"The use of shill bids in on-line auctions illegally drives up
prices and defrauds consumers," said Eliot Spitzer, the State
Attorney General. "These cases and continuing efforts to monitor
transactions should help maintain the integrity of on-line
auctions."
Shill bidding, or as eBay describes it, "the deliberate placing
of bids to artificially raise the price of an item," is strictly
forbidden by the auction forum and may result in suspension from
the site.
It may also result in criminal charges, as Jerrold Schuster, the
former owner of the New Windsor Auction Gallery and his former
employees, Darek Szydlowski and Francis Komsisky, discovered
recently.
All three men pleaded guilty to violating New York antitrust
laws by casting bids in over 1,100 of each other's eBay auctions
for the sole purpose of driving up the price of the merchandise
that they offered for sale, Spitzer said yesterday. Schuster now
faces up to four years in prison, and his employees face up to one
year in jail.
As part of the settlement Schuster is also expected to pay
$50,000 in restitution and fines.
Two other investigations have also resulted in civil settlements
with the Attorney General's office.
In the first, Robert Baranovich and his son, Steven Baranovich,
of West Babylon, have agreed to pay $10,000 in penalties and
restitution to consumers harmed by their placing of 170 phony bids
in 165 of their own e-Bay auctions of sports memorabilia.
In the second, Richard Eggleston, Darryl Lien, and David Printy,
together with a related corporation, Daryl Lien, Inc, have agreed
to pay more than $28,000 in penalties and restitution for their
placement of 610 bids in 106 of their own auto auctions under the
user ID "Mother's Custom Automotive NY Dealer."
The Attorney General's office has identified more than 120
consumers who paid more for items as a result of shill bidding
activities in the three cases – up to several thousand dollars more
in some cases, said Spitzer. The settlements will provide
compensation to these individuals.
