Motor vehicle trader Craig James Rutherford has been fined $12,100 in the Auckland District Court after admitting to shill bidding on Trade Me.

Rutherford was an employee of a company called Cheapcars NZ Ltd trading on Trade Me as Repocars which was owned by Trevor Rooderkerk.

Shill bidding is where sellers use memberships of people they know, or fake memberships they have created, to put false bids on auctions in an attempt to bid up the price of goods they are selling.

A genuine auction requires you to set a reserve – the minimum price you are willing to sell the goods for. Shill bidders mislead you about what that reserve is by gaming the auction over the stated reserve price.

It should go without saying that shill bidding is against Trade Me’s terms and conditions – it is also illegal.

In October 2011 our shill bidding tools alerted us to suspicious bidding on the ‘Repocars’ and ‘trifectacars’ memberships.

We also looked into historic activity on the account at that time and concluded that between January 2009 and October 2011, a number of shill or “ghost” bids had been placed on some vehicle auctions being sold via these memberships.

Trade Me made a formal complaint to the Commerce Commission as the agency responsible for enforcing the Fair Trading Act.

We presented the Commission with a full picture of the offending including a detailed analysis of bidding on Repocars’ auctions.

The Commission chose to investigate further and found cause to prosecute.

As a result of the Commission’s great work, Repocars' manager, Craig Rutherford admitted to shill bidding on 405 auctions by placing 4567 false bids between 8 January 2009 and 13 October 2011.

While noting the contradictory nature of Rutherford’s evidence, the statement of facts also references that Rutherford maintains that Repocars' owner, Trevor Rooderkerk “was aware of a common practice of shill bidding within Repocars and did nothing to discourage it."

Unfortunately, the company was placed into liquidation by Trevor soon after Trade Me made its allegations. This means that although Repocars profited from the offending, no assets are available to assist victims.

We are not aware of any former Repocars staff or Rooderkerk making any attempts to refund any of the approximately $40,000 stolen from Trade Me members in this case.

In our opinion, shill bidding on Trade Me is unnecessary as intelligent operators can achieve the price outcome they are looking for without resorting to shill bidding.

Trade Me auctions provide a facility for sellers to achieve a desired minimum price by simply setting the reserve at the desired level.

Pretty simple concept huh?

Trade Me is privileged to hold a very special place in the hearts of many New Zealanders, a fact which we are very conscious of.

The goal of the Trade Me Trust and Safety team is to keep members safe and to ensure members’ trust in the website is maintained.

We have written to all members affected by the shill bidding and advised them whether they paid an inflated price for a vehicle or not.

Unfortunately, due to the hasty liquidation of the company, it is unlikely victims will get any compensation for the money they were misled into paying Repocars through this offending, unless the former owner does the right thing and voluntarily refunds the money.

Repocars’ employee Craig James Rutherford fined $12,100