back to article eBay jewellery store fined $400,000 for shill bidding

A jewellery company which allegedly bid on its own eBay auctions to "illegally drive up prices by as much as 20 per cent" will pay $400,000 (£204,000) in "restitution and penalties", Reuters reports. The New York state attorney general's office said Ezra Dweck of EMH Group and his employees made over 232,000 bids on auctions in …

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  1. Joe K

    "deny the claims"

    Uh-huh, i'm sure Ebay knew very well that something was up, seeing as they LOG EVERYTHING and probably saw the same IP addresses bidding over and over again for months!

    But no, they just wanted to avoid a court battle. how stupid do they think we are.

  2. Anonymous Coward
    Anonymous Coward

    Evasive answer

    <font color=green>"did not intentionally encourage any fraudulent bidding"</font>

    It's surely irrelevant whether the "company" encouraged it or not. A company is responsible for the actions of its employees. If employees can be proved to have bid on the employer's auctions, knowing them to be auctions listed by the employer, then the employer is liable.

  3. Anigel

    Crime really does pay

    5M usd in fake bids - 400,000 USD fine

    = 4.6M profit for company

    = 400,000 profit for treasury

    and 5M loss for real people

    thank goodness they are there to protect the real customers without that kind of protection the customers have lost 5M

    Oh hang on they still did but this way treasury gets a share of the proceeds as well.

  4. Peter

    Is this a problem ?>

    Surely, if the punter didn't value the goods then they wouldn't bid ?

    In real auctions the auctioneer will often take a bid "off the wall".

  5. Dillon Pyron

    The only one

    Good thing they're the only one doing that.

    </sarcasm>

  6. Chad H.

    EMH??

    (Quote)

    EMH deny the claims, and a lawyer for the company said it had agreed to cough up the cash "only to avoid an interminable, costly battle with the AG's office". He explained: "EMH and Mr Dweck did not intentionally encourage any fraudulent bidding. A buyback program, which was vetted by two attorneys, was created to give winning bidders an incentive to sell back to EMH certain items."

    (end Quote)

    So, even Voyager's emergency medical Holoigram has gotten in on the ebay-fraud racket... is nothing Sacred?

  7. James

    I'm surprised this activity is illegal

    Why is this illegal? Surely the winning bidder is prepared to pay the price that they bid and no-one is forcing them to pay more than they are prepared to just by bidding on their own auction.

  8. Anonymous Coward
    Anonymous Coward

    Voodoo

    "5M usd in fake bids - 400,000 USD fine etc"

    This does not take account of the possiblity that some auctions might have been "sold" to the company's shills, in which case the company would be losing a very small amount of money in eBay's fees.

    Assuming my maths are correct, if the company had sold all of its goods to real people, and assuming that the "over 232,000 auctions" figure is very rough, the company could have made a profit of as little as five million cents, in which case this fine would hurt them. We don't know enough detail from the report to make a conclusion.

  9. Anonymous Coward
    Anonymous Coward

    @james

    OK, here we go, shill bidding in a nutshell:

    I have an item I wish to sell for, say, 40 quid.

    I put it in auction with a reserve of, say, 30 quid ('cos I can't be arsed with timewasters - that's why).

    The auction gets to 40 quid.

    I get a mate to bid 45.

    a) Someone bids 50, they win, they're happy, I make 10 quid more than I wanted in the first place.

    b) Nobody bids above 45. I get to keep / relist / resell the item. *I CANNOT LOSE*.

    Repeat 'til fade.....

    The whole point of an auction is to sell at the highest bid price. Shill bidding perverts this process. In scenario (a) above, someone just got conned out of ten quid (think about it). In scenario (b) I get to fight another day and con some other poor sap out of ten quid.

    Got it?

    Good.

    TeeCee

  10. Nix

    No Reserve means No Reserve!

    It's illegal (and should be) because these auctions are being listed as 'No Reserve' auctions.

    Whether or not someone is willing to pay a higher price is irrelevant. The fact that these auctions are being touted as having no reserve price, when in fact company employees are bidding on them (and thus creating a minimum or 'reserve' price) is unfair not only to the consumer, but also to the other sellers on ebay who don't reap the benefits of getting a low opening price to boost traffic to their ads.

    And here-here to Anigel for pointing out the slight $4,600,000 'discrepancy' between the fine and the profit. If all crimes were as profitable as that, I'd trade in my suit and tie for a ski-mask and gun and make my way to the nearest Bank of London.

