Beware of shill bidding (both legal and illegal)

Whenever you see the same initials or user identification appearing alongside your bid, as in the photo above, you should be wary. Shill bidding—legal or illegal—may be occurring.

Shill bidding is a practice whereby the seller or seller’s agent bids up lots, possibly so that they reach an unnamed reserve, or just to encourage ever-higher bids.

Shill bidding is not allowed on eBay. It happens, though, easily enough, through different computers on different routers or Internet servers. (Shills don’t want to have the same IP address as the seller.) A friend, or even the seller, on one computer will bid up a lot to the point where he or she sees your maximum bid — then retracts — and then bids up again when you do.

This method sometimes fails when done too close to the end of an eBay auction, because eBay doesn’t allow retractions when a sale is closing. Essentially, when this happens, the seller has won back his or her own coin. Then, you as “under-bidder,” will get a message asking if you want “a second chance” to win the lot.

Keep in mind “second chance” offers on eBay are almost always legitimate; we’re talking about the few suspicious sellers here. Suspicions arise if you experience the same bidder always increasing his bids right after you do and then retracting, etc.

Proxibid demands that sellers post a notice if they see maximum bids or are bidding themselves. There is a law that allows this: UCC-3-228, from the Uniform Commercial Code. This law deals exclusively with auctions and auctioneering. Essentially, the law allows shill bidding if a notice is posted in the terms of service.

Sometimes a few sellers do not post the notice, but you’ll see the same initials or user ID bidding up your maximums. When I see this, I contact Proxibid, and the seller has to post the required notice in his or her terms.

Even if the law allows shill bidding, it is unethical to do so. Here are alternatives: Start with a high opening bid that covers the reserve, or simply list that the lot has a reserve.

Unfortunately, on HiBid.com, a popular auctioneer-centered platform, you may have to contact the seller if you suspect shill bidding. Unlike eBay and Proxibid, HiBid doesn’t have seller-buyer rules and regulations.