Analysis of current AH's rules regarding shill/internal/sketchy bidding practices
 

I don't want to hijack the mile high thread...but I've been concerned for quite a while about hammer prices for many cards in the hobby in the past 10 or so years.

Shill bidding on ebay.

final sales but item never really sells scenario.

hidden reserves.

AH's written rules which allow them to shill/bid items up to a reserve/desired outcome.

All of these things concern me and make me think that a lot of valuations in the hobby are artificially inflated.

I'd like this thread to discuss the various AH's and their practices regarding these issues.

I just went to HERITAGE'S site to see what their stance is on this...just because I had to start somewhere!!!!

It is not outlined in the terms of bidding but is buried in a pdf file under terms and conditions:

I found this:

For those too lazy to read the small print...

IT BASICALLY SAYS THE AH...IT'S EMPLOYEES...OR ITS AFFILIATES MAY NOT ONLY CONSIGN ITEMS AND THEN BID ON THEM...BUT THEY MAY BID ON ANY ITEMS.

Pete this is a very shady hobby. Has to be when even the "honest" AH's straight up tell you they can and will shill bid the items in their auctions to the price they want. Best part is nobody cares, AH owners thank you.:D

That is frightening, that's why I set my max price and never change it.

I do believe this is the first time I've seen Mile High have the right to bid in their own auction, but I know HA has had this in their T&C's for years. It seems like every 6 months or so HA name reappears regarding it. On the positive side, at least Mile High marked the lot as a pass, rather than just keeping the final bid "amount" displayed. I'm not sure how anyone could call either either HA or Mile High dishonest for this if it is in their T&C. To me it is quite simple, if you don't like the terms of their sale, don't bid.

On the other end of the spectrum, I know REA and LOTG specifically state employees can't bid and REA even goes so far as to tell you what lots are consigned by employees. I believe both also specifically state when a lot has a reserve.

I know, Ben. Im just trying to raise awareness.

I do not fault any of the auction houses that have such practices as long as they are stated upfront... I just have a problem with the artificial valuations!

If Auction houses or their employees are allowed to place bids, it seems reasonable to expect them to disclose when they have done so. At present, we are left to guess. At least by the end of the auction, and preferably beforehand, all bids placed by the house or its staff should be identified as such in the item's bidding history.

If an item has a reserve price , then that should be where the bidding starts, since the consignor will not take anything less. Seems simple to me. If the reserve is 100K, then the starting price is 100K. If you bid more than this, the highest bidder gets the item. Why secret reserves ?

Agree... But their objective is to get lots of bidders competing for the item. So it behooves them to start it off low- knowing there’s no risk, given the hidden reserve. They feel that the more people who prospectively “take early ownership” of the item, the better chance of the price being driven up.

Does not make it right... just stating their rationale.

I understand what you are trying to say, but honestly, that's just the AH doing what they should be doing, trying to get the most money for the consignor. The more people are bidding, competing, and raising the price, the better the AH is doing for both themselves and the interest of the consignor.

Yes, and that's exactly what I want as the consignor.

As a bidder, it's a different story! ;)

A local antique auction I used to go to had something similar.

They would announce just before starting that the people helping out were dealers, and were allowed to bid on items. It was mostly because without allowing them to bid they wouldn't get any qualified help. (I always figured it was because they asked friends to help since they'd be there anyway. )
Each had a specialty, and would rarely bid on any other sort of item. One was a doll dealer, and usually won. A couple of the others had shops that I'd been to and saw items for sale that they'd won a week earlier.

On the face of it it did seem a bit shady, but I never got the impression that it was anything but what it was announced as.

So what's the difference between AHs allowing their own employees to bid on their own lots and what Mastro (and company) did?

I read the T&Cs for all the major auction I participate in. Although I don't leave max bids very often, I NEVER leave max bids with Mile High, Heritage, and other auction houses that have similar T&Cs. But, I will leave max bids on occasion with auction houses that I consider to be very ethical AND that have T&Cs similar to REA's and LOTG's. In fact, I was traveling during the close of the recent LOTG auction, so I left a max bid on a scarce, pricey (for me) card I really wanted, even though I was pretty sure this card was consigned by LOTG's owner (I later learned that it was); and, I won this card for LESS than my max bid.

Location, location, location.:D

I always found it a little strange when I would place max bids on multiple items at Heritage only to get outbid on most of them at the exact same time. I always felt like it was automated.

