The FBI is investigating allegations of self-bidding on
eBay.com, following the discovery that the sale of a painting on
the auction site was artificially inflated by the owner, helping to
raise its price from 15 pence to £70,000. Several other instances
of self-bidding, also known as “shilling” or “puffing” have been
reported. The practice is illegal in the US but it is not clear
whether or not it can be prosecuted in the UK.
A photograph of the painting was posted on eBay.com by a lawyer
from Sacramento who claimed he found it in a car boot sale. He set
an asking price of 25 cents. He then placed his own bid of £3,000,
thereby starting a bidding frenzy on speculation that it might be
the work of the artist Richard Diebenkorn. The work was eventually
sold to an amateur Dutch collector before eBay intervened.
Ebay voided the sale and permanently suspended the responsible
individual, Kenneth A. Walton, from the site for bidding on his own
painting. The practice is forbidden in eBay’s terms and conditions.
In the US, the practice also contravenes federal statutes against
mail and wire fraud which can lead to a maximum penalty of five
years in prison and a $1 million fine for each count.
According to a report in the New York Times, Walton used at
least five usernames to buy and sell on eBay. The company suspended
8 usernames registered to other individuals after investigating
bidding patterns in Walton’s and related auctions. After using
“shill hunter” software to review bids by several additional
internet names, eBay issued warnings to two other users.
