News

Shill bidders not welcome at Trade Me

The case resulted from an investigation by Trade Me and involved more than 7000 fake bids on more than 500 vehicles list

By Trust and Safety 23 May 2013

Trade Me pleased as shill bidder fined $42,000

Trade Me welcomed the $42,000 fine imposed on a car trading company in the Auckland District Court today, as The Auto Co Ltd was sentenced for its part in the largest case of shill bidding in Trade Me’s history.

The case resulted from an investigation by Trade Me and involved more than 7000 fake bids on more than 500 vehicles listed on Trade Me between July 2011 and July 2012.

Following the investigation, The Auto Co was banned from Trade Me, despite being our largest car trader.

Shill bidding sucks. It undermines the trust of our community and the integrity of our website and it is plainly dishonest.

The Auto Co's actions have not only brought the integrity of Trade Me into question, but has unfairly tarnished the reputation of car dealers, many of whom work hard to trade honestly and play by the rules.

Trade Me has distributed over $100,000 in refunds paid by The Auto Co to buyers ripped off by the company's shill bidding.

We were pleased to see to see the fine imposed on top of these refunds, as we were keen for support from the Courts for the idea that traders cannot simply buy their way out of a penalty by refunding victims when they are caught with their hands so blatantly in the cookie jar.

As well as awesome work by Trade Me's Trust & Safety team bringing the Auto Co to justice, it is worth giving a shout out to our members, whose suspicions about the company tipped us off.

We would also like to acknowledge the speedy and professional work of the Commerce Commission's Fair Trading Investigators getting this case through the Courts.

We understand the case has also prompted a review of the offence provisions under the Fair Trading Act and we are the likely to see the creation of a specific shill bidding offence as part of the consumer law reforms currently before Parliament.

This is a great result for Trade Me members and should send a warning to traders that ripping consumers off through shill bidding is unacceptable.

While it goes without saying that the Auto Co and several employees are permanently banned from operating memberships on Trade Me, a number of third parties who allowed Auto Co employees to use their memberships, or bid on Auto Co auctions following instructions from the Auto Co have also had their memberships banned.

We also understand that a number of these parties have received warnings from the Commerce Commission.

While we would prefer that traders always behave honestly on our website, we are pleased that the offending in this case has resulted in positive change for the law, refunds for the buyers who were ripped off and overall a safer website for Trade Me users.

Trade Me has also banned a second motor vehicle trader, Repocars, who was investigated by the Commerce Commission for shill bidding on $1 reserve auctions. The manager of Repocars was fined $12100 for his trouble.