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eBay Shill Bidding: Do They Really Care?
It has been a long time since I purchased anything on eBay, but in browsing around I found an SUV that looked like it met our needs at a fair price, and bid on it during the auction. In the last few seconds, as expected the price escalated rapidly – by a few thousand. In the end, I was outbid. Within seconds of the auction closing, I received an email from eBay offering me a “Second Chance Offer” to buy the SUV. At first, I was thrilled, but after some thought, began to question the process.
I was previously unaware that eBay had a “Second Chance Offers” policy. Did a little research. The eBay site offers this info for sellers on the circumstances when they can use this tool:
With a Second Chance Offer, a non-winning bidder gets the chance to buy the item at a price equal to their last bid. You can make Second Chance Offers up to 60 days after an auction ends.
It’s free to make an offer, but if the buyer accepts, you pay a final value fee.
You can use Second Chance Offers when:
- Your winning bidder didn’t pay, and you already tried to resolve the issue with them
- Your reserve price wasn’t met
- You have more of the same item available for sale
This all makes sense, but in my case, the official second chance offer arrived within seconds of the auction ending. Looking at the circumstances: 1) the winning bidder surely wasn’t able to communicate his inability to pay, and the seller tried to resolve the issue. 2) there was no reserve price. 3) they don’t have duplicate items to sell. Hmmm. The logical conclusion is fraud. The seller, using a second account, was the final bidder and immediately dismissed his own bid to offer me a “second chance” to buy the vehicle at an artificially high price. This is called “Shill bidding” and is explained by eBay’s policy here.
eBay boldly declares that there is no need to report shill bidding because they have systems in place to detect and prevent this practice. Yeah right. So I called and spoke with customer service, and explained the circumstances. The first customer service rep, Alden, told me that it is not possible for seller’s to shill bid because of their systems. I walked Alden thru the possible reasons that a Seller would dismiss a winning bid. He agreed that there was no logical reason that could explain why my second chance offer would arrive within 60 seconds of the end of the auction. He did a little research and said the seller had a 100% rating and implied that in cases like this it is the buyer who usually is trying to scam the seller. OK, Alden, that’s enough. Let me talk with a manager. It is 9 AM ET. he responds after a few minutes, that there are no managers on duty, but he will take notes and have one call me within two hours.
At 11 AM, I call back and explain to CS rep Rose the same story. She says, no problem you don’t have to accept the offer, it will expire in a day. Just walk away. No, I explain the importance of eBay’s perceived integrity and that the system will fail if sellers can abuse this Second Chance offer and shill bid their own products to maximize prices. She really doesn’t seem to understand the concept of integrity and reputation. I am starting to get a bit perturbed. She asks what I want to do, and I respond it is not about what I want to do, it is about what you will do to investigate and stop this shill bidding. “There is nothing we can do” is the response. I ask for another manager. This time, Ben in Trust and Safety division comes on the line.
Ben at least pretended to understand and agreed that the circumstances pointed to shill bidding. He would document my concerns more fully, and his group would review the street and IP addresses of the highest bidder (and other bidders) and the seller to see if there are any obvious links. If there are, then they would take steps to discuss this alleged behavior with this 100% favorable rating seller. Not really a hard-nosed enforcement policy, but at least the seller might be more sly about his next transgression…
I asked about my situation: I was interested in the car but didn’t want to pay an artificially and immorally inflated auction price, and the “second chance offer would expire in a few hours. What can I do to protect myself? Ben put me on hold again and returned five minutes later. You may send the seller an offer to buy the vehicle at whatever price you wish, presumably lower than the final inflated bid. Maybe he accepts it.
That is the extent of the solution. Caveat emptor. In looking at this situation, the “Second Chance Offer” policy is ripe for corruption. Of course, a seller would be tempted to get a second account, have a wife, partner, friend bid up lots until the motivated buyers tap out, then offer them a “Second Chance” knowing they absolutely squeezed the last dime out of that buyer pool. I promised Rep Rose that I would write about this experience and post to a forum. If simply to burn some of my angst, and perhaps to educate others so they may be aware of the trap. This is that post.
Published in Economics
That’s weird. I don’t think I’d buy a car on eBay, just because of stuff like this.
Once I was selling some art work of my Grandmothers, some prints, because I didn’t know what else to do with them and my mother thought they might be worth some money. They weren’t. Turns out the only bid I got was from a cousin. I said “Don’t bid on it, I’ll send you one!” He said “I was just trying to gin up the price.” Well, that’s obviously no good. But it clearly happens.
Recently I sold one of these on Craigslist. I bought it online hoping it would work for me. It didn’t. And it sat there me having spend over $200 but also thinking “Who would buy something like that used?” Well, someone did. He had to come by my house to get it. Both of use were nervous of fraud or other criminal intent. Worked out fine. Well, for me. I got the cash. I hope the thing works out for him. Not that this story is germane to your issue.
I have a Chiropractic Dr. nephew who swears by the MedCline pillow to solve a variety of sleeping ailments for his patients. Perhaps he receives a commission on each sale? #CaveatEmptor#profitaboveall
I salute you and your persistence. I gave up on Ebay many moons ago because I tired of sorting the good people from the crooks.
I have bought one item on ebay in my life. It was an otherwise apparently unobtainable car part. And I didn’t bid, I just paid the “buy it now” price.
My general principle of silent auctions and ebay: Bid once, and bid the price you want to pay. That doesn’t really apply to a high dollar item like an automobile though.
