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eBay Sellers Power Their Own Sales

I've got a feeling that this is a widespread problem at eBay.

ALBANY, N.Y. (AP) - Eight eBay sellers were ordered to pay nearly $90,000 in restitution and fines after admitting they bid up products online to inflate the prices.

New York Attorney General Eliot Spitzer said more than 120 people will receive restitution in the settlement of the three cases, which wrapped up last week in state courts.

Spokesman Darren Dopp said the cases stemmed from specific complaints, but the office has not conducted a broad investigation of the online auction industry and doesn't know how widespread the practice of phony bidding is.

One buyer, Brad Clarke, 48, of Peachtree City, Ga., already has received a check for $3,089 after overpaying for a 1999 Jeep Cherokee sport utility vehicle he bought on eBay from a New York seller in 2002.

"I'd always been suspicious because it seems like an easy thing to do, to just keep bidding up," Clarke said. "But I was still just completely shocked and very surprised."

I'm neither shocked nor suprised...


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Comments (29)

I have bought a few small i... (Below threshold)

I have bought a few small items on eBay and even sold a couple. It only took about 20 seconds to conceive of the idea of creating a dummy account to bid on items I was selling.

It only took about 3 seconds to decide not to do it.

Yeah, I've been on the rece... (Below threshold)
meep:

Yeah, I've been on the receiving end of some "second-chance" wins. Someone outbid me, and I raised my bids once...but then I hit my limit. Lo and behold, I found myself the actual winner of these auctions, and as all these were of the same type of item (hand-designed cufflinks) from the same seller... I was suspicious and rejected these offers.

Sure the "high bidders" on these auctions all had different user names, but the chances that 3 separate people reneged on their bids a few scant minutes after bidding closed? It is to laugh.

In any case, I've been more careful in researching the backgrounds of both buyers and sellers at eBay. There are lots of ways to scam the system, but the ones I can think of are all short-term strategies. Someone could hijack an account with a good, long history, but I don't think that happens very often.

Did I miss something? That... (Below threshold)
Mark:

Did I miss something? That's why you put a cap on your bid.

The fact that Eliot Spitzer... (Below threshold)
MichaelW:

The fact that Eliot Spitzer is involved should raise a lot of eyebrows. What exactly is the problem here? Are people overpaying for the items they bid on? Noone is holding a gun to their head in order to make them bid more than they are willing to pay. It seems to me that the phony bidding is a double-edged sword -- it has the potential to extract the maximum value for the product being sold, but at the same time it can reduce the number of sales. If you go into the sale with the idea of only spending a certain amount, what have you lost if you spend that exact amount? You made a satisfactory exchange ($$$ for item) so that both the vendor and the vendee are better off than before. Otherwise, why would you make the exchange (caveat: you're own idiocy is not an excuse).

Stupidity notwithstanding, ... (Below threshold)
Doss:

Stupidity notwithstanding, it's still fraud. Although, I'm finding it hard to feel sorry for these people.

Hmmm. Seems like the market... (Below threshold)

Hmmm. Seems like the market decides the price you're willing to pay. Too bad people think they deserve things at less than they would normally pay for them simply because it's an auction.

Online auctions have always been a joke. You pay top dollar 95% of the time, and the other 5% is usually just luck. Besides, auctions aren't supposed to be for great deals to the purchaser, but a way of ensuring the seller gets the top dollar for his item.

I don't go to eBay looking for deals, I go there to locate hard to find items. I never partake in bidding, I only use the "buy now" option because it's faster and I'd end up paying that anyway.

Doss, how is this fraud? Un... (Below threshold)

Doss, how is this fraud? Unless you lie about supply in order to jack up the price, I don't see how anyone was goaded into paying more than they were willing.

