eBay Shill Bidding

Last week I bought a used road bike on eBay.  Actually, I bought it twice, paid once, and know a little bit more about shill bidding.  Time to share.

Shill Bidding: You or someone you know bidding on your own auction item.

This raises the price to the detriment of other buyers, and is a violation of eBay rules and federal law (fraud).  But like most rules, they don’t prevent all transgressions.

Auctions are fun.  If you’ve never tried them out, you should.  There is some excitement to be had in the uncertainty leading up to the close.  My bike auction was no different.

Bidding Theory

eBay has automatic bidding.  This means you enter your maximum bid and eBay automatically increments your current bid only high enough to be the highest bidder.  Here’s an explanation.

With limited research, I uncovered two bidding strategies and opted with the lazier approach #1:

  1. Put in your maximum bid early.  This raises the bid price and discourages bidders who might have been interested at a low price from getting involved.
  2. Put in your maximum bid late.  This may keep the price lower, because there isn’t as much time for bidders to slowly inch the price upwards.

Unfortunately, this was before I had considered shill bidding.  #1 is good for shill bidders because it allows them more time to raise the price and then retract a bid.

Bid Retractions

eBay allows you to retract a bid under certain circumstances.  However, the circumstances aren’t checked before retraction, and they don’t block anything.  They probably only aid fraud investigations later.

How does this help the shill bidder?  They can bid high to discover your maximum bid, retract, and then bid right below your max.  Now you’re paying the maximum amount, instead of the minimum.  Lame.

http://pages.ebay.com/help/buy/bid-retract.html#cond

The Search

I was looking for a Cannondale road bike, size 56, no more than about $500, and no older than 10 years.  Difficult to find in person, but eBay has everything:

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=270906777113#ht_10058wt_1396

The Action

Going into the final day of the auction I was the high bidder at $170.  Great, right?  Bike I want, well below cost.  Let’s just hope the final hours of bidding don’t raise it too high.

At 5 hours to close a new bidder(r***0) swoops in with a high bid of $400.  Oh no!  Don’t panic.  Based on past eBay auctions we knew the bike wouldn’t go for $170.

20 minutes to close and my max of $470 is not the winner.

15 minutes to close and my max of $470 is the winner.  Eh, what?  eBay bugged?  No, r***0 has retracted his high bid.  Thanks r***0 for bowing out and letting me have this one!

10 minutes to close and my max of $470 is a loser again.  r***0 is back!  Weird.  Ok, I’m prepared to pay a bit more.  Hmm, my new $520 bid is not a winner.

8 minutes to close, and my $520 is a winner!  r***0 has retracted another bid.  Weird redux.

5 minutes to close, and r***0 is ahead with $530.  Ok, what am I really prepared to pay?  Do I really want to spend any more time looking for another bike with the right specs?  $570 is my final offer.

Auction closes at $550 in my favor.  r***0 final max was $545.

Here’s the bidding history, which doesn’t show bid retractions unfortunately:

http://offer.ebay.com/ws/eBayISAPI.dll?ViewBids&item=270906777113&showauto=true

Bid retractions were a little weird, but I haven’t bid on any eBay auctions in awhile so maybe this is normal.  Knowing a little too much about software, I absent-mindedly brainstorm technical explanations like timing issues between multiple bidders and eBay servers, etc.

Spider Sense

The mind is a funny thing.  Sometimes you just have this feeling like something isn’t quite right, but you’re not immediately sure what it is.

Less than a minute after the auction closed I received an email from the auction owner that the description may have been wrong.  Specifically, the bike was listed as a 2010 model but may in fact be a 2001 model.

Now, I already knew it was not a 2010 model, because I’ve already researched Cannondale bike models and their history.  The only measurements I did care about were the frame size, which presumably was still correct.  However, the value difference between a 2001 and a 2010 model is significant, so this information is valuable to have before the auction ends.

Why am I getting this email immediately after the auction?  Did the owner just come by this information, or not get around to updating the description before auction end?  What the frak dude!

My elaborate explanations of the bid retractions are gone now.  A simpler explanation is available.  Foul play.

Decisions

Should I complete the transaction or back out?

I haven’t bid more than the bike is worth to me.  The owner has good feedback, so I’ll probably receive what is in the pictures.

On the other hand, I am annoyed by the potentially fraudulent behavior and don’t like the idea of supporting it by paying more than the bike was worth on the open market.

I reply to the owner’s mail about the model year and say I’m not longer interested in the auction.  He cancels it, and that’s that.

Epilogue

My bike is back on the market after a week or so of watching eBay and craigslist.  r***0 is back in the fray as the high bidder with a day left.  My new strategy involves bidding right before close for the max I’m willing to pay.

I forget to login before bidding and end up winning  the bike for $510 with 2 seconds to close.  No time for bid retractions this time.

The only interesting element to the second auction is what amounts to an unofficial reserve price equal to r***0′s max bid.  An official reserve price allows the owner to notify bidders that the minimum amount they will sell for has not been reached yet.   Setting an unpublicized reserve price through another account is still shady behavior, but I don’t care at this point.  I saved $40 and didn’t feel like a victim this time.

http://pages.ebay.com/help/sell/reserve.html

The bike arrives quickly, was packed well, and the dents and scratches make it look like it  survived an apocalypse.  The frame is smaller than the stated measurements, but it is still just big enough.  A new set of tires and handlebar grips is all needs.  It’s perfect.

http://www.ebay.com/itm/270914223697?ssPageName=STRK:MEWNX:IT&_trksid=p3984.m1439.l2649#ht_10160wt_1396

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7 Responses to eBay Shill Bidding

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  2. D says:

    Wow! A great cautionary tale. I will think twice before bidding on ebay.

    Glad you canceled the first bid; I hate encouraging scams like that.

    Looks like a good bike for getting you around town

  3. Philip Cohen says:

    And the ugly reality for consumers dealing with the clunky, unscrupulous eBay/PayPal complex …
    “Shill Bidding Fraud on eBay: Case Study #5″ … http://bit.ly/11F2eas

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