AP reported today that eight eBay sellers were ordered in three different cases to pay nearly $90,000 in restitution and fines after admitting they bid up products online to inflate the prices.
The idea behind the fraud is simple – a dishonest seller simply submits phony bids under a fake identity for his own merchandise thus driving the prices higher by 10-20 or even 50 percent. One doesn’t need a degree in psychology to figure out that some potential buyers see online auctions as yet another exciting computer game and there is a good chance that they would go far beyond any reasonable limits in order to win.
As the three NY cases show virtually everything – from trucks to fine arts – can become a subject for price manipulation. Although it is hard to estimate the number of phony bids without conducting an industry-wide investigation the participants of online auctions should assume that the practice is much more widespread than it seems. And they’d better check the prices they paid in the past.
How to avoid paying artificially inflated prices? First, do at least some market research and get a rough idea of a fair price for the item you’re planning to buy. Second, decide on the price limit, write it on a piece of paper and put it in front of you before placing the first bid. Third, never ever bid above that limit! Online auctions may look like a game but the bucks you pay are real.