eBay Scandal! Run for the hills!
HooDeeDoo
today.
http://www.nytimes.com/library/tech/00/06/biztech/articles/02ebay.html
In case that doesn't work, below you will find the ENTIRE LONG ARTICLE.
Mark
.......trying to be helpful in Manhattan
June 2, 2000
In Online Auctions, Rings of Bidders
By JUDITH H. DOBRZYNSKI
When eBay, the Internet auction
company, suspended the seller and
voided the sale of a vivid abstract painting
whose price shot from 25 cents to $135,805
last month, his offense had nothing to do with
the authenticity of the painting or the story he
invented to go with the work.
Rather, the seller, Kenneth A. Walton, had
entered a bid of $4,500 on his own offering -- a
practice known as shill bidding -- on the second
day of a 10-day auction, long before
speculation that the painting might be by the
renowned artist Richard Diebenkorn sent the
price soaring.
But a close analysis of that and other eBay art
auctions reveals that the flourishing cyberauction
world faces a deeper, more intransigent
problem than lone self-bidders: the prospect of
rings of shill bidders, acting as partners. Mr.
Walton, a Sacramento lawyer who used at least
five Internet names selling and buying on eBay,
appears to be just one of a circle of people who
have engaged in cross-bidding activities that
may have influenced the outcome of eBay
auctions.
Starting with the list of people who bid in the
$135,805 auction, and with the help of upset eBay users, The New York
Times researched eBay's auction records and assembled a list of 33
Internet names that repeatedly bid on one another's offerings. The
participants also encouraged other bidders by posting glowing
testimonials to one another on eBay's vaunted feedback system, the
comment forum where people write about their experiences dealing with
other individuals on the site.
This week, after using proprietary software called "shill hunter" to
review
the list, eBay said it planned to warn two of the names and noted
that 13
of them -- including Mr. Walton's -- had been suspended after the
company's own investigations.
EBay declined to disclose why, citing privacy concerns. But that
makes
15 user names that have been disciplined in the wake of the canceled
auction.
No one knows how many rings are operating in the online auction world
-- or, for that matter, in the traditional auction world, where the
practice
is generally considered illegal under business codes and many state
laws.
But critics of eBay contend that the company's screening system is
not
fine enough to detect all ring-bidding.
The company acknowledged that it reviewed bids made only in the last
30 days, which may not be long enough to discern shillers who spread
out their false bids.
It also conceded that those in the circle may have changed their
bidding
patterns in recent weeks, lying low to avoid attracting attention
once Mr.
Walton's auction began making headlines May 9.
Indeed, experts in the art world, academia and law enforcement say,
the
fact that the circle surrounding Mr. Walton would not have come to
light
without the media glare illustrates just how easy it is for people
acting in
concert to fly beneath the devices eBay uses to root out rigged
bidding.
"We look for rings," said Robert Chesnut, eBay's associate general
counsel. "We have detected rings. But there is a limit to shill
hunter. And
there are things that look like shill bidding that are not." EBay
will not
divulge how many people it has expelled for shill bidding.
One thing is certain: Every day the opportunity for shilling grows.
This
year, sales in consumer-based online auctions in the United States
are
expected to more than double, to $6.4 billion, up from $3 billion in
1999,
according to Jupiter Communications, a research company. EBay's share
of the market -- more than 90 percent, Jupiter says -- dwarfs that of
Yahoo, Amazon and other rivals.
At last count eBay had 12.6 million registered users. On any given
day
they place 1,000 bids a minute on the more than 4.5 million items up
for
sale. EBay, whose revenue is expected to double this year, to $400
million, views the transactions on its site as private: it does not
vet the
offerings or descriptions, though it does try to remove outright
frauds.
Though eBay explicitly forbids shill bidding, company officials say
they
recognize that there will always a few bad apples in such a large
community.
And nothing in eBay's rules prevents a person from using more than
one
Internet name. Nothing prevents friends from bidding on one another's
offerings, running up the price, so long as the bid is sincere.
Nothing
prevents friends from posting nice comments about one another. It was
only on March 1 that eBay began requiring those feedback comments to
be related to actual transactions.
While online auctions are thus ripe for manipulation, tracing
possible
bidding collusion is extremely difficult. It involves sifting through
and
cross-referencing dozens of bidding histories and user feedback
records,
hours of work.