Maybe to explain further: I... (Below threshold)
meep:

Maybe to explain further: I had been bidding on about 5 similar items, all of which had auctions ending about the same time. My "limit" was not the price I was willing to pay for one object, but the total I was willing to drop at that time on cufflinks in total. I set my original bids according to that total limit, and adjusted as I was outbid, weighting the different auctions according to which one I liked the most... I ended up being outbid on all the auctions but the one I was most interested in.

However, just minutes after the auctions had closed, the top bids in all these other auctions had been rejected and I was being offered the item at my bid limit I had put on the item (the "second chance" offer). Thing is, they weren't worth that much to me any more. Items don't retain a fixed value to a particular person. When I've filled my wardrobe for the season, the next shirt I buy will likely be at a price lower than I was willing to pay for those first 10 shirts. It's a marginal price thing.

So once I got the one pair of cufflinks I wanted most, I wasn't willing to spend more money on cufflinks... at least, not at that price. If the person using fake bidders thought they'd get a maximum price for their wares, it ended up with them getting no more money from me. Perhaps they were able to go down the list, but I bet their results may have been less than optimal.

I'm with other people that this kind of shady dealing doesn't rise to the level of fraud -- selling and not delivering is. Spitzer, the perennial busybody, is getting involved in something that is a concern of eBay's (oh, he's never done anything like =that= before, the publicity whore). In my case, the situation took care of itself - I paid for a pair of cufflinks that was the right price for me, and rejected these second chance offers as those were no longer the right price. I think I came out the winner.

People still wear cufflinks... (Below threshold)

People still wear cufflinks? Interesting ;)

Add me to the list of those... (Below threshold)

Add me to the list of those who see no fraud. This sounds more like a simple bargaining session. The pretense that bargaining is from a third party is a little deceptive, but from an ethical or economic standpoint, it makes no difference.

The seller is trying to find the highest price you are willing to pay. Key word: willing.

The legal term for such a t... (Below threshold)
E. Benton:

The legal term for such a tactic is called a by bid. Unless the bidder knows the seller is bidding, the practice is illegal in the sense that the winning bid is non binding on the bidder and does not form a contract of sale. An interesting question is whether the buyer would rather have the item than not at that price, assuming the seller would have been unwilling to sell lower than the bid just below his by bid?

I do quite a bit of selling... (Below threshold)
notthisgirl:

I do quite a bit of selling on eBay; this is not an unusual occurance - even for much less expensive items.

Yeah, I'd say it's fraud be... (Below threshold)

Yeah, I'd say it's fraud because the buyer is bidding against people who are in league with the seller (being a straw bidder for the seller is about as "in league with" as it gets) to artificially inflate the sale price.

Basically, if what you're doing would cause legitimate bidders, if they knew what you were doing, to refuse to continue bidding -- and you do it anyway -- you're acting with intent to defraud.

It troubles me that we have people here who don't see a problem with this.

I've bid on a few items on ... (Below threshold)
Tim:

I've bid on a few items on ebay and watched counter bids get higher. I figured it was the seller and backed off. I haven't been back to ebay since.

"Fool me once, shame on you; fool me twice, shame on me"

Getting the "second chance"... (Below threshold)
Diana:

Getting the "second chance" offers mere minutes after bidding closed is the hallmark of a major scam on ebay having nothing to do with the seller. A genuine second chance offer comes from the original seller, whereas a spoof does not. A genuine offer links back to ebay, whereas a spoof does not. Many of these spoofers are in Europe. You can google 'ebay second chance scam' and get lots of info.

I only use eBay for hard-to... (Below threshold)

I only use eBay for hard-to-find/unique items. There are no deals there on goods that are otherwise generally available.

A couple of months ago, I needed a specific SCSI cable. The one I needed had been listed and relisted (at a very low price) without bids several times. When I placed a bid on it, I was suddenly outbid! This item that no one had wanted for weeks was now a hot commodity. It was obviously the seller's strategy to list it low, then bid it up themselves. Duh. I let him win his own auction. Jackass.

harkyman shows why I don't ... (Below threshold)

harkyman shows why I don't feel it's fraud. He decided that the price wasn't worth it and stopped bidding.

