Strategies for Detecting
Shill Bidding on eBay

By Ed Sherman

My experience bidding on eBay over a period of 18 years has taught me that shill bidding on eBay has gradually become more prevalent over time. There is every reason to believe this trend will continue. Although eBay forbids the practice, they have implemented a series of changes (discussed below) that buffer buyers from key data that would reveal shill bidding more easily. For a classic definition of shill bidding, I will borrow from Mike Brandly, a professional auctioneer since 1979 (Bio: In his blog, “Mike Brandly, Auctioneer Blog ~ All about auctions and auctioneers, with observations on auction law and common practice,” Mr. Brandly states:
“What shill bidding involves is bidding without the genuine intent to purchase, and rather with the intent to ensure price protection for the seller by one of two methods: 
   • The shill bids and if the bidding only reaches an amount less than Frank is willing to accept, the shill buys the item, and would then typically pay for the item and return the item to Frank, who would reimburse the shill for his purchase.
   • The shill bids with the intent of influencing others to bid, hoping others see his level of interest in the item, and gauge value based upon his bidding. In this scheme, the hope is that if the shill bids an amount, the other interested bidders sense one more higher bid as reasonable.
In practice, shill bidding typically involves a combination of these two methods because, of course, when the shill bids there is the inherent risk no other bids are made, thus requiring the shill to purchase the property, even if the scheme is put in place to influence others to bid higher than the shill.”

eBay’s Version of Shill Bidding When it comes to shill bidding on eBay however, the buyer and seller have no true risk because a transaction is easily cancelled between consenting parties with fees returned to the seller. It’s all done through various pages within eBay’s customer support system. The two shilling parties can even give each other positive feedback to enhance the legitimacy of their dealings (and their ratings)!

Here is what eBay has to say about shill bidding:
“Shill bidding means bidding for an item while holding more information about it than other members could—for example, if you're a family member, roommate, or the seller's employee. We don't allow shill bidding because it can falsely increase an item's price or desirability. Make sure your listing follows our guidelines. If it doesn't, it may be removed, and your buying and selling privileges could be restricted.
If a buyer is linked to the seller and genuinely wants to buy their item, they can use the Buy It Now option as they won't need to bid. Contact us if you think someone is breaking the rules.”

What Action Has eBay Taken?
We appreciate how eBay looks out for us. The challenge today though is that eBay has systematically endeavored to obscure a great deal of data that would assist the average bidder in detecting shill bidding. Here are some of the changes eBay has instituted that promote shill bidding:
• At one time, bidder’s ID’s were visible during an auction, allowing us to see details about the bidder and their bidding habits. You could even read their feedback, to look for patterns in who they were buying from. But in 2006, eBay instituted an initiative called “Safeguarding Member ID’s (SMI)” as “a significant step forward in protecting eBay’s bidders, who have increasingly become targets for unwanted commercial and malicious spam, such as phishing, spoof, and fake Second Chance Offers.”

That’s why today the only thing you see about bidders is an alias (e.g. f***4) and their feedback score. So lots of really useful data is now gone forever. Let’s remember though that shill bidding still existed before 2006 primarily through “private auctions” where bidder names are hidden. The intent of the vast majority of private auctions at that time was obviously shill bidding, so I devoutly ignored those kinds of auctions.

• The whole premise of SMI as stated by eBay in 2006 is malarkey. What is the common thread between phishing, spoof, and fake Second Chance Offers? Email. eBay could have implemented a safer email system either through security measures or simply preventing members who did not have a mutual transaction in play from emailing one another. By doing so, we could still look at a bidder’s basic profile, bidding patterns, and feedback yet not be able to send them problematic emails. Simple. No more scams. Well, no more scams other than shill bidding. But to be generous, it’s easy to see how eBay never thought of a safer email idea- in the ensuing 11 years.

• Private auctions did not disappear after the change to SMI in 2006. One has to wonder, “If I can no longer see any personal bidding information then why does eBay bother having private auctions as an option anymore?” Seriously, how does that make sense? As you will see later in my discussion around how to detect shill bidding on eBay, you can still detect patterns of shilling even without seeing personal information, patterns, or feedback about bidders. The private auction option allows sellers to overcome the problem of smart bidders detecting bidding patterns by obscuring even the alias name and number of bids per seller. So now sellers can openly shill bid their own auctions without any fear of detection. Why would anyone bid in such an auction? They do- every day. I once encountered a seller who explained that he uses Private Auctions as a way “to protect the privacy of bidders.” We can’t see bidder’s screen names anywhere in the auction. Even if you look at a seller’s feedback to and from sellers, only the alias is used! I emailed this seller asking about his practices, and he blocked me without responding! So what is this guy really protecting? Shill bidding, with no pretense of using fake names. Thanks, eBay!