"This is Joe Public," said Delores Gardner, a lawyer who specializes
in
Internet fraud at the Federal Trade Commission. "I'm not convinced
that
many people are sophisticated enough to detect shill bidding. It
takes a
lot of work, and it's not the type of work that a buyer should have
to do."
Most complaints to the commission have been about shoddy
merchandise or failure to deliver the goods, not about bidding
shenanigans.
EBay, citing cost considerations and
storage capacity, removes auction
records from its site after 30 days,
which makes detection harder. And
even while a bidding history is
available, the bid list discloses only
the highest offer entered by each
Internet name, which sometimes
masks the progress of bids. Mr. Walton's painting, for example, drew
95
bids, but the bid history contains just 17 names, and prices on it
leap
from $7,701, entered by "animationconnection" on May 4, to $135,505,
entered by "howdyhi" on May 7.
Exactly what happened in between is now a mystery, one that provokes
other questions about the bidding of people using Internet names that
include "birdaroo," "artpro," "w." and Mr. Walton's own "golfpoorly,"
"advice," "grecescu" and "cheesesix." (He has not disclosed his
additional
names.) Along with several others, these names have regularly bid on
one
another's items but have rarely placed the winning bid, and they have
patted each other on the back in feedback.
Of the 17 bidders on Mr. Walton's $135,805 painting, at least six --
in
addition to Mr. Walton himself -- had bid on but not purchased the 36
other offerings he had placed for sale on eBay in the 30 days before
his
now canceled sale.
At least three of those six had already paid tribute to Mr. Walton on
his
feedback page. And that tally does not include Mr. Walton, who after
buying a $2 CD from himself under a different Internet name commented
that he was charged less than expected for shipping and called
himself "a
really cool guy."
During 1999 and early this year, Mr. Walton wrote equally flattering
testimonials for five of the 17 bidders (four others plus himself).
And
seven of the 17 bidders have received positive feedback from several
buyers and sellers who have links with Mr. Walton and with one
another
in other recent eBay auctions.
Some overlap is coincidental. It is in fact inevitable, because
buyers and
sellers who are interested in one kind of item, like paintings, will
gravitate
to those offerings, which are made again and again by the same
sellers.
Some buyers prefer to do repeat business with sellers simply because
they know that those sellers deliver.
But if the extent of the overlap seems remarkable in this and similar
cases, eBay disagrees. "Sometimes bidding just looks suspicious," Mr.
Chesnut said, "especially in areas of collecting that are narrow,
where of
course you'll be bidding in the same area."
He recounted the tale of a judge the company bounced for shilling who
was indignant about the false accusation. "I could give you a half
dozen
other examples where we accused people of shill bidding falsely, and
they were outraged," he said. "The evidence was circumstantial."
Yet in the eyes of some bidders, online auctions, under the current
rules,
are hoaxes waiting to happen. Mr. Walton's offering simply brought to
a
head complaints many say they have already made to the company.
"EBay has created a monster that has grown beyond its capacity to
monitor and to police the misdeeds of some very simple kinds of fraud
out there," said Louis Richman, the financial editor of Consumer
Reports.
Mr. Richman, who believes that shill bidding and misrepresentation
occur
frequently online, said that his magazine had no statistics about
them but
was designing a research project to study online auctions
systematically.
When the stakes are small -- the average eBay sale is about $40 --
the
harm may be minimal, certainly too small for prosecutors to bother
with.
But a man who bid more than $126,000 on Mr. Walton's abstract
painting, and who said that after spending a week researching
Diebenkorn he had asked friends and relatives to chip in another
$125,000 if he needed it to win, feels lucky to have escaped without
mortgaging his life. (The painting's authenticity remains unclear.)
The man, a resident of the San Francisco Bay area who insisted on
anonymity because he feared retaliation from eBay devotees, withdrew
his bid after Mr. Walton refused to let him see the painting in
person.
This bidder placed an offer of $126,200 at 2:30 a.m. on May 7, about
42 hours before the bidding was to close. Then he went to bed. "By
the
time I got up, I had already been outbid," he said. He bid a little
more,
but when "howdyhi" suddenly "came out of nowhere" and upped the ante
to $135,505 he decided he had to see the painting before going
higher.
