How To Prevent Fake Bidders (aka Shill Bidding)
There are many aspects to look at when you are running an auction. Whether online or live you will always have people who think they can outsmart the system…your system. There are two types of
bidders – real and fake. Those fake bidders are those who try and register to bid but have no real intentions of bidding to win or pay for items after the auction.
There are many ways to help combat this including having a registration in place to help prevent those bidders from getting into your system…you will want to talk to your auction provider and work through this if you don’t have a system in place
Another factor is Shill bidding, this is the general idea of a person placing a bid to drive up the price (helping the seller increase revenue) without actual intention of purchasing the item. This type of sneaky behavior stains the auction process & easily creates broken trust between real, genuine bidders & the sellers. Not only that but it is also illegal, going against the fair trading act & the dishonest use of a computer provisions of the crimes act. (https://bit.ly/2Xjtewe)
Shill Bidding can happen in several different ways in all types of auctions – for example, in the case of an online auction, this could be someone creating a second account for the purpose of bidding on their own items to increase the selling price. It could also be a seller asking their friends or family to bid on the item to help increase the price. This type of behavior is heavily frowned upon in the auction industry – and although it has a bad rap people are still engaging in this type of poor behavior. It is difficult to enforce rules & consequences to help prevent these types of “fake biddings” from taking place. Online auctions are generally where shill bidding is most prevalent being that it’s easier to conceal your identity behind an IP address as well as the fact that it’s harder to enforce rules on a bidding community that is spread out all over the country or world!
You might be kind of discouraged at this point, you’ve just read how impossible it is to enforce rules & hold people accountable for their improper bidding actions…but the fact is, there are certain small things that auction companies can do to prevent shill bidding from taking place & risking the reputation of their company. Although realistically it might not be 100% effective, small steps are still steps towards solutions!
It’s a good idea initially to sit down & think about a concrete plan to put in place to guard against fake bidders that will use your website. We recommend that you get a team together & talk through what different scenarios could be & how to prevent them from happening. Some of these could be as simple as adding in an approval to bid process, or a re-captcha at each bidder registration.
With advancing technology, it has become easier to implement security measures to flag duplicate IP addresses & similar seller/bidder IDs. Although these might cost a little to start initially, in the long run it should help prevent many cases of shill bidding from happening on your watch. Note* This is not fool proof, it’s possible that 2 separate auction bidders use the same computer for various reasons, but it should help prevent shill bidding from happening.
Take a look at bidding patterns, it can be quite telling if bidding patterns are off or inconsistently rising. (unless bid increments are in place) Keep an eye out on items that bids rise quickly & by large increments. These should be monitored & watched for false or fake bidders with no intention of actually coming home with the item.
There are also different software for sale that you can use to help prevent unfair auction activity. Radware is just one that has been used to protect auction companies from various forms of unfair bidding & fake bidders including bots.
A time consuming way but effective is to monitor your auctions & use your brain. Watch for bidders who are devoted to bidding, but rarely win because they are low balling the price. Another indication is a bidder who is tackling multiple somewhat varied or random items. It’s unusual that a buyer will need to buy 20 different items at the same time, that just so happen to be sold by the same seller…
Initially you will probably have a simple process, but with time your auction system will grow and it will be necessary to adapt your process accordingly! Big and well known auctions don’t happen overnight! Another thing we want to point out is to also don’t be afraid to ask your bidders to help! If you have regular bidders who might notice some sort of odd behavior, ask them to report it, and maybe even offer some incentive (free shipping, 20% off coupon, etc) this will motivate people to help you find & eliminate bidders who are not actual bidders. All in all, there will never be a one size fits all perfect solution to making sure that your auction doesn’t fall prey to fake bidders – but there are various steps and process’ that you can implement to protect your company the best way possible. Make sure that you talk to your auction provider
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