Federal prosecutors issued an indictment on Friday against three eBay usersfor self-bidding on their own art auctions in an attempt to spike bidprices.
The indictment alleges that the three men used 40 different names on eBay to place over 50 false bids on paintings they auctioned online from November 1998 to June 2000, including afake Richard Diebenkorn painting that garnered a US$135,000 bid.
Rob Chesnut, eBay’s deputy general counsel, told the Associated Press that hebelieved the indictment marks the first criminal case to result from alleged shillbidding online.
eBay spokesperson Kevin Pursglove told the E-Commerce Times that the Web auction house assisted the investigation by providing federal authorities with access to eBay tools that can help pursue individuals who perpetrate auction fraud.
Where There’s A Shill
According to published reports, Kenneth A. Walton, a 33-year-old lawyer from Sacramento, California; Kenneth Fetterman, a 33-year-old man from Placerville, California; and 31-year-old Scott Beach of Lakewood, Colorado were charged with a total of 16 counts of wire and mail fraud.
If convicted, the men face up to five years in prison, as well as fines and the obligation to pay restitution to the victims.
The shilling scheme, which included the creation of phony e-mail accountsfrom art experts, raised $450,000 in auction bids. In May 2000, eBay voidedthe $135,805 sale of the fake Diebenkorn painting after discovering thatWalton had placed his own bid on the item using a different online identity.
Pursglove said that because approximately 6 million items are listed on eBayeach day, it would be impossible to catch each and every fraudulent actionas it occurs. However, eBay’s new proprietary software tools gives theonline auction leader the best possible chance to do so, Pursglove said.
The software searches the bidding history of individual bidders to look forhistorical shill patterns, and identifies shill patterns as they areoccurring, Pursglove said.
On March 5th, eBay announced a new partnership with Eppraisals.com, the largestonline art, antiques and collectibles appraisal company.
For a fee of around$15, eBay users can get an appraisal on an object up for bid by sendingEppraisals the object’s item number or URL. Pursglove said Eppraisalswill help eBay customers determine if an item is priced or describedaccurately, with a turnaround time of around 48 hours.
Pursglove said that eBay’s alliance with Eppraisals “will go a long ways towards buildingconfidence shoppers have on our site.”