"Howdyhi," whose real name is Mark
Therrell and who lives in Placerville,
Calif., about 50 miles from Mr.
Walton's home in Sacramento, did
not respond to an e-mail message
and could not be reached by phone.
Among the early bidders in this
auction were several whose names
regularly turn up, often in succession
or nearly so, on other offerings by a
small circle of sellers.
On May 2 Mr. Walton, using the
name "advice," put what he called an "outstanding estate oil -- Arabs
on
Horseback" up for sale. Among the bidders, 17 in all, were "odona,"
"astheworldturns," "artpro," "1ackley" and "jgle," the last four in
succession, according to the posted bid history. Mr. Walton, using
the
name "grecescu," also bid on the item, but that bid was canceled by
eBay
on May 10, when the company suspended Mr. Walton for 30 days.
In April, 10 of 17 bidders -- including "jgle," "astheworldturns,"
"artpro,"
"birdaroo," "estate-queen" and "flipbackwards" -- who seem to
cross-bid
were bidders on an exotic genre painting put up for sale by "w."
Also in April, "astheworldturns," "jgle," "1ackley,"
"big-fat-mamba-jambas" and "cheesesix" -- one of Mr. Walton's names
-- made offers in near succession on an "abstract oil painting by
Hager"
put on the block by "boyscoutsofamerica." They comprised five of the
14
bidders for the painting.
And in April, Mr. Therrell's sister, Alice Therrell, who also lives
in
Placerville and uses the name "pog...@jps.net" on eBay, put up for
sale
a "large oil painting by Califano -- his best!" Among the 16 bidders
were
"astheworldturns," "education1," "birdaroo," "artpro" and Mr. Walton,
using the name "grecescu."
Of those names, eBay has suspended "education1," "w.,"
"flipbackwards" and Mr. Walton's names. It plans to warn
"boyscoutsofamerica" as well as another name submitted to eBay by The
Times, "docharpo." The others remain registered users in good
standing.
Not every painting sold by "advice," "boyscoutsofamerica" or others
who
appear to be in the circle has attracted such cross-bidding. But many
do.
Mr. Walton said that he was "absolutely not" part of a ring. "There
is
nothing going on," he said. "EBay got me, and I'm off, and that's
it."
In the past he has said that all of his questioned bids were made on
behalf
of friends.
Guy Sbar, a New Jersey doctor who uses the name "docharpo," also
said he was not part of any bidding ring. E-mails or phone calls to
the
other Internet names were not returned.
Eric Greenleaf, an associate professor of marketing at the Stern
School
of Business at New York University who has researched the traditional
auction process, said that there were two good clues to indicate that
someone is shill bidding for a friend: "if the only time he bids is
when
some one person is selling and if the underbidders are very
geographically close."
According to the information eBay users provide for other eBay users,
many in this circle of repeated interacters live in northern
California or
Colorado.
Without help from eBay, it is difficult to determine how frequently
members of this circle bid or buy. But some clues are available
through
eBay's feedback system, as evident from a feedback posting on eBay
about a year ago.
Within four days, 10 of the names that regularly appear in relation
to Mr.
Walton placed complimentary comments on the feedback site for a
seller
named "pigroast." "Eh . . . eh . . . You sure do know how to 'cook'
up
one good game deal, pigroast," wrote "1ackley" on May 27, 1999. A
day later, "big-fat-mamba-jambas" added: "Hallelujah, Pigroast! May
the
Lord Come Down And Bless Your Kind Soul!! Amen." Other
compliments are either equally obscure or underscore "pigroast's"
dependability, as in "thriftstorebob's" comment: "bargain city . . .
deal of a
lifetime . . . an asset to the Ebay community!!!"
Within hours of the appearance of those comments, "pigroast" had
posted return compliments for each Internet name.
Three of "pigroast's" 10 admirers -- including Mr. Walton, using the
name "grecescu" -- bid in the $135,805 auction.
Yet eight of the 10 names in the "pigroast" feedback have two or
fewer
feedback comments from other eBay users -- and they include comments
from "pigroast" himself. The scant number usually indicates that
these
bidders rarely complete transactions.
