|Tue July 6 2010 21:10:03|
Does eBay Effectively Fight Shill Bidding?
By: Ina Steiner
|When eBay defended itself in court from accusations of facilitating shill bidding on its live-auctions platform, did it call into question its ability to detect and eliminate shill bidding on its core eBay.com marketplace?|
Today's AuctionBytes Newsflash newsletter describes a 2007 lawsuit against eBay that claimed it engaged in racketeering when it allowed auction companies to place floor bids on the eBay Live Auctions platform when those auction companies did not hold live, physical auctions. The plaintiffs argued that floor bids from those particular auction companies were shill bids. The case was settled after plaintiffs failed to get certification for a class action, but their law firm is still investigating - see Wednesday's news story.
The challenges the plaintiffs faced included the following: the primary plaintiff was a business, not consumer; and the Judge believed damages would vary for each class member - she did not believe the plaintiffs' argument that shill bidding drove prices 20% higher across the board. And in the beginning the Judge made it clear she did not like the complexity that RICO added to the case.
Complicating matters was eBay's allegation that one of the plaintiffs herself engaged in shill bidding as a seller on eBay.com. The plaintiff's lawyer, John Balestriere, said the plaintiff and the firm deny this "baseless assertion of supposed misconduct," and noted that the charge was only made after the plaintiff sued eBay.
There can be legitimate reasons why eBay sellers bid on each other's items, and the case was never fully investigated or defended.
But what really strikes me about eBay's allegation is that, if it was true (and I'm not in a position to know either way), it would be an indication that its shill-bidding detection system on its core platform was not effective in detecting that activity. eBay never detected the plaintiff's alleged shill bidding until they specifically looked at her account after she sued them. (The industry's anti-shill bidding crusader is going to have a field day with that one).
The law firm is continuing its investigation of shill bidding on eBay Live Auctions, even though eBay closed the platform at the end of 2008. Take a few moments to read the article, and post a comment if you have an opinion.
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