Shill bidding occurs when someone places a bid on an auction for the sole purpose of stimulating bidding activity or raising the bid prices–with no intention of purchasing the product. Shill billing most often occurs when a seller is either getting no bids or is not happy with the bid prices thus far. Sometimes sellers with multiple auction accounts bid on their own offerings; other times they have a friend or family member do the bidding. Shill bidding is both unethical and a violation of eBay’s terms of service. The tactic is not necessarily illegal in the USA, but can be viewed as fraud in some cases and can be prosecuted. If eBay catches you engaging in this activity, they will shut down your account and may ban you forever.
Any experienced eBay member knows that bidding too early in the auction timeline can be a bad idea. Experienced users more often engage in stealth bidding, which is not a violation of eBay’s terms of service. With stealth bidding, you bid at the last few seconds of an auction and only bid the most you are willing to pay for an item. Early bidding just tends to drive the price up early, which is also the goal of shill bidding. When buyers see bidding activity, they tend to take a closer look at the item because now there is a perceived value to another bidder. The more users reviewing an item, the more likely multiple users will bid.
Sometimes the goal is to stimulate the bidding process when no bids are occurring. With today’s tight economy, any auction items with high starting bid prices or outlandish shipping fees are likely to receive zero bids. Once an item starts receiving bids, more users are likely to bid. eBay also frequently raises the rank position and visibility for items with lots of activity, including multiple bids and multiple users who place items on their Watch List. The incentive can be strong to engage in this practice, especially if you are a seller who tends to use low starting prices for their auctions. Low starting prices are sometimes lower than the cost for an item. Low starting prices tend to stimulate bidding, but sometimes they do not. The issue is not that the item won’t sell, but rather the item will sell with a single bid at the starting price. Making money by selling anything below the actual cost in unprofitable.
We’ve seen a recent phenomenon with people offering auction bidding services on Fiverr.com. A search in Fiverr for ‘auction bidding’ or ‘shill bidding’ yields several people offering these services. If you are going to cross the line into the dark side, doing the deed though someone with a different IP address than yours is safer. eBay undoubtedly records the IP addresses for all bidders and can easily identify a seller engaging in unethical practices.
You should now have a better understanding of what shill bidding is and why you risk losing your account if you use this tactic. The best advice we can offer is “don’t do it,” but be aware of what it is and how how it works.