. High number (anything over 5) indicates highly suspicious activity and can be good evidence to indicate shill bidding.


    3. Check sellers sold items history. If the seller is selling the same unique item time after time it may suggest he is winning it himself with his fake account and then simply relisting it. In other words his “reserve” is not being met time after time. But really do make sure it is the same item, such as is if it is a used item, does it have same photos and wear marks in same places, or if the product serial number is shown, is it the same number, etc.



    How to avoid being a victim of shill bidding?
    Luckily it is very easy to avoid shill bidding. Here are the actions you need to take:


    1. Research the price of whatever item it is you are thinking to bid on. You can do this by checking up the sold listings. eBay allows all users to see any eBay listing that ended in the last 90 days. Simply use eBay search and type in the item name you are interested in, when results come back look along left column and tick “Completed Listings”. The page will refresh again and only sold listings will be shown. Look among them and try and work out the average selling price of the item you are looking to buy. However if you are buying something unique which is not often on sale it may be hard to find the average selling price. In this situation you need to simply think about what your budget is for this item and set a figure in your mind.


    2. Now the easiest way to avoid shill bidding is to never bid until the very end of the auction. Literally bid in the last 7 seconds of the auction. This way the seller will not have enough time to react and bump your bid up. Do not bid more than your researched or average price if you want to avoid overspending.


    3. If you do not have time to sit around and wait until the auction ends. This is especially useful if the auction ends at an inconvenient time, such as 3am. You can use an auction sniper. This is a program which places the bid for you in the last few seconds of the action. Great news is that it is absolutely free and safe and you do not even need to download anything. One such service is Gixen. Having personally used it for years it never fails.


    What to do if you won the auction and suspect shill bidding?
    If you are in a situation where you won the auction and suspect shill bidding has taken place you should not pay the seller unless of course you do not care and are happy with the price. You need to take the following steps:


    1. First research the facts by following the steps we provided earlier in the video. If there is good evidence suggesting shill bidding, contact the seller and inform him that you want to cancel the purchase because you suspect him of shill bidding and state your evidence, such as there being other bidder who has high amount of bids with this same seller or whatever other evidence you have. Usually the seller will get scared because he will see that you are not an average user and you are well informed. He will cancel the listing.


    2. If the seller does not cancel the listing he may try to open an unpaid item case against you later. You do not want an unpaid item strike so contact him again and tell him that unless he cancels the sale you will report him to eBay as well as his local police and or online fraud department. For good measure you can send him the following link so he will know what is coming.


    3. By this point the seller will usually get very scared and cancel the listing. If he still does not do that and proceeds with doing the unpaid item case, call eBay customer support and inform them of all the information you have. Try to get the customer support person to connect you with one of the supervisors as this yields better results. To do this keep saying that you do not feel that the customer support person has dealt with your enquiry efficiently enough and you wish to speak to the supervisor, usually it works and they will connect you.


    Hopefully this information is useful to those who are interested in protecting them from this eBay scam.


    Regards


    ConceptFeed.
     
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  2. Sam Green

    Sam Green Junior Member

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    Nice guide, but random question you mentioned a 2010 UK court case. What law was broke exactly? I can't think of any US laws that forbid this sort of activity outside of the Ebay TOS.
     
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  3. NicholasVegas

    NicholasVegas Regular Member

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    CL and Ebay have always been a place where you need to watch out for scammers.

    [​IMG]
     
  4. unity006

    unity006 Newbie

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    I believe the laws that were broken were made in 2008 and they are:
    • Business Protection from Misleading Marketing Regulations
    • Consumer Protection from Unfair Trading Regulations
     
  5. John Kabalski

    John Kabalski BANNED BANNED

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    How would shill bidding work if the product you are trying to sell is not getting enough exposure or interest anyway?