"But (HA, or insert auction co here) is a billion dollar company, why would they need to do this"


Says the crowd

I was kind of hoping that this thread would lead to some of you investigating some of the other auction House sites and ultimately we can compile a grid or a list of all the auction houses and they’re bidding behaviors.

My intention was not to bash any individual auction house just to make everyone aware of who does what.

I will add to this when I have a moment.

Maybe to become a $2 billion auction company??

Pete, I am pretty sure that REA and memory lane use the same software, which I think precludes the AH from seeing a max bid. I also think both AHs forbid employees from bidding in their auctions; however, I think employees can consign.

Categories should be (1) can employees consign, (2) can employees bid, (3) can employees see max bids, (4) are reserves disclosed, and if so, at what point in the auction is it disclosed there is a reserve and at what point do we know what the reserve amount is.

It's that they are telling you up front. Like when I go into a store I say very loudly when I'm shoplifting, "I'm stealing this!!!!!" then walk out the door.

As long as you say it, you're good.

when I’m driving on a dark rainy night I’m less concerned about what other cars are on the road than I am who the drivers are.

Ryan, the same people who tell you that the software prevents owners from seeing max bids are those who steal their clients’ mailing lists and sell them to other clients.

This is exactly what happened to me in Hunt's yesterday. The auction had just opened - I bid on a whole slew of items - and was instantly outbid on every single one! I have never had that happen before.... It's as if each lot already had a ceiling bid in place. Normally you are the high bidder for at least a short period.

I know Hunt has stated they are privy to use hidden reserves on certain items... but for every single lot (dozens actually) to receive outbids instantaneously feels like a mathematical impossibility.

Because, Ted, otherwise, IMHO, lots of the great cards that get consigned to Mile High (e.g., the low-grade 1916 Holmes-to-Homes cards that just sold for insane prices), Heritage, and other auction houses with similar T&Cs would otherwise be consigned to "higher-integrity-T&C" auction houses like REA & LOTG.

While I'm not going to say there might not be an issue with some auctions, the AH placing automatic bids early doesn't make a lot of sense since they are also then limiting the number of potential bidders putting who may put in placeholder bids. I can also say it is not uncommon for me to go through the day an auction opens and put in a bid, and sometimes a bid several increments up if the opening bid is really low, on a majority of the card lots. Often I'll put in bids on lots up to say 50% of what I believe a lot should sell for with the idea to limit the number of other bidders. As someone who is willing to buy just about anything when the price is right, I do that to keep my options open during extended bidding when i go through looking for bargains. Have 2 or 3 people like me doing that and it is easy to see how you could get outbid immediately on multiple lots.

I know what you're saying, but it felt more like I was bidding against hidden reserves. You may well be correct, but this was a vast array of items that were in no way related. Much of it being obscure stuff with limited mass appeal. I've bid in hundreds of these auctions over three decades, and never encountered an opening day shutout like that one. Weird.

Yawn
Zzzzzz

Any one can buy any thing from any one any time online. Period. Posted rules from the AH matter not.

Just decide what you will pay and bid early or late. You sound like babys churning this same topic which has no answer. Just ketchup the fact the AH makes the item avalable to you!

Stop your wining

US economic recessions are the only time I’d contemplate bidding from auctions. This market is highly over inflated ....when it comes down its going to come down big.....a couple different issues may hit at the same time. Be patient and let the folk spend their money how they want. Don’t let emotions get you....save your money up and buy all this stuff at lower levels.
If not oh well you missed it ....B/S/T

Is there any actual evidence that getting several people "involved" really yields higher prices all the time? That's as much urban legend as it is fact, which is to say "no, there is no consistent evidence". It takes exactly two and only two every time - the winner and the runner up.

I hate secret reserves, and I don't see how this can be good for anyone. So many people here have discussed how they "move" their funds between auctions at various points based on what they're winning or not. If you don't at least know it's a "reserve auction", even if you don't know what the reserve is, you've allocated your funds to that auction. Then you find out AFTER it's over that you didn't actually win because it didn't hit the reserve?

This one is simple - at least note there's a reserve so people know. Once the reserve it met, the auction should say it's live and will sell. Anything else is just silly.

As far as auction houses and their employees consigning/bidding, I probably don't have that big of an issue with it as long as there are some common sense rules and disclosure around it. Some of that has been suggested, like disclosing which auctions have bids from parties with potential "conflicts of interest". Another should be for the auction house itself - if they're bidding, bid once and once only at some point prior to final day. The idea that the auction house and their employees would have the same "rights" as other bidders is again good for no one, and it clearly fuels speculation of manipulation and improper price reporting post auction, as this thread and many others demonstrate.

