Unless you work on a buy it now basis, the only way to sell something on eBay is to offer it up for auction. This means that interested buyers are going to need to place a bid on the item and hope that their price wins unless you engage in a spot of shill bidding which is illegal.
In the most part, people who sell on eBay do so within the regulations and laws, however, there are some people who want to take an entirely different approach, one that may not be quite so honest.
One such person is Paul Barrett. Barrett became the first person to be prosecuted in the UK for bidding against his own item on eBay. During 2010, the Bradford Crown Court found him guilty for what is known as shill bidding. He was fined £3,500, ordered to pay costs of £1,456 and also ordered to carry out 250 hours of unpaid work. Barrett was lucky to escape a prison sentence, with the judge taking into account the fact that he had no previous convictions for being dishonest.
It was during this hearing that both the Misleading Marketing Regulations and the Unfair Trading Regulations 2008 were mentioned and how they both related to the crime of shill bidding.
Consumer Protection from Unfair Trading Regulations 2008 against shill bidding
Overall the Unfair Trading Regulations 2008 protects consumers from unfair commercial practices. It classifies unfair commercial practices in two different ways. Those which are unfair, where the consumers decision making may be swayed and also those that could be deemed as always unfair.
There are 31 different commercial practices that are banned within these Regulations. Shill bidding falls into these under generally unfair commercial practices.
Generally unfair commercial practices
Under the Regulations there are a number of commercial practices that are banned because they are going to have an impact on not only whether or not the consumer buys their product or service, but also that they may end up paying more for the product then they normally world. One way that the behaviour of a consumer and potential buyer could be distorted is down to shill bidding. Not only does it increase the price of the item, falsely, but it also could mean that the item appears more desirable to the consumer. It is not only completely untrue, but it is also unfair too. Given that the majority of people are never going to want to pay over the odds for an item, it is hard for any seller to prove that the average customer is going to have been happy to buy the product, despite knowing that the price has been increased artificially.
Omissions and misleading actions
Another banned commercial practice is misleading actions and omissions. A commercial practice is thought to be misleading if it contains false information. Or if it has untruthful presentations that could deceive the average consumer. Even if the information is factually correct, it could be deemed to be misleading if it is presented in a way that is going to change the buying decision (such as buying an item that they otherwise wouldn’t, or paying more for it). A commercial practice is also misleading if it is seen that it causes confusion between that one product and a product sold by a competitor or if information is omitted that could otherwise be important.
As the name suggests, an aggressive commercial practice is one whereby the seller harasses, coerces or acts aggressively in order to try to influence the buyer into their purchase. Their freedom of choice could be affected and in doing so, they may buy something they don’t need or pay more than they usually would.
They could even be influenced into buying a product that is not to the standard that they want, or perhaps doesn’t even do something that they need.
Whilst it may not strictly be aggressive as you would normally see it, shill bidding is actually an aggressive commercial practice. By increasing the price or the bidding numbers, they are going to coercing or influencing the other potential buyers to pay more money for the item that they are selling, or perhaps even gaining more bids and interest in an item that they would otherwise not be able to sell.
What relevance does the Business Protection within the Misleading Marketing Regulations 2008 have?
This particular set of Regulations were set up to prohibit misleading advertising. They may not be 100% relevant to shill bidding , however, when you bid on an item that you are selling in order to inflate the price, you are, in essence, falsely advertising the price and acting in a misleading fashion.
Advertising is misleading, if it is presented in a way that is going to deceive, affecting the economic behaviour of consumers, or perhaps even causing an economic injury to the competitors who are also selling a similar product or service.
What relevance does the Fraud Act 2006 have to shill bidding?
Mr Barrett was prosecuted under the Business Protection from Misleading Marketing Regulations 2008 and the Consumer Protection from Unfair Trading Regulations 2008, however, if someone has been found to be using shill bidding to their benefit, then there is also a chance that they could be prosecuted under the Fraud Act of 2006.
Not only this, but if someone agrees to bid on the item being sold by someone else, then they could both be prosecuted for the offence of conspiracy to defraud.
As you can see, shill bidding is an entirely deceptive practice and whilst it may seem harmless, it can actually have a huge impact on your life for the future.
About the author:
This article was written by a member of the Expert Answers legal advice team and posted by Lloyd Barrett. Expert Answers provides online legal advice on all aspects of UK Law to users in the United Kingdom.