Shill Bidding

[Sean1125]

Gixen.com

[Peter_Spaeth]

Originally Posted by Sean1125

Gixen.com

LOL. Too easy I guess.

[Yoda]

I am really naïve about the nuances of shill bidding, not that I really want to know too many details, but am curious about the end game with a major card
in a major auction with a major auction house. (Harvard Business School has assuredly already picked up on the Mastro debacle as a good case study.) Presumably, a shill bidder if his bid won the auction would be held harmless by the consignor and be reimbursed for winning. Some kind of side agreement, I suppose. If there are more things more egregious than paying more for a long coveted card because the price has been driven up by greedy, unfair means, then I can't think of it at the moment.

[swarmee]

Not every time has Brent said that his bidding patterns were irregular but honest. He has agreed that there have been instances of shill bidding revealed to him and he has cancelled them and claimed that he blocked the consignor/bidder from making any additional bids in his auctions.

[Brian Van Horn]

Originally Posted by swarmee

Not every time has Brent said that his bidding patterns were irregular but honest. He has agreed that there have been instances of shill bidding revealed to him and he has cancelled them and claimed that he blocked the consignor/bidder from making any additional bids in his auctions.

If the shill bidding is going on with Brent's auctions, then it is a highly risky procedure. It would also not be the brightest move in the world. Mastro and its spinoff Legendary were caught. Doing it on eBay, although traffic may help to hide the procedure, any entity that would be investigating the behavior would be able to see patterns of behavior and would be able to build a case from that end. The harder part would be linking actions on PWCC's end to the alleged shill bidding. If that happens, then........

[jhs5120]

Is there any industry other than sports memorabilia that frowns upon shill bidding? I have witnessed hundreds of auctions that openly are shilled by the auctioneer (up to a hidden reserve) to garner interest and favorable outcome to the seller. It seems like sports collectors have turned a bogey man out of an otherwise unanimously accepted positive influence on auction house experiences. Just my two cents.

[MetsBaseball1973]

One thing I personally believe is there is a direct correlation among not having the funds to win a desired item, losing an auction, and ranting about shill bidding and rising prices.

[ullmandds]

Originally Posted by MetsBaseball1973

One thing I personally believe is there is a direct correlation among not having the funds to win a desired item, losing an auction, and ranting about shill bidding and rising prices.

well I started this thread and I have been winning everything in sight lately!

[nat]

So there are a few different things you might be trying to do with shill bids:

(1) You might be trying to ensure that your item sells for your minimally acceptable price.

(2) You might be trying to squeeze every dollar out of bidders.

If (1), it seems to be unnecessary. Just start bidding at the lowest price that you'd take. It'll knock out some bidders, but those bidders wouldn't have stuck around in a shilled auction either.

It's (2) where shilling plays a role, and is pretty unambiguously ethically problematic. One reason that it's ethically problematic is that it sends a signal to bidders that there is a market for this card, when, in fact, there isn't. It's a kind of deception. Another related reason is that bidders are participating in what they reasonably believe to be an honest auction, when it's not that at all. (Both problems could be fixed if the auction house announced ahead of time that shill bidders are going to participate in this auction. But of course that's not going to happen.)

In any case, I sure hope that auction houses make shillers who win their own items pay the full price (including BP), and send them a check for their share of the sale, which then needs to be reported in income taxes. If shilling could cost you 30-60% of the value of the item (depending on your tax bracket and local and state tax rates), that at least is some incentive to not do it.

EBay is a different animal, because the seller can just cancel the auction if it looks like they are likely to win their own card. Is there any mechanism to discourage this? Can the high bidder leave negative feedback if an auction they participate in is canceled?

[Peter_Spaeth]

Originally Posted by jhs5120

Is there any industry other than sports memorabilia that frowns upon shill bidding? I have witnessed hundreds of auctions that openly are shilled by the auctioneer (up to a hidden reserve) to garner interest and favorable outcome to the seller. It seems like sports collectors have turned a bogey man out of an otherwise unanimously accepted positive influence on auction house experiences. Just my two cents.

Prepare to be vilified.

[Jeffrompa]

Originally Posted by jhs5120

Is there any industry other than sports memorabilia that frowns upon shill bidding? I have witnessed hundreds of auctions that openly are shilled by the auctioneer (up to a hidden reserve) to garner interest and favorable outcome to the seller. It seems like sports collectors have turned a bogey man out of an otherwise unanimously accepted positive influence on auction house experiences. Just my two cents.

That's what Bill Mastro said .

[jhs5120]

Originally Posted by Jeffrompa

That's what Bill Mastro said .

Bill Mastro broke the rules of his own auctions. If Mastro had put in language in the terms and conditions that stated certain lots have pre-established reserves and will be subject to house bids up to the reserve, than Mastro would not be in jail. (Assuming he only bid up to the reserve).

Christie's, Sotheby's, Phillips and most every big and small auction house in the world has similar language. I believe sports memorabilia is the only industry that frowns upon the practice.

[Exhibitman]

This is really simple, guys:

reserve = legal
shilling = illegal.

No moral judgment, no excuses, just simple criminal conduct.

You want to use a reserve, use a reserve. Don't pretend there is a market auction going on if there isn't.

As for why shill, it is a long con: create an inflated market price then sell into it later on. I saw the same thing done to jack up the prices of real estate in the 1980s-1990s: fake sales with straw man buyers to inflate comparable sales prices, followed by real sales at inflated prices.