A NY Defense Lawyer Explains The Crime of Shill Bidding
The eBay terms of service clearly prohibit the practice of shill bidding. Shill bidding is not permitted in online or live auctions and it can actually rise to the level of a criminal offense. If you have been accused of shill bidding, contact a NY auction fraud defense lawyer for help responding to charges and seeking to avoid prosecution or minimize penalties that could come with conviction.
What is Shill Bidding?
Shill bidding refers to the practice of placing bids on eBay items or other auction items in order to drive up the price. Typically, the eBay shill bidding scam begins when a seller lists an item and begins accepting bids. The seller instills friends and family, or uses aliases, to bid on the item. The price of the item goes higher than it otherwise would if a legitimate buyer bid on and purchased the item.
The seller in an eBay shill bidding scam makes more money than the fair market value price of the item. In some cases, sellers have used shill bidding as part of larger fraud schemes, including schemes in which forgeries or counterfeit goods are sold as if they are legitimate valuable items. In 2001, the New York Times reported on three men who were part of a bidding ring in which shill bids were placed in 1,100 auctions intended to deceive art buyers into believing they were purchasing valuable and rare paintings.
Penny Bidding as a Form of Shill Bidding
Penny auctions create significant opportunity for shill bidding. Penny auctions often give Internet users the opportunity to “buy” bids for items that appear to be priced very low. Each bid costs money. When the buyer pays for a bid and makes a low bid, those participating in a penny auction scam will enter false (shill) bids to continue driving the price of the item higher and higher. Often, the bidder loses the investment he made to purchase the right to the bids. If the bidder does “win” the auction, the bidder may end up paying far more than the item is worth by the time the price of the item and the cost of the bids is added together.
Penalties for eBay Shill Bidding and Penny Bidding
Penalties for shill bidding vary depending upon whether those accused of involvement in the scam face state charges or federal criminal charges. When the eBay shill bidding is part of a large scheme and involves other crimes like forgery or the sale of counterfeit goods, penalties become more serious.
Shill bidding has resulted in criminal prosecutions in New York State under the Donnelly Act. The Donnelly Act, found in New York’s General Business law Code section 340-347, is an antitrust law that prohibits bid rigging and price fixing. The Donnelly Act has been used by prosecutors against people accused of shill bidding in online auctions. Being charged under this Act can result in a maximum four year prison sentence, and a fine of $100,000 for individuals and $1 million for businesses.
Shill bidding may also be considered a form of wire fraud, which is a federal offense under 18 U.S. Code Section 1343. Maximum penalties for the crime of wire fraud can include two decades imprisonment.
A NY eBay Fraud Lawyer Can Represent You in Shill Bidding Cases
When accused of shill bidding, it is imperative that you defend yourself to try to avoid conviction for a state or federal offense that could send you to prison and leave you with a felony on your permanent record.
A New York auction fraud defense lawyer can provide legal assistance in arguing against conviction for shill bidding. When an attorney helps introduce questions about whether you violated the laws, the jury should not convict if the prosecutor can’t make the case against you beyond a reasonable doubt. Your attorney can also assist you in negotiating a plea deal, which could reduce the criminal penalties faced for shill bidding.
Bukh Law Firm, PLLC has provided legal representation to clients in shill bidding cases on the federal and state level. To learn more about the techniques and strategies we can use to defend you in a shill bidding case, give us a call today to schedule a consultation.
