Bid Shielding "Scam"
> The author of the "Scam" story just wrote me back. Thought I
> would share it with you. It's rather long....
>
> I did over-simplify the technique for clarity,
> but it is real. Here are more details -- I hope this helps.
>
> 1) you place a max bid for the item - Say the item is an antique vase.
> You like it, think its worth $100. Bidding opens at $2, with increases
> of $5. You place a bid of $100. eBay gives you the opening bid at $2.
> You are protected up to $100.
>
> 2) another bidder Bidder 2 comes along and he wants the vase for
> $50., so he bids that amount. Bidder 1 is still the high bidder, at $55
> ($50 + $5 increment). So Bidder 2 comes back and bids again, this time
> at $105. Viola! Bidder 3 is now winning at $105 (he met your high bid of
> $100 + the $5 increment.
>
> 3) more bids Bidder 3 thinks the vase is worth $125, and bids that
> amount. He becomes high bidder with a price of $110. Bidder 4 thinks the
> vase is worth $130, and becomes high bidder posting that amount. The
> auction continues in this way until the end. Usually, in the last
> minutes, the bidding gets very heated, and the vase may end up selling
> for $600., which is close to what your local antique shop might charge.
>
> This is how the scam works:
>
> 1) Same vase, opens at $2. Only this time, Bidder 1 bids $1000. The
> opening bid still shows only $2. He immediately follows with a false
> identity Bidder 2, at $990. Bidder 1 becomes high bidder at $995. Since
> this is more than you can get a similar product locally, and in a price
> range the average user is not going to spend lightly, there are no other
> bidders.
>
> 2) Scam complete. 15 seconds before the auction ends, Bidder 2
> rescinds his bid, the "high" price drops back to the opening bid of $2,
> and Bidder 1 wins at that amount. Unless the seller has a substantial
> reserve to protect his investment (which is discouraged by eBay) he will
> be obligated to sell the vase for $2. If he does have a reserve, he
> doesn't have to sell, but he still owes eBay posting fees and the
> auction was a waste for him."
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Also see MSNBC story: http://www.msnbc.com/news/293918.asp
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