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Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Sat Dec 22 2012 19:46:54

eBay Relaxes Shill Bidding Provision in Major Policy Shift

 By: Ina Steiner
Sponsored Link
eBay relaxed a provision of its shill bidding policy - friends, family and acquaintances are now allowed to bid on a seller's auctions in certain circumstances. eBay's new shill-bidding policy states, "Shill bidding happens when anyone - including family, friends, roommates, employees, or online connections - bids on an item with the intent to artificially increase its price or desirability."



The old policy prohibited friends, family and acquaintances from bidding on your auctions at all: "If people you know want to buy your item, they should do so in a way that doesn't involve bidding." That's because, according to eBay, "people the seller knows might have information about the item that other members don't, which might give them an unfair advantage."



This is a major shift in how eBay treats shill bidding, which is a crime in many states. In fact, last year, eBay briefly banned "online friends" from bidding on a seller's auctions, leaving sellers with large followings on sites such as Facebook, Twitter and LinkedIn in a quandary.

Also surprising is the fact that eBay never announced the change in its shill bidding policy. We researched the issue after an EcommerceBytes reader noticed the change on the eBay policy pages. A search on a major search-engine reveals that blogger "cappnonymous" noticed the change in June. He noted that the timing of eBay's policy change seemed to coincide with an incident involving the owner of an eBay drop-off store who participates in a reality TV program.

On the surface, eBay's new policy makes sense - just because someone knows a seller doesn't mean they're in cahoots with that seller to raise the bidding on his or her auctions. But as with everything related to eBay, it's how the policy will be enforced that's the sticking point. Sellers remain just as susceptible to accusations of shill bidding - how will eBay be able to determine the intent of the bidder?

In fact, the new policy makes no mention of how it will determine intent.

Further muddying the issue is the fact that eBay's help pages serve up a contradictory message about shill bidding: "Shill bidding means bidding for an item while holding more information about it than other members could - for example, if you're a family member, roommate, or the seller's employee. We don't allow shill bidding because it can falsely increase an item's price or desirability. Make sure your listing follows our guidelines. If it doesn't, it may be removed, and your buying and selling privileges could be restricted."

Many people are bound to see the policy shift as a negative, since actual shill bidding drives prices up. But others will see it as a positive, assuming eBay enforces it consistently.

The EcommerceBytes reader who informed us of the policy change wrote, "This is a good change for our business, because we have had several instances where we suspended from eBay for 10 days or even 30 days because some competitor would report us, knowing that many of our sucessful bidders KNOW me because I ran a retail store for 10 years, and are from the same city thus violating the rule against friends bidding. Or look at an item at a coin show in person, and thus become "someone with more knowledge than the general public has.""

We asked eBay for comment on Friday, they did not get back to us by press time.
Comments (49) | Leave Comment | Permalink
Readers Comments

Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: iheartjacksparrow
       
Sat Dec 22 22:03:19 2012
I want to know what commenter Philip Cohen has to say about this.
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: AgendaSwallowsAll This user has validated their user name.
       
Sat Dec 22 22:59:53 2012
Why wouldn't ebay change policy at a point in time when they're desperately grasping for anything that may increase their bottom line.

Only thing is, ebay had best inform these shills to place their bids at least 15 seconds prior to auction end and I'm unsure if that would even be enough. They lost at the least $1, possibly $25 or more this evening when I attempted to place a bid 8 seconds prior to auction close only to have it read ''Loading'' for those 8 seconds after my $298 bid allowing the prior high bidder to win the item @$25 less.

John Donahoe and his Merry Men aren't Rocket Scientists as evidenced once again by this latest move, they're nothing more or less than run of the mill criminals and incredibly stupid-ignorant ones as well.
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: Truk This user has validated their user name.
       
Sat Dec 22 23:40:49 2012
Couple of things got me thinking
I buy a lot of tools locally
I search distance nearest and bid to buy

1-I won some craftsman tools from a seller who I don't know 3 miles from my home they do not allow pick-ups they shipped my items to me

2- I won some more tools from a local seller he dropped them off at our shop I knew him

3-I won some electric cords from a seller here in town and he let us pick them up

Am I a shill bidder I think not
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Ric
       
Sun Dec 23 01:35:54 2012
eBay is running out of ways to artificially inflate GMV and generate higher revenue so they are going to change policy which will increase auction prices.

As Phil has said about 10,000 times, eBay has always looked the other way with the majority of shill bidding this policy change simply allows them to do it openly.

