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Protecting Yourself from Shill Bidding at Online Auctions

11 December 2012

Just yesterday we gave you 25 ways to save money on Christmas shopping and today, we’re going to tell you about a few ways you can protect yourself from online auctions. This is something that’s going to become even more important as many people shop online for items and need to keep themselves – and their money – protected. And while many online consumers may know about checking out the seller’s background and making sure they’re working with a reputable company, there’s a tactic some sellers use to get more of your cash; and it’s call shill billing.

Shill bidding is a practice that some auction sellers use in order to boost up the bid amount on one of their items. Whether there is already a bid on the item or not, the seller will create another eBay profile (or use someone else’s that’s willing to help them in this particular type of fraud,) and use it to bid on their own item. This will push up the amount of an item, and either you bid higher or you risk losing the product (or so you think.)

Chances are that even if you do bid higher once the seller has bid on their own item, they’ll bid again – likely with the same user name. This can go on until the auction on that item is almost closed. At that time, the seller will then withdraw all of their bids, leaving the next-highest bid – your bid that’s now way overpriced – responsible for purchasing and collecting the item.

It’s this strategy that can sometimes make online shoppers, especially new ones, most wary of shopping online. But there are things you can do to ensure this doesn’t happen to you.

First, if you find that there are multiple bidders, or that one bidder continues to increase every bid placed, look around on the auction site for similar items. Are the bids placed after yours for a reasonable price, or are they much higher than what similar items are being purchased for? Those higher bids on the item you want are probably shill bids.

There’s another way you can check to see if shill bidding is occurring on items you want, but it does take a bit of research. Write down the seller’s name and then look through other items that they have up for auction. Does the same user name appear again and again, bidding on items? Are the amounts much higher, or much lower than a normal bid? Has that bidder already dropped out of several auctions put on by the seller? The chances are that’s the shill bidding profile, and you should stay away from that seller entirely.

Shill bidding is something that every online shopper (which is just about everyone these days,) needs to be aware of and take careful steps to try and avoid. Because this practice lowers consumer confidence and makes online auction sites more challenging to use, many sites such as eBay forbid the practice. Reading the seller and buyer agreements before selling, buying, or making any transactions is a step you should take to protect yourself from all illegitimate practices used by sellers, and other buyers too.

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