• Did you know that in December 2012, eBay actually eased restrictions on shill bidding? It’s true. If you didn’t know, it may be because eBay never announced the change. The old policy prohibited friends, family and acquaintances from bidding on your auctions at all: "If people you know want to buy your item, they should do so in a way that doesn't involve bidding." That's because, according to eBay, "people the seller knows might have information about the item that other members don't, which might give them an unfair advantage." Since the policy change, eBay only prohibits “Bidding on your own items with another account.” As far as those who know you, “Buying an item from someone you know, as long as you don't intend to artificially increase its price or desirability or violate our Feedback manipulation or search and browse manipulation policies.” eBay doesn’t mention in its policy how it will determine intent. I have personally reported an obvious shill bidder at least 30 times. I also pointed out to eBay an account that bid on this seller’s lots more than 4,100 times in one month without winning (the bidder had an eBay rating of exactly 1). That I can tell, nothing has changed with this seller and its business as usual.

One could arrive at a logical, reasonable conclusion that eBay is supporting shill bidding in a methodical way while paying lip service to prevention. Why does eBay seemingly not care about shill bidding? Simple- the higher the final valuations of auctions, the more revenue eBay generates. Policing and enforcing shill bidding reduces revenue.

So with the information above as a primer on the problem of rampant shill bidding on eBay, what can the average consumer do to avoid overpaying? Presented below are my tips on how to detect possible shill bidding. Keep in mind these are tips- a strategic approach to ferret out situations where shill bidding may be occurring. There are no hard and fast rules that guarantee success. In the final analysis, you will develop your own sense of when shill bidding may be in play for a particular auction and only you can decide if you wish to participate or move on.

• Resist the temptation to log into eBay and immediately search for the “ending soonest” lots in your category of interest. You may see a bargain, but you are losing any opportunity to research the seller, photos, slabbing, certs, bidding, or other critical data you need to make sound decisions before placing a bid. I did this once with a graded, slabbed MS64 Morgan Dollar. It was a really good price for the date/MM. When I looked more deeply and discovered the coin was slabbed in an NNC slab (which comes from a notorious self-slabber), I immediately realized the error of my ways. Luckily, he agreed to cancel the transaction.

• Resist the temptation to bid too early. Most shill bids are placed in patterns. The most common pattern I see involves 1 – 4 low bids placed within the first 48 hours of the auction-start. I believe the reason why shill bidders do this is to create a sense of urgency that the product is really good, to begin filling in a reserve price the seller has in mind, and to get higher on the advanced search for items with “most bids.” Later, when a legitimate bid is placed, additional shill bids are added by the seller to get close to or above the legitimate bid. These shill bids often follow a pattern I call “nibble bidding;” small incremental bids placed to push a legitimate bid close to its limit but hopefully not over. The longer before the end of an auction you place a legitimate higher bid, the more likely the seller will feel bold about trying to run up to your maximum. Another technique sellers will use if you’ve placed a bid well before the end of an auction is what I call a “scouting bid.” This is when a shill account places a very high bid to ascertain your maximum bid. After the bid is placed, the seller can look at the bid history to see your max bid. The shill account then retracts their bid and either places another bid just below yours, or a different shill account places the bid. That’s why I am immediately suspicious when a bidder has retracted dozens or even hundreds of bids. It often means they are shills “scouting” out the highest bid in order to manipulate the outcome. So, if possible resist all temptation to bid too early, getting yourself into bidding wars with shill bid accounts, and bid as close to the end of an auction as possible.

• Resist the temptation to use what I call “Stacking Bids.” Stacking bids are extra bids that a legitimate bidder places on top of a bid that is already the highest. I understand the strategy- you are the high bidder by just a small increment, so you figure, “Let’s stack a couple or 3 higher bids as a buffer in case another bidder comes after me. I’ll show them- they won’t be able to top all MY bids!” The problem with this strategy is if a shill bidder (or even a regular bidder) notices that you have the 3 or 4 highest bids, they know they can nibble you up slowly, without any risk, until they place a bid just below your highest one. I see this pattern of bidding constantly, and in the end it often just costs you extra money. As suggested in the previous bullet point, always “bid as close to the end of an auction as possible.

• Always research the bid history before placing a bid. Make sure you know who your competition is! Below I will describe characteristics of shill bidder profiles, but if you don’t bother checking the bid history page you won’t be able to analyze the patterns. And not to be a broken record, but check the bid history page as close to the end of the auction as you can. A good strategy is to check the bid history about 10 minutes before the auction ends, and place your top bid in the last 30 seconds (or less). While one can never be sure if a given bidder is a shill, there are certain bidding characteristics that provide clues. Click on any bidder’s alias (blue link in the “Bidder” column at far left) to bring up the “Bid History: Details” page.

o Look at the 30-Day Summary to see what percentage of this bidder’s activity has been with the seller. My personal rule of thumb is if the bidder has 20% or more of their activity with this seller I become suspicious. The exception to my rule is if the bidder has limited activity. If they only placed 10 bids in the past month and two are with this seller, that 20% of total activity is not based on enough data to represent a pattern. However, if the bidder has placed 250 bids this past month with 20% or more on the seller’s auctions, I would be suspicious. And the higher the number of bids coupled with higher and higher percentages with this seller, the more suspicious you should become.