Ask yourself how eBay benefits from this... I see several ways.

1) Higher auction closing prices means ebay's GMV will grow.

2) Higher closing prices means higher revenue from Final Value Fees.

3) eBay can eliminate some customer support staff by eliminating the one or two people who were the 'team' that investigated reported shill bidding cases.

John Donahoe and his hand picked management team has run out of ways to bleed sellers, so, now he will turn on buyers and allow them to be bled dry when they place auction bids.

Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: Massachusets Howler This user has validated their user name.
       
Sun Dec 23 02:54:19 2012
I want to hear what Phil has to say also.
Just like jd to SNEAK this into the UA and then to not change the PUBLIC info page- typical.
This constant lack of integrity from ''management'' has gotten very old.
Mass Howler
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Philip Cohen
       Web Site
Sun Dec 23 07:06:44 2012
“This is a good change for our business, because we have had several instances where we [were] suspended from eBay for 10 days or even 30 days because some competitor would report us, knowing that many of our successful bidders KNOW me because I ran a retail store for 10 years, and are from the same city thus violating the rule against friends bidding. Or look at an item at a coin show in person, and thus become ''someone with more knowledge than the general public has.''”

What a load of nonsense that statement is!

Firstly, since bidding IDs were totally anonymised in 2008, users have not been able to identify who bidders are; users can only suspect shill bidding by examining the patterns of bidding exposed in an analysis of the convoluted bid history statistics.

Secondly, eBafia will slap only small merchants for shill bidding only if it is obvious to eBafia that shill bidding really is occurring. To suggest otherwise is an absurdity. The lady from Chicago, being a major eBay merchant, has obviously received no such slap and indeed nothing has changed regarding the very obvious patterns of bidding on her auctions that, in my humble opinion, suggest blatant and rampant shill bidding.

Thirdly, indeed, eBay surreptitiously changed their policy on shill bidding (in the US only, apparently) at the time of the McFadden v Burke matter, for the benefit of McFadden as McFadden had (foolishly) been earlier recorded as stating that she allowed her staff to bid on her auctions. Does the expression “No Touchy …” sound familiar?

Possibly it could be said that eBay’s blanket policy did not make sense in that statutorily there has to be an intention to defraud for it to be truly “shill” bidding; that intention can usually be demonstrated when a monotonously consistent pattern of bidding appears on a seller’s auctions, as can be observed on virtually every one of the ~250 auctions that eDropOff lists every day. It really is so blatant, it is barely believable …

No one should regard this surreptitious policy change as anything other than circumstances requiring a reluctant and unheralded recognition by eBafia of what has always been the case: undisclosed vendor (“shill”) bidding, for the purpose of making a gain and thereby defrauding a buyer, is quite OK by eBafia; it’s doing it so amateurishly and getting reported for same that is disapproved of by eBafia—that is, unless you are a major, favored seller, and then eBay will simply ignore any such reporting, as they have consistently done with eDropOff; indeed, eBafia went one step further and supplied McFadden with a certificate stating that eBafia could see no evidence of shill bidding on her auctions! That is blatant aiding and abetting after the fact. And, who knows just how many unscrupulous major eBay sellers, being serviced by the same commercial supplier of shill bidding, eBafia is knowingly aiding and abetting …

In the US, shill bidding on “online” auctions is considered “wire fraud” and that is a Federal crime, therefore it’s unlawful in every state of the union. To knowingly and calculatedly aid and abet such criminal activity, as eBafia so obviously does, is also a Federal crime. Indeed, it can be easily demonstrated that eBafia is the greatest knowing and calculated facilitator of wire fraud on consumers that the world is every likely to know …

The full ugly story of the eDropOff matter is at http://bit.ly/N1nTlc
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Anonymous Annie
       
Sun Dec 23 10:17:08 2012
Ina writes: ''Also surprising is the fact that eBay never announced the change in its shill bidding policy.''

Actually... it's not very surprising at all.
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Ric
       
Sun Dec 23 13:39:56 2012
Another point to consider.

As Ina points out, shill bidding is illegal in many states, yet this policy change seems to condone the practice as long as it is not 'obvious'.

Who determines obvious?  eBay of course.

Now that eBay users have been forced by default into accepting compulsory arbitration and can not participate in class action lawsuits against eBay unless they opted in to be able to do so, eBay has awarded themselves immunity from any serious legal actions initiated by users.

Users who suspect shill bidding will now likely be dismissed and ignored by eBay, however, users who suspect shill bidding may still have legal recourse.