For the most part I set a bid and forget it - if I win great, if I don't oh well. I do try to revisit late in the auction (day before final or final day) and search for overlooked items. Otherwise, I'm comfortable with what I bid which makes it easy to go to sleep and not worry about it. I have never woke up the following morning and been disappointed as a result. And yes, I'm the second bidder quite a bit, but when I am it reinforces that I set value correctly. You literally just can't win them all.

There seems to be a lot of misinformation and incorrect assumptions regarding the terms & conditions of Heritage Auctions, so I’m pleased to take this opportunity clarify.

Let’s begin by noting the definition of shill bidding. Shill bidding is the practice of placing bids on auction lots to intentionally raise the bid price with no interest in actually purchasing the lot.

Next, here is the term that is being referenced in our terms & conditions, term 21:

21. The Auctioneer, its affiliates, or their employees consign items to be sold in the Auction, and may bid on those lots or any other lots. Auctioneer or affiliates expressly reserve the right to modify any such bids at any time prior to the hammer based upon data made known to the Auctioneer or its affiliates. The Auctioneer may extend advances, guarantees, or loans to certain consignors.

Here is what this term means:

(1) Heritage does sometimes consign items that they own to the auctions and some of those items have reserves. The reserves are published online, and reserves are a form of bid placed by the consignor.

(2) Heritage will place bids at a wholesale level on lots owned by other consignors if we think that by buying it at that price we can make a profit in the future. These bids are placed strictly as potential buyers, and are without regard to any existing bids on the lot. In addition, bids placed by the house are entered a week before the close of our sports catalog auctions, well before the bulk of serious bidding begins. The part about modifying bids has to do with outside data regarding an item's value, such as a third party authenticator changing an opinion about a clubhouse signature on a team signed baseball.

(3) Many Heritage employees, including myself, are also collectors, and we will place bids on items that we want for our own collections. When I win something, I pay the full hammer price, the full buyer's premium, and Texas sales tax.

Heritage and Heritage employees do not shill bid. It is an illegal practice, no matter the state in which the business is based, and any employee that engages in the practice would be reprimanded and very likely terminated.

Our auctions do not have hidden reserves. All reserves are noted and published online 7 days prior to the auction close for catalog auctions (3 days for internet only auctions), and any item that does not meet reserve is listed as ‘Not Sold’ in our post auction results.

Last, while I can understand some skepticism from collectors given the previous scandals related to some other sports auction firms, Heritage has been conducting collectibles auctions for over 40 years and is the largest auction firm founded in the United States. The fact that our policies are disclosed publicly should leave no doubt that we have nothing to hide, and that our practices are both legal and well within the bounds of hobby ethics.

I hope that this post clears up any confusion or concerns about the terms & conditions of our auctions. This will serve as my only post on the matter so if anyone has any additional questions, then please feel free to contact me directly.

Regards,
Chris

Chris Ivy | Director of Sports Collectibles
HERITAGE AUCTIONS
3500 Maple Avenue | Dallas, TX 75219
877-HERITAGE | (877) 437-4824
Direct: (214) 409-1319 | Fax: (214) 409-2319
Chris@HA.com | www.HA.com
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Thank you Chris for the explanation. I love the cards that Heritage sells and I spend a good deal of money with Heritage annually. So, I ask these questions not out of antagonism or spite, but as a customer who wants to truly understand the rules. Here is Rule 21, as you quote it:

"The Auctioneer, its affiliates, or their employees consign items to be sold in the Auction, and may bid on those lots or any other lots. Auctioneer or affiliates expressly reserve the right to modify any such bids at any time prior to the hammer based upon data made known to the Auctioneer or its affiliates. The Auctioneer may extend advances, guarantees, or loans to certain consignors."

A few questions:

1. Why can the Auctioneer, its affiliates or their employees bid on the lots that they consign? What would be the reason for someone bidding on their own lot, other than to shill? Indeed, if they truly wanted to buy it, they never would have consigned it.....

2. If I consign, can I bid on my own lots, assuming that I intend to pay the full hammer and BP if I win my own lot? If not, then why can he Auctioneer, its affiliates or their employees do so?

3. Are we allowed to modify our bids prior to hammer based on info that we find out? If not, than why is Auctioneer and its affiliates allowed to?

Seems that Auctioneer (and sometimes the employees), in its/their capacity as buyers, are given certain advantages that other buyers are not afforded, no? If I am wrong here, please explain.

Again, I love Heritage and I am customer, and plan on being one for a longtime. But I think these are legitimate questions, and some of the items that give board members heartburn.

