Prices artificially driven up by ebay's biggest sellers
Monday, January 29 2007 @ 05:56 AM MSK
Customers of the internet auction site eBay are being defrauded by unscrupulous dealers who secretly bid up the price of items on sale to boost profits. An investigation by The Sunday Times has indicated that the practice of artificially driving up prices - known as shill bidding - is widespread across the site.
Last week one of the UK's biggest eBay sellers admitted in a taped conversation with an undercover reporter that he was prepared to use business associates to bid on his goods for him. Our inquiries found evidence that a number of businesses - ranging from overseas property agencies to car dealerships - have placed bids on their own items using fake identities. The cases raise questions about whether eBay, the world's biggest auction site, is doing enough to protect consumers.
Shill bidding is against eBay rules and is illegal under the 2006 Fraud Act. But eBay benefits from the resulting higher prices on its site as it takes a percentage from all sales. One former eBay employee told The Sunday Times: "They never really bothered that much about customer service, because they knew that whatever happened it was to their advantage ... So yes, if something goes up to a higher value [because of shill bidding] they get a bigger slice." Last November eBay changed its rules to conceal bidders' identity - making it even more difficult for customers to see whether sellers are bidding on their own lots. Since its launch seven years ago, eBay's UK website has attracted more than 15m users. It sells more than 10 million items at any given time.
One of the beneficiaries of the boom is Eftis Paraskevaides, a former gynaecologist, from Cambridgeshire. He has become a "Titanium PowerSeller" - one of eBay's handful of top earners - selling more pounds 1.4m worth of antiquities a year on the site. In a conversation with an undercover reporter last week, Paraskevaides claimed shill bidding was commonplace on eBay. When the reporter asked whether he arranged for associates to bid on his own items, he replied: "Well, if I put something really expensive [up for sale] and I was concerned that it was going for nothing, I would phone a friend of mine, even a client of mine who buys from me, and say: For Christ's sake, I sell you 100 quids' worth of items a week ... just put two grand on it, will you?" The reporter was posing as a seller of valuable antiquities. He inquired whether Paraskevaides could sell them on eBay and guarantee a minimum price. He replied: "Leave it to me [laughs]. Don't call it shill bidding. Then I won't be accused of shill bidding. Yes. I mean - I've got people. He claimed eBay would never follow up a complaint against him for shill bidding because he generated about pounds 15,000 a month in commission for the company. "Are they going to ban somebody who's making them the best part of 15 grand a month? No," he said. A spokesman for eBay said he expected that the company would now launch an investigation into Paraskevaides. Anyone caught shill bidding risks a permanent ban.