If the laws in their jurisdiction prohibit shill bidding, users may be entitled to file complaints with the appropriate agency who might then file suit against eBay for condoning the activity. As the enforcement agencies are not eBay users they would likely not be bound by the forced arbitration process and eBay's self granted immunity would likely not apply.

Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: iheartjacksparrow
       
Sun Dec 23 14:18:33 2012
This is another move by eBay that reeks of desperation. This is obviously a means to generate higher fees, and also points to a decline in buyers/bidders. How can any bidder have confidence that the people bidding against him/her are honest bidders, and not bidding for the sole purpose of inflating the price? Or is this some sort of "master plan" by JD to abolish auctions when it becomes widely known that eBay allows shill bidding and people stop participating in auctions?  
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: Steevo This user has validated their user name.
       
Sun Dec 23 16:15:22 2012
The problem is you should clearly be able to buy *anything* in an open auction, as long as you want and are willing to pay for it and take delivery.  

Shill bidding is where someone sells something and if the shill ends up with it they have to relist it, the shill bid was fake.  

As long as it's a separate person who wants to buy the item, I can't see the problem.  

In an open auction, anyone could have outbid anyone. There's no way to divine intent, now is there?  There's no mind reading.  
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: iheartjacksparrow
       
Sun Dec 23 17:59:24 2012
Steevo says: "As long as it's a separate person who wants to buy the item, I can't see the problem."

My take on why shill bidding is a problem is the following (please correct me if I'm wrong):

A purple widget goes up for auction. I desperately need a purple widget to complete my collection. So I place a bid. Annie is also looking for a purple widget for her collection, and she places a higher bid. Which would be fine, I'm bidding against Annie. But then Ric, who is a personal friend of the seller, and purely for the purpose of raising the price, places a higher bid. So Annie and I keep bidding, hoping to win the widget, all the while Ric is placing bids only to raise the price. So in the end, if I win or if Annie wins, we are paying a much higher price than we normally would if the seller's friend wasn't also "bidding."  
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Philip Cohen
       Web Site
Sun Dec 23 18:17:31 2012
@Annie, “Actually... it's not very surprising at all.”—So true …

@Ric, “shill bidding is illegal in many states”. That apparent qualification applies only to traditional, attended auctions. eBay auctions are “online” and any such fraud therefore is considered “wire fraud”. “Wire fraud” is a federal crime and therefore undisclosed vendor (shill) bidding on eBay auctions is a crime in ALL states, regardless of any lack of state statute on the matter …

“Users who suspect shill bidding will now likely be dismissed and ignored by eBay, …” Users who complain about even blatantly obvious shill bidding, as is the case with a certain lady from Chicago, are indeed being ignored by eBafia; any perusal of my notes and spreadsheet analysis of her auctions should convince even an unreasonable person of that fact. Indeed, eBay is knowingly aiding and abetting this seller in her, in my opinion, blatant, shill bidding activities.

Ric, if you can bring this matter to the attention of some competent authority that will actually do something about this criminal organization’s blatant aiding and abetting of such fraud on consumers—good luck to you; unfortunately, I suspect that the relationship between such large corporations and those in authority is utterly corrupted and I suspect that eBafia is going to carry on regardless, blatantly facilitating such criminal activity. Still, given the otherwise overall destructive policies of the current management, even eBafia’s own blatant aiding and abetting of such criminal activity will ultimately not stop eBafia, and its ugly adopted daughter, PreyPal, from eventually slipping beneath the waves …

Obviously, things are getting more and more desperate at eBafia; they are now literally swimming in oceans of blood red-indicated unsold items (and not just auctions). So, these days, not even the US Criminal Code is going to be allowed to get in the way of the propping up eBafia’s sagging bottom line …

So called financial analysts in the financial media carry on about Amazon's share price being overvalued; yet no one has bothered to explain why there has become such an enormous difference between the stock prices of Amazon and eBay over the past five years. Well, obviously, some on Wall Street understand: there has to be a reason that these two stock prices are now so unequal and it can most likely be best put down to eBay’s obviously incompetent, destructive, senior management ...

@iheartjacksparrow, There was a time when I presumed that the eBafia Don was indeed trying to do away with auctions because he well knew that all the obvious shill bidding fraud was something that could one day blow up in his face; but things are now so desperate, the chief headless turkey is no longer trying to kill auctions; indeed, he’s trying to breath life back into them—regardless of all the obvious shill bidding; so, what then about all this shill bidding fraud? What shill bidding fraud? eBay can’t see any!

