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eBay plays down 'shill' bidding allegations

Lawsuit launched

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Giant auction site eBay is being sued for allegedly using "shill" bidding against its own customers to force up prices and increase the fees it's able to charge.

The class action lawsuit filed in the California Superior Court in Santa Clara was brought on behalf of a Pennsylvania man who maintains he fell foul of eBay's "shill" bidding practice on at least two occasions.

In one case Glenn Block claims his bid for a Xerox Copy Cartridge was increased from $111 to $112.5 despite the absence of any real competing bid. In another auction Block claims eBay's intervention raised his bid from $75 to $75.55.

Although the sums involved are only small, multiplied by eBay's huge customer base they could add up to millions of dollars, said lawyers Lerach Coughlin Stoia Geller Rudman & Robbins LLP in a statement.

The allegations centre on eBay's used of computer-generated responses that encourage the high bidder for an item to raise the ceiling on his bidding to ensure that he is not overtaken by another buyer.

"Despite having been notified that he was the highest bidder, eBay raised the buyer's bid without any further competing bids. In these cases eBay effectively acted as an invisible shill bidder so as to pump the auction price higher," said lawyers acting on behalf of Block.

eBay spokesman Hani Durzy told Reuters: "Based on what we know about what's being alleged, it appears the plaintiff completely misunderstands the functionality of the eBay bidding system." ®

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