Good for you for sniffing this out and being a pest on the phone. When anyone acts vigilantly, we all benefit. Thank you!
Definitely sounds like a shill bidder to me.
But I find this an interesting bit of consumer psychology: even if it was a shill bidder, who cares? One minute before the auction ended you were willing to pay that price. Either the SUV was worth it to you at that price, or it wasn’t. The details of how it came to that price shouldn’t affect its value to you. Of course, you’re far from alone in responding that way – there are dozens of studies that show that your reaction is very typical in that type of situation.
With that being said, this whole thing has a slight tinge of an old man yelling at a cloud. Was it really necessary to persist through three different levels of customer service just for you to tell them how much they suck? The one woman was right: just walk away. The market will take of the rest, as already seems to be happening with eBay auctions.
I got swindled one time selling an original Macintosh on EBay to a guy in New York.
He jerked me around for awhile and then, on a weak pretense, refused to pay.
I just didn’t want to mess with it any longer and gave up. So he’s got the Macintosh and I don’t have the money. I suppose I should have reported him to EBay, but I just didn’t want to mess with it.
No more EBay for me. Just too much hassle. Craigslist is the way to go because it’s local.
Darn Kids! Get off my Grass Mendel!
You bring up great points. I am in fact bothered by the perceived injustice of the issue, rather than the price. It was my bid, and we would have been pleased to have won it fairly. It is the sense of impropriety and scam that makes this old man scream at the clouds. Interestingly, in youth , I was always been more sensitive to the perceived injustice, than the infraction itself. I thought I had grown past that stage. As you have pointed out, I am obviously regressing.
Now get off my lawn, that’s the last time I will tell you!
I bought some stereo speakers on eBay. It was a brand and model I really liked, already owned, but wanted another set for another room. Not a brand with a great cult reputation ( Cambridge Soundworks Ensamble ). Paid $100, well over market but under what I thought personally they were worth. Arrived, quick, were in great shape, and a few months later I got a package with some badges for them that the seller thought went with the speakers. I was quite happy.
I bought a few things on eBay over the years but I have always believed that there is a lot of shill bidding going on. Frankly, from a technical perspective, it really isn’t hard to do some fake bidding to drive up the price a bit. I think if I was doing it on a product that I was selling I would do the shill bids in the middle of the bidding process being careful not to burn out the bidders interest too fast and then let a couple of real bidders bring in the final selling bid.
I haven’t heard of the second chance offer (it’s been a wile since i have been on the site) but it certainly makes sense if you have more that one of the item to sell.
I buy everything from Lord Bezos these days anyways………
I tried car shopping on Craigslist a few years ago. Found a nice, low mileage 2005 Toyota Highlander at a low price I couldn’t believe. I was right not to believe it. “I’m military and getting deployed, need to get rid of the car. Really don’t want to. But you put the money in this escrow account and then I have the car delivered to you.”
Yeah, okay. Have never visited Craigslist since. And have never visited EBay.
I remember watching this:
Perhaps my background will help explain some of my affinity to auctions. In my college years, I attended many a car auction and bought and resold plenty. At the age of 20, NY State sent me a certified letter warning I required a Used Auto dealers license, as I has already purchased and sold 9 vehicles that year. I purchased wonderful estate furniture at that age. Beautiful crystal, mahogany dining room suite (Which my sister now proudly uses in her country farm house) fancy linens (some with wine and tomato sauce stains). In the lean years, my older brother started a flea market/ weekly auction. He hired me to go to estate sales, garage sales and dumps and find things to sell. I found treasures and junk. we sold most of it. In later life I have purchased a few cars for personal use off of Ebay, craigslist, and other sites. A deal is always exhilarating, and the joy of getting something below market price – well – it still feels great.
Today, I have the financial liberty to buy off a dealers lot. But why would I? As I have oft joked with my Mom (who celebrated her 90th on Black Friday last November) I was born a poor black chil in the depression. Her response: You weren’t born in the depression! ignoring our obvious Polish/Germanic heritage.
People bid confidently on their internet only because persistent men stand ready to call customer service.
That cloud needed yelling at.
I bet he was the same guy that was military and retiring and wanted a car to tool around in and also wanted to do the deal in a strange and shady way.
That guy sure does get around.
I have never bought anything off of eBay, but I have heard enough stories around sudden increases in price in the last few hours or minutes of an auction (particularly in connection with cars) that I have long assumed that there was a significant amount of fake bidding to drive up the price.
[I did once buy a car that I had found on eBay for sale by a dealer, but I contacted the dealer directly to buy it, rather than buy it through the eBay system.]
I used to sell and buy a few things on auction at eBay. It was common for most of the bidding action on things I sold to occur in the last few minutes. Pleasant surprises some times, and some times not. Most bidding action on things I was buying occurred in the last few minutes, too. In fact, I learned to save most of my bidding for the last few minutes.
When an auction has a fixed end-time (as opposed to ending when the bids stop) there’s no point in bidding until shortly before the end. All you do is drive the price up.
It’s interesting. We have bought numerous things over the years from eBay, and even sold a few. In the early days we used to buy high end sunglasses (Serengeti) at a huge discount, but those days seem to be gone. Amazon has been so reliable as far as finding the best price that probably 95 percent of our on line shopping is through them. (Although Mrs. Tex’s purchases from Lego likely distort that on a dollar basis).
ebay is like anything – scammers will eventually find all the loopholes, and every time the business plugs a hole the scammers find new ones.
Seems to me that I get a second chance offer on any auction that I bid on but failed to win. Maybe that’s just me though.