Of these names, eBay has suspended "pigroast" and "thriftstorebob,"
while the rest remain members in good standing.
In another odd episode, Ms. Therrell, who as "pogdog" is an active
art
seller on eBay, offered a painting about six months ago that stirred
notice.
According to a few eBay users, including David J. Carlson, a Carmel,
Calif., art dealer who employs three "e-pickers" to search for
authentic
paintings on eBay that he might buy for resale, "pogdog" put up for
sale
an abstract painting that also resembled a Diebenkorn. The
description
never used Diebenkorn's name and made no claim about the artist. Like
Mr. Walton's, Ms. Therrell's offering included a close-up of the work
with the signature "R.D." easily discernable. Ms. Therrell did not
return a
phone call seeking comment or respond to an e-mail.
Auction records for that offering on eBay are no longer accessible,
and
the company declined to provide a bidding history or any information
about the offering, citing policy and an inability to track the offer
now.
But Mr. Carlson recalls that the work fetched more than $10,000.
"Pogdog's" feedback record includes many highly complimentary
comments from some of the same people.
"Artpro," for example, posted two, including "THE MOST HONEST
SELLER, WITH THE BEST ITEMS AND CUSTOMER SERVICE
ON EBAY-BY FAR!," while "1ackley" wrote, "PAINTING WAY
BETTER THAN DESCRIBED! THE MOST HONEST SELLER ON
EBAY!"
Mr. Greenleaf, the N.Y.U. professor, said he believed that Internet
companies like eBay could detect rings of friends who bid on one
another's online offerings if they wanted to. "There should be
patterns that
would be very suspicious," he said. "These companies have powerful
computing ability, and it would be easy to search for coincidences.
But
it's time-consuming, and eBay is very laissez-faire."
So far, eBay has responded to reports of shill bidding mainly by
suspending a user for 30 days on the first violation and indefinitely
on the
second. The company, however, said that to date most incidents of
malfeasance involve credit card fraud and the failure to deliver
goods.
But as online auction fever grows, bidding fraud could get worse.
"The
Internet offers more opportunities to shill than traditional auctions
because you have a lot of time to think about it," Mr. Greenleaf
said.
Furthermore, he said, the cost to a shill bidder who gets stuck with
his
own property is lower, because commission rates are just 1 to 5
percent
online compared with as much as 30 percent at Christie's and
Sotheby's
and at least 10 percent on Sotheby's online sites.
Alan Bamberger, an antiquarian book dealer in San Francisco who
applauds eBay for broadening the art and antiques market, also said
companies like eBay could do more to reduce fraud. "One of the things
I've lobbied for is to get the records left up on the site longer,"
he said.
"They could play it into great P.R., and they hardly have to do
anything."
MDB
So that's where you've been, bidding on art, eh?
Where were you when this was happening with Nancy Drew books a couple years ago
and Loni was suspended from eBay because Gayle and a couple other Californians
reported her for shilling?
No wonder she's trying to destroy the new egroup. It's never too late for
revenge!
MDB
Michael Whittier
God I hate ill-informed reporting. Just when the media at large stops
portraying the internet as consisting wholly of AOL and porn, this. The
tone of the article is so overwrought and uninformed; it seems 'the media'
has found a new Internet Story, to replace the Child Molestors Stalking
Your Children in Chatrooms story that they've worked to death.
I especially love this self-congratulatory bit:
> Indeed, experts in the art world, academia and law enforcement say,
> the fact that the circle surrounding Mr. Walton would not have come to
> light without the media glare illustrates just how easy it is for people
> acting in concert to fly beneath the devices eBay uses to root out rigged
> bidding.
Thank you, Media Glare.
>But a close analysis of that and other eBay art
>auctions reveals that the flourishing cyberauction
>world faces a deeper, more intransigent
>problem than lone self-bidders: the prospect of
>rings of shill bidders, acting as partners.
"The prospect of". Not documented cases of, not reports of, just the
vaguely lurking, sinister 'prospect' of 'rings'. Spooky.
>No one knows how many rings are operating in the online auction world
> -- or, for that matter, in the traditional auction world, where the
> practice is generally considered illegal under business codes and many state
> laws.
"No one knows how many." When you have a rough idea, try writing the
story then.
