From The Sunday Times January 28, 2007
Revealed: how eBay sellers fix auctions
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.
Last week one of the UKs 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 worlds biggest auction site, is doing enough to protect consumers.
Shill bidding is against eBay rules and is illegal under the 2006 Fraud Act. However, the resulting higher prices on the site boost the value of eBays share of the sales.
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, eBays UK website has attracted more than 15m customers. It sells more than 10m 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 eBays handful of top earners selling more than £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 Christs 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). Dont call it shill bidding. Then I wont be accused of shill bidding. Yes. I mean Ive got people.
Ive got some of my big clients who buy big items off me, I look after them. So I can get on the phone to America and say: Mr XXXX . . . youre a multi- millionaire. You buy a hundred grands worth off me a year. Do me a favour would you. Just put yeah. Exactly.
He claimed eBay would never follow up a complaint against him for shill bidding because he generated about £15,000 a month in commission for the company. Are they going to ban somebody whos making them the best part of 15 grand a month? No, he said.
After being told that he had been talking to an undercover reporter, Paraskevaides denied that he had ever shill bidded on eBay and claimed he was talking about clients who sometimes bid on expensive items if they wished to protect the price.
However The Sunday Times discovered businesses that have been bidding on their own items. One leading dealer from London admitted last week that that he had shill bidded in the past.
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.
spokesman added: The change to the way bidder IDs are shown has
already resulted in a safer environment for users.
me an offer: the eBay bid scam
He advised: You phone up a mate, and say can you please make an offer . . . thats called shill bidding, and strictly speaking its illegal. Its against eBay regulations.
Asked if many sellers used the tactic, he replied: Of course they do. Come on! Were in the real world here.
Paraskevaides is a man well versed in the techniques used to boost sales on the auction site. He claims to be Britains biggest eBay seller with an income of £1.4m a year. But he was unaware that the client he was trying to impress was in fact an undercover Sunday Times reporter investigating dealers on eBay.
Our inquiries have established that Paraskevaides was one of a number of eBay sellers prepared to shill bid to drive up prices by asking friends or associates to bid on their goods.
The sites safeguards are so lax that it is often impossible to detect especially if bids are placed on separate computers using different eBay identities.
Many regular eBay users complain that the practice is widespread across the auction site.The Sunday Times has identified a number of businesses ranging from a car dealership to an overseas property agency that have bid on their own items.
One former eBay employee said last week that eBay never really bothered that much about customer service.
Since its foundation 11 years ago, eBay has become the worlds largest marketplace with 212m registered users. In Britain there are 15m customers and the site accounts for 10% of all time spent on the internet.
The eBay phenomenon is driven by the simple idea of a marketplace based on trust. Sellers and buyers strike a bargain at an internet auction and their trading records are self-regulated by both leaving feedback on the success of the transaction.
For example, should an item not meet its description or should a buyer fail to pay for the item, then this can be reported on a trading record.
Auctions, which last several days, often begin at £1 and a seller cannot withdraw their goods in the last 12 hours when the bidding usually hots up.
Shill bidding allows sellers to increase the price of their own items or to buy them back if the sale is not going well as it nears its end. The practice is particularly suited to the internet where eBay charges small commissions because it has such a high volume of sales and few overheads.
The auctions have
attracted a growing band of entrepreneurs who have made millions by trading
solely through eBay.
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