  11. Anonymous Coward
    Anonymous Coward

    Lower price listings

    I'm not sure of the detail but I know ebay 5p listing day promotions normally require a seller to have a starting price and a reserve of less than £1, this sort of scam used in that context could make a huge difference to a sellers listing fees.

    I wonder whether the settlement included an acknowledgement of liability - in which case ebay may be after them next for the rest of the fees that would have been due if the correct reserves were used (they'd probably sue the high price shill bid on each item to calculate what they were due as reserve fees).

  12. BobApril

    Illegal profit vs. sale price

    Anigel - The jewelry sold for $5 mil, true, but without the shill bidding, it would still have sold for something. Presumably the AG ran the numbers and decided they got $400K extra, above what it would normally have sold for. (Or more likely, they boosted the prices by less than $400K, and the AG tacked on some punitive damages.) Comparing the $400K fine to the $5 mil sale price is not a fair estimate of profit, and is DEFINITELY an unfair assumption of stupidity in the prosecutors.

  13. Alan Donaly

    ebay jay walkers

    All the people fencing stolen goods on ebay millions a year

    and taking money and not delivering any goods and they bust

    this Jewelry store for shill bidding please if it's too high don't

    bid how hard is that if it's not who cares if I don't care enough

    to save myself some money I am an idiot whether I am bidding

    against a shill or not this is just stupid.

  14. Matt

    eBay has really taken a turn for the worst

    From a buyers point of view, there are so many reasons to avoid eBay these days. Not only the aforementioned topic, but also the sellers, who list items for £1 and postage at £5 for something that weighs less than a stamp, promise first class postage, only for the item to turn up 2 weeks later with a 2nd class stamp on it, posted from a Uk location. On top of that, you have the now laughable feedback system, which is so abused in relation to shill bidding, with people leaving feedback for fake auctions all over the place, and now the fashion for 'power' (sic) sellers to completely abuse the system by attempting to avoid a bad rating by not leaving feedback until a user leaves the seller a positive, essentially bribing the buyer, 'if you leave good feedback for me, i'll leave it for you'. Even though the buyers part of the sale is complete when he/she has completed payment, this is when a seller should be rating them, but no, now you have to wait till you have received your (poorly packaged and under stamped) goods, and then leave glowing feedback in order to boost your own.

    As far as the co. that got fined, I say hooray, but for christ sakes it would be nice to see eBay pull a finger out of its arse and do something about the small time crooks instead, who probably cause a humungous amount more grief on eBay with fake auctions etc.

    /rant over

  15. Anonymous Coward
    Anonymous Coward

    Other scams as bad

    I bought an item from a UK book-dealer with a good feed-back rep. After the auction he added a massive premium (15%) for using PayPal, not mentioned before anywhere - basically because no-one else bid and he wanted to get a better price than the successful one. He tried to blackmail me with feedback doom and gloom. I said what gives, he said that feedback was his "weapon of choice" when people didn't "obey" him. I refused to pay, he wrote over the top bad feedback. EBay more or less said "shit happens", be more careful next time. Thanks guys.

  16. Spike Ravenscroft

    Not All Bad!

    I really don’t like the way eBay is going at the moment.

    Its full of con artists and spammers and general meanies.

    In the meantime there are little people like me selling good quality items and trying to provide a good service to my customers.

    The reason I don’t leave feedback for my customers until they have left feedback for me is so that I know they are completely satisfied before I consider the sale complete.

    It’s quite a horrible environment to deal in as everyone starts with the assumption that there is a scam going on and you are out to fleece them and you have to do a lot of work to change their minds. eBay and people like this don’t help, that’s for sure.

    An alternative? Please?

  17. Matt

    re: Spike

    "The reason I don’t leave feedback for my customers until they have left feedback for me is so that I know they are completely satisfied before I consider the sale complete"

    But what does your rating of the buyer have to do with THEIR satisfaction of your product/service? You are deluded if you think you have a valid reason for holding back your feedback other than a reason to give them bad feedback if they are unsatisfied with your product and give you bad feedback.

  18. Anonymous Coward
    Anonymous Coward

    Not the worst thing that happens on eBay...

    OK, so I admit, I mostly use eBay to bid on iPod kit and old records (I'm that kind of geek) where you don't see so much of this stuff, but all the annoyances mentioned above don't greive me half as much as when a seller removes an item "because it is no longer available for sale". Yep, in other words, they got a better offer and took the item off eBay. Because that's obviously how it works...

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