Like I said, it's not like you end up paying higher prices than you want or are willing to. I've never trusted an auction to give me a deal so I guess I'm just jaded.

If I bid on a Nikon D2h because I see it for $100, it's my own fault for falling for the trick. The damn thing is $3200 and I should know no one is going to sell it to me at a loss. And if the bid gets run up to $3500 and I pay, then again I am the fool. No fraud.

Now if I pay $2000 for the D2H and it turns out to be a D70, then yes, THAT's fraud.

Actually, it would still ha... (Below threshold)

Actually, it would still have been a slightly better price than other auctions were ending for. The reason I bowed out was because I felt that the seller was attempting to defraud me with a straw bidder. The rules are the rules, he was breaking them. What other rules would the seller be willing to break for a measley $.50? Not deliver the product? That fact is that if someone is engaging in monetary transactions in violation with the stated rules, you should not do business with them. They are untrustworthy.

Is a better price really a better price when offered by an untrustworthy seller? It isn't. And if the buyer is unaware that the seller is untrustworthy, then they are paying an inflated price, as the perceived value of the goods is higher than it's actual value, coming from an untrustworthy seller.

In econ terms, a $5 bid for an item being sold by A, who is trustworthy, indicates that the value to me of the product is $5. But if I bid $5 for B's item, who I know breaks the rules, it is because the value of B's product is actually more then $5, the difference being the amount that in $ the I peceive in risk of being defrauded by B. If B is concealing that he breaks the rules, though, then I am offering $5 for a product whose actual value is less than what I perceive.

Yeah, I wear cufflinks... a... (Below threshold)
meep:

Yeah, I wear cufflinks... and I'm a woman. I love french cuffs. The cufflinks I got show Sean Connery as James Bond -- really cool.

The second chance offers I got were legit, btw. I went to my ebay account, and didn't follow the link in the email (I never click on email links for ebay). The second chance offers were there in myEbay. I've given a second chance offer to someone after I didn't get a response from the high bidder after a couple days. My point was that the seller invalidated the high bids just moments after the auctions closed -- this is extremely fishy, whether email scam or eBay scam. As a general policy, I don't accept these offers if they're made too quickly after an auction ends. I can think of one way they could be legitimate -- the high bidder won on a different auction of a similar object from the same seller, and told the seller they only wanted one. That's not scammy or deceptive in my book - I've played with several auctions at the same time, and it can be a balancing act trying to win just one.

Is a better price really... (Below threshold)
MichaelW:

Is a better price really a better price when offered by an untrustworthy seller? It isn't. And if the buyer is unaware that the seller is untrustworthy, then they are paying an inflated price, as the perceived value of the goods is higher than it's actual value, coming from an untrustworthy seller.

harkyman: I don't mean to pick on you, but this doesn't make any sense. The "actual value" of any item is whatever the buyer is willing to pay. Even if the item is only worth $5 to the Seller, if the Buyer is willing to pay $10 then the "actual value" of the item is $10. And if the Buyer turns around and decides that it he would rather have some amount of cash instead of the item, then the "actual value" will be whatever price he is willingly sells the item for EVEN IF IT IS LESS THAN WHAT HE PAID FOR IT.

One of the greatest things about a market is that it shifts goods to their most highly valued use, without any moral value being associated with the exchange. No matter how evil and devious the Seller's intentions are, if the Buyer acquires the item at a satisfactory price, both parties are better off than without the exchange.

To avoid this problem I hig... (Below threshold)
WillieSurvive:

To avoid this problem I highly suggest 'sniping'. That is the eBay term for bidding on an item in the last few moments of an auction.

I've bought and sold many items on eBay and it never really pays to bid on an item early. The more bids an auction has it tends to attract more bidders. People tend to want what others want. If possible I'll bid on an item when there is less than 1 minute left on the clock.