Regardless, eBafia made this unheralded policy change solely to protect a favored merchant after she had stupidly publicly admitted that she knowingly allowed her staff to bid on her auctions. What a shame it is then that eBafia does not make the same (genuine) effort to protect we mere peasants from such unscrupulous merchants … Then, are we not simply the sheep put on Earth for the eBafia and all its “made men” to shear? …

@Steevo, It’s only “shill” bidding if the intention is to defraud; therefore, in law, there is no bar to family or friends bidding on an auction as long as the bidding is a genuine attempt to buy. The question then becomes, how regularly can such a friend or family (or indeed any bidder) bid on a merchant’s auctions before it become apparent that the intent is not to buy but to defraud? Regardless, the material difference between a traditional, attended auction and an online eBay auction is that with an eBay auction there is an auditable data trail of the bidding …

Still, I’ll be interested to hear the spin that eBafia puts on their answer to Ina’s question; I will be surprised if there is any mention of McFadden, which brings us back to that old adage, how can you tell when an eBay/PayPal spokesperson is lying? Their lips are moving …

eBay / PayPal / Donahoe: Dead Men Walking
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: elpereles
       Web Site
Sun Dec 23 19:50:09 2012
What a joke! Technically shill bidding is finally allowed in the policies.

@Truk, you are right. You aren't a shill bidder. But if someone near a seller begin bidding in every category the seller has available. It is very rare. I don't believe a local repeat/return buyer will continue buy from you in eBay. One of them will look to avoid it.

@Philip Cohen, your comments always against eBay/Paypal are very fanatic. But you were right about the shill bidding stuff as far I saw time gives you the proof.
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Ming the Merciless
       
Mon Dec 24 00:06:33 2012
Next year ebafia will secretly issue invitations to truck and dock thieves, shoplifters, and employee thieves to sell their stolen merchandise on ebafia.

This has been going on for years anyway, of course, and ebafia will seek to expand criminal fencing operations to enhance their numbers. The FBI once said that ebafia is the world's largest source of stolen merchandise in the country, and ebay seeks to grow their market share of this profitable subset of sellers.

The next revenue enhancing program will be to recruit criminal probationers and parolees to buy on ebay.
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: mjr55 This user has validated their user name.
       
Mon Dec 24 03:21:28 2012
Jeez....some of you find something to complain about in every story.

Before this change....some of you cried and complained about how you were suspended or whatever because someone in your city or household accidentally bid on one of your items...or whether someone on your Facebook friends list could be something that might get you suspended.

Now it seems Ebay has relaxed the policy only in they aren't going to have a strict interpretation....which is only going to help sellers who were "dolphins caught in that net" and did nothing wrong but were suspended and basically had no recourse.

Some of you are turning the AB boards into the Ebay forums....where you criticize every little thing and tear anyone's head off that disagrees. Hence...some of you have become as reputable on here as the people on those boards.

Just stop.....

Philip Cohen....as you said, shill bidding is illegal. I believe Ebay's TOS specifies you cannot break laws in using the site. Ebay does not have to re-state these laws specifically when they already have a blanket clause prohibiting activities considered illegal by federal/state statute. Ebay isn't "encouraging" criminal activity by making the distinction they have. If anything, they are aligning themselves with the law. Under the law, shill bidding was artificially increasing it's price by bidding on the item you are selling or having someone you know purposely do that. Hence, under the law....someone bidding on an auction (who...say.....lives down the street from you but doesn't know you and truly wants the item and isn't inflating price)...is NOT illegal under law. Despite this activity being legal, it seems Ebay was still DEFINING this as shill bidding up until this policy change.

Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: mjr55 This user has validated their user name.
       
Mon Dec 24 03:27:20 2012
Oops...pressed enter accidentally. What I was saying....is that Ebay was considering some legal activities to be shill bidding...even though the law said those same activities were not considered shill bids (and in reality they weren't).

I'm sure the circumstances the policy change will apply to will be small. Let's be honest....there probably aren't many times someone next door to the seller just happens to bid on seller's auction....but I'm sure it's happened (and as another poster stated...they had issues with a competitor who was in the same city bidding on their listings).  
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: mjr55 This user has validated their user name.
       
Mon Dec 24 03:31:57 2012
Also @Philip Cohen....I'm sure there is some case law available from the last few years that might deal with your comments in terms of what Ebay (well...really...the courts) considers to be regular in terms of how "regularly can a family member" bid on a listing until it's considered an intent to defraud.

