Shill Bidding

[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.

[jhs5120]

Originally Posted by Exhibitman

This is really simple, guys:

reserve = legal
shilling = illegal.

Simple as that.

I agree, but does our hobby differentiate? If PWCC included in their auction description that there is a hidden reserve on some lots and may be bid up to that amount by the house, will our hobby accept this?

I don't believe the use of hidden reserves (even though legal) is ever an acceptable practice with sports auctions.

[Jeffrompa]

Everyone is bored with this subject . I am too . I guess its a fact of life people are lying cheaters .

[Leon]

Originally Posted by jhs5120

I agree, but does our hobby differentiate? If PWCC included in their auction description that there is a hidden reserve on some lots and may be bid up to that amount by the house, will our hobby accept this?

I don't believe the use of hidden reserves (even though legal) is ever an acceptable practice with sports auctions.

I think as the hobby matures it is a sad but true fact that if you don't know the hobby market you can get taken by a shill. Of course they can and do happen anyway, and collectors get taken, but knowledge is always key. There are several auction houses that have that practice of bidding in their own auctions. I don't agree with any of them personally but if I want to bid then I accept the rule. As Adam said, shilling is illegal and setting reserves isn't. And for some reason, if an AH says they bid on their own lots it's ok. So as long as you say you are shilling (house bidding) then it's all A-OK. (just not to me)

[Snapolit1]

I suspect that the guy who gives the Mantle card to PWCC tells his best friends to run it up till it gets to a realistic number and then see what happens. No shiller with an empty wallet really wants to end up holding that size bag when the music ends. Maybe it has more to do with the insanity of PWCC starting a $75,000 Mantle card at a penny.

I like PWCC. They seem to run a very professional gig. Customer servive and shipping is excellent. If you feel otherwise there are other places to buy cards. I doubt Brent needs to worry where any of these items really end up. He must have a warehouse half the size of Washington (or wherever he is.)