>[Ebay] also conceded that those in the circle may have changed their
> bidding patterns in recent weeks, lying low to avoid attracting attention
> once Mr. Walton's auction began making headlines May 9.
Conceded? Why not say they confessed, reluctantly? I can imagine the
question as posed to the Ebay PR flack: "Isn't it possible..." Flack:
"Well, yes, I suppose it's possible..."
>One thing is certain: Every day the opportunity for shilling grows.
IT'S GETTING WORSE! Just while I was reading this article, the prospect
started looming larger! Is there no hope?
>And nothing in eBay's rules prevents a person from using more than
> one Internet name.
Here I may be wrong, but isn't it necessary to register with a credit card
now? And wouldn't the name and address supplied at the time of
registration necessarily have to match that on the credit card? So unless
someone has multiple names, as well as credit cards with multiple
names...? If so, it would seem that Ebay has addressed fraud
significantly. Not to mention the haunting PROSPECT of fraud.
>Nothing prevents friends from bidding on one another's
>offerings, running up the price, so long as the bid is sincere.
Huh? Sincere? Meaning that the bidder intends to follow through with the
transaction, if they end up being high bidder at the auction's close?
>"EBay has created a monster that has grown beyond its capacity to
>monitor and to police the misdeeds of some very simple kinds of fraud
>out there," said Louis Richman, the financial editor of Consumer
> Reports.
A MONSTER, mind you.
>Mr. Richman, who believes that shill bidding and misrepresentation
> occur frequently online, said that his magazine had no statistics about
> them but was designing a research project to study online auctions
> systematically.
Does he also believe that he has frequently been anally probed by aliens?
That might get him some media play too, so that he can throw hyperbole
around, and get to see his name in print. Get cracking on that 'research
project', and you could end up on Larry King, Mr. Richman.
> But a man who bid more than $126,000 on Mr. Walton's abstract
>painting, and who said that after spending a week researching
>Diebenkorn he had asked friends and relatives to chip in another
>$125,000 if he needed it to win, feels lucky to have escaped without
>mortgaging his life.
This man, and anyone who 'chipped in' to help him, deserve whatever
fleecing they might encounter. He knew little enough about the artist in
question that he felt compelled to spend a week in research, AFTER he had
placed his first bid of over one hundred twenty thousand dollars on a
painting he had seen only via jpegs.
>Eric Greenleaf, an associate professor of marketing at the Stern
> School of Business at New York University who has researched the traditional
>auction process, said that there were two good clues to indicate that
>someone is shill bidding for a friend: "if the only time he bids is
> when some one person is selling and if the underbidders are very
>geographically close."
Ooh, clues. The Nancy Drew element. I am not a professor of anything, but
I know of several people who have engaged in shill bidding on Ebay, and
none engaged in shilling in any of the manners profiled in this sloppy
article. They were all dealers, and they easily bid one each others'
items, because they would follow through with the transaction, and resell
the items themselves. They never gave each other feedback. They bought and
sold from many other people other than their 'friends'. So much for The
Mystery of the Shill Ring.
Obviously shill bidding is fraud, and obviously its unethical, and more
than likely its illegal. It would seem possible to make all of those
points (I am pretty sure I just did) without resorting to hyperbole. Is
it widespread? Nothing factual in this article would suggest it is. This
sort of exaggerated reporting only serves to undermine enterprise, and
does nothing to resolve the real problems it purports to expose. The fact
that Ebay has taken steps to limit feedback to that which is
transaction-based indicates they're aware and responsive.
If Ebay left auction data up longer, would people avail themselves of it
to root out shill bidding patterns before they bid? I doubt it, and I
doubt that's the solution. Personally, I'm typically too lazy to even look
at a seller's feedback, except to note the total figure. But then I still
have a 28.8 modem.
I don't think that the topic is un-newsworthy, as much as this article on
the topic is unworthy of the subject. Blecch.
ShanPirate
Probably. But we all know that a lot of eBay users cheat like crazy, for it's
happened so often within the group that posts here. Loni with her shill
bidding, Finnski with his fraudulent bidding using other peoples' names as
screen names, Ogden's friends having auctions with no item, just an
advertisement for the RB format guide, and on and on. All of them, of course,
probably believe that they've been anally probed by aliens too, and love it!