What Is Auction Bid Shilling?

Rons-Blog

 

You may be asking, “What is bid shilling with regards to auctions?” Bid shilling is when the sellers has an individual or several people, bid on an item for the sole purpose of driving up the price. The bids are false and the shill bidders have no intention of buying. Again, the purpose is to drive up the selling price by forcing interested bidders to bid higher. It is very difficult for the average bidder to determine whether or not he or she has been the victim of a shill scam.

I recently read in a national publication that a large on-line only auction company was being sued for bid shilling.  I suspected this as a client of mine asked me to bid on a property this company was auctioning on-line. It was for one of his employees.  The local realtor told me that they had zero showings and no interest from anyone in this property which was located in a very rural area.

The incremental bidding was initially at $5,000. In other words, if I bid x number of dollars, for someone to upset my bid, their bid had to be at least $5,000 higher than my bid. After registering and placing my initial bid, you would think everybody and their brother wanted this piece of property, which was a mobile home on 1 1/2 acres.

Every time I placed a bid, someone would out bid me immediately. At one time, the bid increased by $10,000. “What is going on?”, I asked myself. No one had shown any interest, now there appears to be a lot of interest.  Looked like bid shilling to me but I couldn’t prove it in a thousand years.

With more and more companies, including ours, moving to or making on-line auctions available to their buyers, bid shilling will become more of a concern for many buyers. Bid shilling can even takes place at live auctions.

Keep in mind that sellers or their representatives can bid on their own items when it is disclosed to the crowd. If it is not disclosed, then it is often illegal, and unethical.

Shill bidders bid on everything their friend has to sell, showing you that they have no interest in any one category or set of categories. If you suspect someone is merely increasing their bid just for the sake of driving up prices, report this to the auctioneer or one of his or her assistants. You’d be doing everybody a favor.

Can you ever withdraw your bid before the hammer falls, viz., the bidding is closed or the auctioneer cries our “SOLD!” Typically when you start bidding you have entered into a contract according to Terms and Conditions of the auction, therefore you cannot retract it.

However, you can retract it if circumstances justifies it. For example you heard a wrong number called out or perhaps the item you were bidding on is not the same item that was advertised. While these situations do occur, they are rare.

If you have questions, call us at 252-257-4822.

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