Suit Accuses eBay of Shilling

March 28, 2005
A class-action lawsuit accuses eBay of enabling "shill bidding" -- artificially inflating bids placed by buyers on the site. The company says the lawsuit is "without merit."

The complaint was filed earlier this month in California's Santa Clara County Superior Court. It alleges violations of California's Auction Act, California's Consumer Remedies Act and unfair competition.

Basically, the suit argues that when a bidder increases his maximum bid limit, eBay sometimes illegally submits a bid on his behalf, even if he was already the highest bidder.

The suit was brought on behalf of Glenn Block and a class of bidders who purchased items on eBay during the past four years.

Block accuses eBay of raising a bid for an item he was trying to purchase from $111 to $112.50, after he responded to an e-mail warning that he had reached his maximum bid limit and was the highest bidder.

Block says he didn’t need to pay the extra $1.50 in order to win the auction and his lawsuit accuses eBay of pitting buyers against themselves, and profiting from the increased bids.

Block is not alone. Other consumers have reported similar problems to ConsumerAffairs.com.

"I was high bidder on an auction for a math textbook. My $30 bid was matched by another. E-bay rules are that if two bids are matched then the first one is the winner. No other bidder bid higher. E-bay bid automatically UP to $31 -- bidding myself up to $31 against my own $30 bid," said Chris of Pocahontas, Arkansas.

Chris said he complained to numerous support personnel at eBay before one told him to contact the legal department.

"This is a common practice by ebay according to their explanation to me," Chris said. "A dollar here and there through millions of transactions surely brings in countless dollars. They are aware of the problem and refuse to fix it."

The automatic bidding up has been compared to shilling, the practice of bidding on an item with no intention of buying it, merely to raise the price. Shilling, or shill bidding, by users is forbidden by eBay and may result in suspension from the site.

But the lawsuit says that eBay's rules apparently don't apply to the site's automated processes: "If a user accepts eBay’s request to provide a higher maximum bid, eBay then acts as a shill bidder on behalf of the seller at the price level of the highest former competing bidder. As a result of eBay’s hidden shill bid, eBay automatically raises the hapless buyer’s bid so as to out-bid eBay’s shill."

eBay denies that. "...the plaintiff completely misunderstands the functionality of the eBay bidding system," a spokesman said.

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