What is the purpose of making fake accounts to drive up bidding on auction sites? I don’t get what advantage it is for the fraudsters to get the price hiked up so high that the item has to be taken down and re-listed.
Generally the purpose is to show activity on the item and raise the price up so that the item sells for more. As such, it is usually the seller who does it.
But I don’t know why they would bump it up so high they need to relist it. I would just assume they accidentally bumped it up so high no one legitimate wanted to buy it, so they have to start over.
A guy I knew had a small ostrich farm, hoping to make $$$ when we all started eating ostrich meat. Turns out that didn’t happen. He bought dozens of ostrich when the price was high then had very little success reproducing them.
He eventually hired an auctioneer to come in and sell the birds. Worried they’d go too cheap, he asked me to place some bids. I declined. He found someone else to do it.
Turns out that was a bad idea. The birds that bad fake bids sold to the fake bidder, but the auction house got a percentage, then he had to find a buyer anyways.
Let’s say you have an item that you think should sell for $100, but could sell for as low as $75, and you don’t want to accept anything less than $90. On eBay, you have a couple options.
Option A: List it for $90 and guarantee your minimum.
Option B: List it for $1, and add a reserve of $90.
Option C: list it for $1 and hope for the best.
Option C is much cheaper, but I’m not sure which of A or B is the most expensive. Someone who chooses C may want to get a fraudulent second account to bid it up to $90 on the sly.
In addition to the above, there’s also the chance to generate a sense of urgency.
I know someone who used to list old electronics in good condition with low-ish initial bids, and a reasonably high (not excessive) Buy-it-now price. By adding bids, and steadily increasing the current auction, it showed that the object was in demand, and maybe grabbing it at the buy-it-now price was smart before the demand got it close to that anyway.
Even without buy it now, incremental bids over an auction can push the price up on an item instead of watching everyone wait until the last day/few hours of a bid and prime the pump as it were.
I wouldn’t do it, and few of the items I’ve ever bought online would benefit from such things, but it’s an understandable (if rather underhanded) tactic.
Shill bidding by the seller is the most likely reason, to drive the price up, but there is another less common case where someone who wants the item cheap might interfere with the auction by placing fake bids from a throwaway account (outbidding all the competition, so the item never actually gets sold and must be relisted over again) - after a few rounds of this, the fake bidder contacts the seller and makes a low offer to buy it outright. The seller accepts out of desperation.
On eBay, there is the option to sell to an underbidder of the winning bidder doesn’t come through, but that feature wasn’t always there.
It might also be a way of figuring out what a good buy it now price would be. If I don’t know the item very well, I can’t tell if I should set the BIN price at $100 or $500. If I set it too low, I lose a lot of potential income, if it’s too high, I lose potential buyers.
So list it for $1, then bid it up to $1000. Take a look at the highest real bid, and use that to determine your BIN value.
I’m absolutely convinced that I’ve been involved with eB** auctions in which there was shill bidding. It’s fairly frequent for me to bid on an item that starts at, say, $10, with a bid of $30. There’s no bid activity for several days, then the bidding in the last day drives the price to over $50. Now I’m not interested at all. A day or two later, I receive an e-mail offering me the item at my bid of $30 because [reasons].
What is suspicious to me is that there had to have been at least two “bidders” trying to outbid each other as the bid price passed my original $30 and went to $50+, otherwise it would have sold at $31. Do they expect me to believe that the winning bidder failed to pay and that the second-highest bidder declined the seller’s offer in less than two days?
There’s another scam I’ve encountered on eBay.
See an item for sale. Make a low bid, say £20.
With a second account make a high bid, say £100.
since the amount goes up in increments, it now minimum bid £22.
somebody bids £30. Rejected, but the minimum bid goes up to £30.
somebody bids £40. Rejected, but the minimum bid goes up.
somebody bids £50. Rejected, but the minimum bid goes up.
Then a few seconds before the auction ends, the £100 bid is withdrawn, and the £20 bid wins.
In the case I was wondering about, I’m pretty sure the sellers are reputable, unless there is a rogue employee involved. So if it’s not the sellers or the sellers’ employees but some shill bidders, what is their motive? I still don’t get it. The shill bidders wouldn’t have any control over the item, i.e., they wouldn’t be able to offer it to another bidder because only certain sellers are allowed on the site.