The practice is known as shill bidding

Jul 5, 2010 13:23 GMT  ·  By

Online auctions, made popular by eBay, have opened the door to a new way of selling everything from your iPhone 3GS, while you stand in line for the new iPhone 4, to your mom’s old car. Unfortunately, it also opened the door to shadier characters looking for a fast way to make some money. Today, an UK man was fined £3,000 and ordered to attend 250 hours of community service, a first in the country, after fixing several eBay auctions.

Paul Barrett runs a mini-bus hire business in County Durham in the UK. He pleaded guilty to bidding on his own items in order to drive up the price on several occasions. The practice, which is known as shill bidding is illegal in the UK, but so far he is the first man actually found guilty of it. The fake bids were uncovered after an investigation by the North Yorkshire Trading Standards, which was actually looking into another matter regarding the man.

He had been accused of putting up an auction and eventually selling a mini-bus on eBay with a tampered mileage meter which indicated a false low number. But when the local Trading Standards agency looked into the matter, it uncovered that he had bid for his own items several times.

The practice, which is unfortunately somewhat widespread, is done in order to create the impression that there are other bidders interested in the item, driving up the price. Barret sold the items, including a pie and pasty warmer, under the username “shanconpaul” and he bid on them with his other account, “paulthebusman.”

Shill bidding is considered fraud in most of the UK, but the man said he didn’t realize that what he was doing was illegal. While shill bidding is regarded as a problem for online auction sites, it’s hard to prove it in a court of law. Even if a buyer suspects he has been a victim, it can be hard to get the law officials involved.