If you can't be at your computer when the auction ends there are several programs that will submit your bid for you, down to the last 3 seconds.

Michael: Absolutely the tru... (Below threshold)

Michael: Absolutely the true market valuation of an item is exactly what it is worth. But an item purchased sight unseen and on trust of delivery is worth more to the market from a trusted source than from a proven untrusted source (one that is known to cheat). The prospect of being cheated reduces the value (or, the price you are willing to pay) of the item until you have it in your hand. Therefore, a seller who is hiding the fact that they cheat is falsely advertising the value of their item. If they were to add the following line the their item description:

I occasionally cheat on auction transactions.

then I would be perfectly fine with that, as the market would then be able to determine the true $ value of that statement.

Willie is absolutely right.... (Below threshold)
Joe:

Willie is absolutely right. Sniping is the way to go on eBay. Over six years of selling and buying, I've observed that smart bidders _always_ wait until the last few minutes before an auction ends to put in their bids. This both frustrates the second-chance scam and increases your likelihood of getting a good price (doesn't always work with items with "Buy It Now" prices, though, especially if they're desirable collectibles of one sort or another). I prefer to hover, vulture-like, over the listing in question during the last few minutes, but when I can't do that, I use something like AuctionSniper, which isn't quite as finely calibratable but which will do in a pinch if you can't get to a computer.

harkyman: I think I unders... (Below threshold)
MichaelW:

harkyman: I think I understand your point -- the more information that is known about a transaction by all parties involved, the more value is realized from the transaction; or, put another way, the lower the incidence of asymetric information, the greater the incidence of highest valued use being achieved. On that point I think we agree.

Your previous post seemed to suggest something entirely different. I thought that you were trying to suggest that if a Seller uses straw bidding to "trick" the Buyer into agreeing to the Buyer's highest price, somehow the "actual price" was something different than what was paid. If I understand you correctly, you are saying that a Seller who cheats in bidding (uses straw bidding) is more likely to cheat in other aspects of the transaction, and is therefore a net negative on the market as a whole. I can't say that I disagree, but

"Is a better price really a better price when offered by an untrustworthy seller? It isn't."

doesn't come anywhere near your point. A "better price" is just that ... better than any higher price, whether the Seller is Mother Teresa or Jingis Khan.

MichaelW: Right. My first p... (Below threshold)

MichaelW: Right. My first post didn't get that across, like you pointed out.

BTW, these days I always snipe. Some people I know prefer to place an early bet to "claim their territory," but that's just silliness. I prefer to find what I need and see it sit completely idle until the last few minutes.

The key to successf... (Below threshold)
MahaRichie:


The key to successful bidding and buying on eBay is RESEARCH.Both, reasearch of the value and authenticity of the merchandise;and research of the track record of the seller.My two main fields of interest are Antiquities and Fossils.There is much unauthentic material on eBay in these two categories-especially the former.Sniping can be a good method ,but you better know your merchandise and set a reasonable limit.
After 4 years of eBaying I know who I will deal with and who to avoid.RESEARCH thoroughly and establish relationships with proven sellers no matter what you are buying.

What do you call it when I ... (Below threshold)
Rick:

What do you call it when I have no interest in buying or selling...I simply like to bid on items to up the prices.

If I ended up winning I buy the item, but that is usually not my intention.

Rick:It's called 'g... (Below threshold)
MahaRichie:


Rick:It's called 'get a life'.

As far as I'm aware, someti... (Below threshold)
John Barnes:

As far as I'm aware, sometimes second chance offers are made because the seller has more than one item and simply wants to sell more from 1 auction. Those who didn't win actually get a bargain as they didn't suffer from 'winners curse'. I can see this being used by scammers by it's also a perfectly legit way of selling on ebay - UNLESS it is confirmed that the winning bids really were cancelled.




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