Or...maybe the courts have not decided this and they leave it on a case by case basis....which might be a reason Ebay isn't particular about the number of times or what exactly is defined as "regular."

Just my opinion...  
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: Philip Cohen
       Web Site
Mon Dec 24 03:38:29 2012
Bear in mind that my comments are my opinion only; you can draw your own conclusions from the facts presented. Can I also mention, once again, that I don't “hate” eBay. I enjoy dabbling on eBay as a buyer of stuff. But I am a vocal critic of eBay because I recognise them to be a blatant and calculated facilitator of massive wire fraud on the consumers of the world. That facilitation has become even more massive following the anonymising absolutely of bidder IDs in 2008, which I have little doubt was done for the very purpose of better aiding and abetting major unscrupulous shill bidding sellers …

It’s not as though eBay’s criminal facilitation of wire fraud cannot be clearly demonstrated: eBay’s email reaction (previously published on this blog) to a buyer’s complaint of shill bidding by eDropOff, prior to the McFadden v Burke matter in May of this year is proof enough for even an unreasonable person, I suspect. The problem is, getting anyone in authority to examine this matter and then bring eBay to boot for their blatant criminal facilitation of such massive wire fraud.

Regrettably, I suspect that nothing will be done and more probably the eBafia Don will have taken the whole unscrupulous enterprise submarine before anyone in authority, or even the eBay BoD, awake from their slumbers …

eBay’s demonstrable criminal activates undoubtedly dwarf even that of the sum of all the most unscrupulous traditional auctioneers; when we go to a traditional auction, unless we are still very “wet behind the ears”, we know that we have to take care; but, conversely, eBay, by falsely claiming that it has “sophisticated and proactive software” to control and protect users from shill bidding, deliberately engenders a false sense of security in buyers on eBay auctions; this is about as grossly and utterly unscrupulous as any commercial entity can get; indeed that false claim of having “sophisticated and proactive software” in itself is a gross fraud on buyers at auction; this is a truly obnoxious enterprise …  

Question: How many times does a bidder have to repeatedly bid on a seller’s auctions before you would consider the bidder to be a “shill”?

One of the many habitually regular bidders that eDropOff has is “i***i” (user “junminn”), with feedback currently of 1745; this bidder has, for the past eight months that I have been watching, bid on nearly every one of her auctions (and damn it, “won” a few too at the nominal starting price); but ii’s rolling statistics are ~3000 bids, on ~3000 items, 96% with this seller, with  69/245 retractions; these stats have been building up for the past seven months and add up to a total of ~17,000 bids on ~17,000 items ~95% with eDropOff. Now, who would like to hazard a guess as to whether or not “junminn” is simply a friend—or a shill? Funny though, eBafia, with their claimed “sophisticated and proactive software” for detecting such bidding activity, can detect none of this …

eBay / PayPal / Donahoe: Dead Men Walking
Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
This user has validated their user name. by: elpereles
       
Mon Dec 24 03:47:28 2012
@mjr55, you can provide some examples of people here crying about being suspended because a "neighbor" bid in an auction.

Because I read the Auctionbytes comments and I don't remember any. Thanks.

Perminate Link for eBay Relaxes Shill Bidding Provision in Major Policy Shift   eBay Relaxes Shill Bidding Provision in Major Policy Shift
by: erratic*attic This user has validated their user name.
       
Mon Dec 24 08:11:59 2012
I'm surprised no one sees the connection to shill bidding sellers and 'best match'

Let's say 2 ebayers sell in the same category...mid century modern furniture for example.

Seller 1 is an honest Joe who sells from home. He takes great pictures and starts his auctions at a price he can afford if there is only 1 bid (happens all the time now). Or he starts an auction at $9.99 but pays $2.00 for a reserve. The way 'best match' is now, unless he gets early bids, his item may well be buried in 'best match'. Honest Joe does not have anyone shill bidding for him...he's Honest Joe, and he does't cheat people.

Here comes Seller 2...Mr. Watchyourback. He has a B&M and a studio with employees. Mr. Watchyourback starts his auctions at $9.99 with no reserve. His friends and relatives immediately start shill bidding the auctions, which puts them on the 1st page of best match. He doesn't worry about paying reserve fees. Mr. Watchyourback has no problems with cheating buyers. He has always had fun cheating the system.

It's not just buyers that are affected by shill bidding...the honest sellers are, too.
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