o Staying on the same page, look below at the table labeled “30-Day Bid History.” This info tells you what type of items the bidder has bid on, the number of bids they placed on each auction, which sellers they bid with (using anonymous names like Seller 1, Seller 2, etc.), and how far before the end of each auction the bidder placed their last bid. Each Seller alias is used once- in other words, if the bidder placed bids on 15 different lots from Seller 1, those bids were all placed with the SAME Seller. Here are some patterns to look for:

▪ Bidders with low ratings can be shill accounts. This is because the seller may be using the account to shill but not completing many or any transactions. I mentioned a bidder at the beginning of this article who had more than 4000 bids with the same seller in one month, 100% of their bids with the one seller, and a feedback rating of exactly 1. An account with those statistics can only be a shill account. That said, new eBay members are usually very aggressive and want to win stuff. At the same time, they haven’t yet figured out the nuances of bidding intelligently and “stealthily.” They can be seen “nibble bidding” until they see their alias at the top of the heap, even if the auction isn’t closing for several days. The default eBay account settings are set to notify the new member by email every time they have been outbid. When that happens, the aggressive newbie dutifully adds more nibble bids until they once again reign supreme. Finally, these same folks will often do “Bid-Stacking” as the auction ends in the hopes that multiple high bids will win the day. So, carefully review the bidder’s statistics to determine if they are simply a newbie, or a shill account out to take your money. Either way, I usually don’t bid at all when I see either type of bidder. I just wait for the next time the stamps come up again for auction.

▪ If the bidder has bid on many auctions from the same seller, the bidder may be a shill. Compare this to the bidder’s percentage of bids with this specific seller. If the percentage is also high, the bidder may be a shill.

▪ If the bidder has bid far in advance of the end of the auctions (often “nibble bidding” which you can see on the bid history page for that lot), the bidder may be a shill since serious legitimate bidders frequently bid as close to the end of an auction as they can. 14 bids placed by one low-rated bidder on an auction not due to end for 4 days should get your attention.

▪ If the bidder has bid on many disparate categories of stamps from the same seller, the bidder may be a shill. For example, if a bidder placed bids with one seller on auctions for early Canadian small Queens, modern Mozambique souvenir sheets in quantity, 1950s Venezuela Arms & Industry definitives, Fauna topicals, Cuba, French Colonies proofs, and Scott unlisted Trucial States, I strongly suspect they are a shill. Why? Do you know many people who collect all those far-flung areas at the same time? I don’t. Most people are chasing certain specific areas that share common threads. If you add to the mix that the same bidder has placed 650 bids in the last 30 days, 46% of them with the one seller, you should be strongly suspicious the bidder is a shill account.

▪ Look for more than one bidder with the same characteristics participating in the same auction. Sellers who shill try very hard to stay one step ahead of you. They know a single bidder who obviously only bids with that seller will make you suspicious. So, one strategy the sellers employ is to use multiple shill accounts to place bids across multiple collecting areas. And these shill accounts often have similar characteristics- high volume of bids especially with this specific seller, low feedback score, and seemingly random collecting interests. Also watch for bidders with frequent bid retractions. They may or may not be shill accounts however bid retractions without a competitive bid is a warning sign. You can see any bid retractions for an auction at the bottom of the bidding detail page (click on the number of bids link from the main listing page for that auction.

▪ While some of these shill accounts may have minimal feedback, some sellers may be using accounts with a high feedback rating to shill bid. I am not certain this type of shill account is being used sometimes on eBay, but I suspect some sellers do use them. How is this possible? It’s difficult to say for sure, however I have a couple of theories:
     o Some sophisticated sellers who shill bid may be sharing shill accounts with like-minded sellers.
   o Sellers may have friends, family, or customers who allow their accounts to be used for shilling (perhaps for an appropriate trading concession/discount in the case of customers).
    o eBay accounts with relatively high ratings are for sale on the internet. A high-volume seller can recover the cost of these accounts quickly with frequent, incremental bids that ultimately inflate the final sale price.
The key to detecting whether these higher-rated bidders are shill accounts is to look for the same metrics as you would look for with low-rated bidders- high volume of bids especially with this specific seller, high percentage of bids with the seller, and seemingly random collecting interests.

▪ Be extremely wary of private auctions. As stated above, for the most part I will not bid in a private auction. Occasionally, if the stamps are ones I really want AND the item still appears to be a bargain in the last 30 seconds before closing, I will place a bid with 3-4 seconds left. This prevents the seller from having time to push my bid up with masked shill accounts.

In summary, shill bidding occurs on eBay in the Stamps category however it is unknown to what extent. My personal experience is that the Coins category has a much greater problem with shill bidding than does Stamps however for US Stamps, which I don’t collect, shilling may be more prevalent. Hopefully this guide has provided assistance in identifying shill bidding and is helpful to Philatelists.