It's good to hear from Heritage. It would be even better to hear from Heritage about their view on the altered card scandal enveloping the hobby, and what (if anything) they are doing in response.

For example, has the winner of this apparently trimmed and recolored 70K Hull rookie been contacted?
https://www.blowoutforums.com/showpo...postcount=1778

In a few live auctions where lots I've wanted have had reserves that weren't disclosed the way it worked was that I was bidding against the reserve which was handled as bids as if I was bidding against another buyer. Seems strange, but it worked pretty well, one place would announce when bidding was against the reserve, another wouldn't
Both would disclose the reserve when the bidding ended, or once it was exceeded. Both would usually then allow a bit at the reserve unless the high bid wasn't even close.

So like
all done at 120? hammer, "the reserve was 130 do you want it?"

Chris,

Your post here is much appreciated. Thank you.

I know you said that was to be your only post. But to Peter’s inquiry, please assure us that the winner of the altered Bobby Hull Card was notified!

It is not a poor reflection on Heritage whatsoever. A card doctor with nefarious intent submitted it to PSA, where it was issued a high numerical grade. The trouble is that once these altered cards are slabbed, they can (and will) end up everywhere in the hobby... trade shows, auctions, ebay, private sales, inheritances, and so on.

So rather than being a poor reflection on Heritage, the communication would be viewed as an enormous positive. Can Heritage notify the unsuspecting buyer, and more importantly report the consignor to Law Enforcement? Heritage can play an integral role in cleaning up the hobby!

Please let us know if necessary steps are being taken to alert the buyer and expose the consignor. True collectors will be forever thankful for any help in eradicating the corruption and deception that is plaguing this hobby.

To have a major player in the industry such as Heritage on our side would be a huge feather in your cap. Your loyal and core collector base would be forever thankful!

+1 on above and Peters question

Again...this was not to be an AH bashing thread...but since chris came on here in the 1st place...I also would like to hear his responses to the questions posed.

Perhaps someone could email the questions to him and post his response here???

While I understand what Chris is saying, I still think its slimy of an auction house to bid in it's own auctions for any reason. Basically you have a multimillion dollar bidder that can outbid everyone on all the lots in the auction raising all lots to a "wholesale" price. Or bidding up others who may have had a shot at a good price on something if it was falling under the radar or demand happened to be low at that time. I just don't like it. :mad:

I agree...as well as the idea that they bid if they feel like a lot is a "good deal?" Everyone's idea of a "good deal" may be different.

yup, if the lot is a good deal, did they they really do all they can for the consignor? Especially if they feel they can sell it again and make more of a profit?

Ostensibly these auction houses don't have knowledge of the bids of others.

As a company that uses the same platform as REA I know I can't see the maximum bids.

It is just seeming more and more...to me...like AH's are like "the dealer" in vegas.

They have distinct advantages over the "players" and they win most of the time.

Well
 

Well, let me see if I have this straight:

1. I am bidding against the other bidders.

2. I am bidding against the employees of the auction house, some of whom are bidding on their own items.

3. I am bidding against the auction house, who is scooping up any good deals.

4. Items that I consign are competing for a limited amount of dollars with the auction house consigments and the employee consignments.

5. Heritage only charges me a 25% buyers fee for the privilege of of buying from them.

Sounds like a good deal to me. Where do I sign up?

I have a vision (relayed to me by a friend) of Bill Mastro back in the day at one of his own auctions, with a bid paddle.

When the house wins an auction, and of course doesn't pay a premium, how is the price reported to the community?

I give credit to Heritage, they came on here and said they bid on their own auctions. I guess my definition of shill bidding is different than theirs.

Chris, I applaud you for posting the clarifications to Heritage's T&C #21, and I have assumed that you have been completely candid with us. But, as you can see, your damage-control effort and "only post on the matter" was one post too many, for it has backfired on you. IMHO, not that you are likely to care about my HO, what Heritage should at least do is completely revise T&C #21 to include the essence your clarifications. Regardless, you have not changed or even dented my intention to NEVER leave a max bid in a Heritage auction as long as T&C #21 remains (or with any other auction house that has a similar T&C).

Wow...I mean WOW. You really thought your post was a good thing, Chris 'Poison' Ivy??????????????? My gawd!!!!!

Darren, obviously you don't think so. But, I said what i meant, and I meant what I said. Throughout my life, I have striven to "do the right thing." IMHO, what Heritage is doing regarding their T&C #21 is not the right thing (for any auction house). Simple as that.