Question About Shill Bidders And Second Chance Offers

[blackbeardstreasurechest]

I was recently the second highest bidder on an auction that was won by a bidder with zero feedback. Their bid for the item was $275.00, while my maximum bid was $270.00, and the third highest bid was $165.00. This bidder also had never placed a bid on anything before this winning bid, and therefore had 100% bidding activity with the seller. Barely two days after the auction ended, I received a second chance offer for my maximum bid of $270.00 from the seller. 

To me, this sounded a little suspicious, and I thought it might have been a case where the seller used a shill bidder (either their own account with different eBay usernames, or asked a friend/relative to bid on it) to drive the auction price up and then conviently back out after it was over. I contacted ebay with my concerns about this and was told that the buyer was from Mexico and was not directly associated with the seller, and that the seller was unable to get in contact with the buyer. Not even two full days had passed since the end of the auction, and that seems like an incredibly short amount of time to ascertain that the high bidder is not going to pay and to make a Second Chance Offer.

While I highly suspect that the winner of the auction was a shill bidder, I don't understand eBay's policy about Second Chance Offers. To me, since the high bidder for whatever reason will not be paying for the auction item, then why is their bid still valid in the auction? If the high bidder was taken out of the equation, I would have won the auction for  $167.50, which would be the next highest bid increment above the third highest bidder's maximum bid.

While this would not even be an issue in an auction where all the bids were very close to each other, in this case, the difference is about $100 between my maximum bid and what my winning bid would have been if this non-paying high bidder had never placed a bid on this item at all. While I know I have a choice to choose to accept the Second Chance Offer or not, I was curious if anyone else has ran into a similar situation. Does this sound like a case of shill bidding, and am I wrong in my logic that the Second Chance Offer should be based on the next highest bidder's lowest winning bid increment instead of their maximum bid?

[7606dennis]

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@takikawa4 wrote:

Your bid is good until the auction ends. Never bid on another item if it's the same thing until then.

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Unless I misunderstood the OP, they received a second chance offer and were not being told that they had won the auction after a higher bidder retracted or had his bid canceled.

A second chance offer is merely an opportunity for someone that has lost the item to a higher bidder in an auction if that winning bidder fails to complete their part of the transaction or the seller has more than one of the item.  The bidder receiving the SCO is given the opportunity to purchase the item for the amount of their bid, not the winning bidder's bid, if they so choose.  They are under no obligation to accept this offer.  In fact, they can set their setting to not even receive second chance offers if they so desire.

[*madison]

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@7606dennis wrote:

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@takikawa4 wrote:

Your bid is good until the auction ends. Never bid on another item if it's the same thing until then.

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Unless I misunderstood the OP, they received a second chance offer and were not being told that they had won the auction after a higher bidder retracted or had his bid canceled.

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taki wasn't talking to the op, it was another poster.

[nowthatsjustducky]

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@rolenboy01 wrote:

This is why many sellers don't bother with second chance offers they always get falsely accused of shill bidding when in reality some idiot snipes the item and then doesn't pay and now we are stuck with an unsold item and getting accused of something we didn't do.

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Eeyup.  As Phil, the Lord of Insufficient Light would say, "You're darned if you do, and darned if you don't."

[bigchief2472000]

The issue with dropping down to the next highest increment above the third bidder ($167.50) is that that bidder may have been willing to bid more if you and the winner hadn't drove the price up.  It may not seem applicable to your particular scenario, but could be relevant in many other auctions that take place where people are manually bidding and driving the price up.

[godzilla_goose]

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@blackbeardstreasurechest wrote:

I was recently the second highest bidder on an auction that was won by a bidder with zero feedback. Their bid for the item was $275.00, while my maximum bid was $270.00, and the third highest bid was $165.00. This bidder also had never placed a bid on anything before this winning bid, and therefore had 100% bidding activity with the seller. Barely two days after the auction ended, I received a second chance offer for my maximum bid of $270.00 from the seller. 

To me, this sounded a little suspicious, and I thought it might have been a case where the seller used a shill bidder (either their own account with different eBay usernames, or asked a friend/relative to bid on it) to drive the auction price up and then conviently back out after it was over. I contacted ebay with my concerns about this and was told that the buyer was from Mexico and was not directly associated with the seller, and that the seller was unable to get in contact with the buyer. Not even two full days had passed since the end of the auction, and that seems like an incredibly short amount of time to ascertain that the high bidder is not going to pay and to make a Second Chance Offer.

While I highly suspect that the winner of the auction was a shill bidder, I don't understand eBay's policy about Second Chance Offers. To me, since the high bidder for whatever reason will not be paying for the auction item, then why is their bid still valid in the auction? If the high bidder was taken out of the equation, I would have won the auction for  $167.50, which would be the next highest bid increment above the third highest bidder's maximum bid.

While this would not even be an issue in an auction where all the bids were very close to each other, in this case, the difference is about $100 between my maximum bid and what my winning bid would have been if this non-paying high bidder had never placed a bid on this item at all. While I know I have a choice to choose to accept the Second Chance Offer or not, I was curious if anyone else has ran into a similar situation. Does this sound like a case of shill bidding, and am I wrong in my logic that the Second Chance Offer should be based on the next highest bidder's lowest winning bid increment instead of their maximum bid?

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@blackbeardstreasurechest

blackbeardstreasurechest, 

First, I will say that I quite enjoyed reading your post as it clearly reminded me of some lengthy post I had written on the Old Bidding Board back on 2010-07-25.

As far as I am concerned, as an at-arms-length party from you, the eBay seller, the 0-feedback eBay newbie and eBay itself, I will present you my ideas for your consideration:

Due to the loss of transparency in the eBay marketplace, it is virtually impossible for the legitimate eBay bidders/buyers to perform their due diligence on competing bidders before placing proxy (or automatic) bid(s) in an auction.

The above being stated, let us just for the sake of discussion, consider that the 0-feedback newbie is not a shill bidder and is not related to the eBay seller, OK? For all I know (or care), the 0-feedback newbie could be a previously suspended user who registered a new eBay user ID but if the 0-feedback newbie is actually a previously suspended user, then by bidding, that 0-feedback newbie is, in effect, acting as a SHILL bidder for eBay's (financial) benefit.

I will use your numbers to argue why I think eBay is dealing with Second Chance Offers the way eBay is dealing with them and I will assume, for the sake of discussion, that there were only three bidders in your auction in which you were the second place bidder with a proxy bid of $270.00.

0-feebdack newbie:   $275.00 (winning bid)

blackbeardstreasurechest:   $270.00 bid

third place legitimate bidder:   $165.00 bid

With the auction ending at $275.00, eBay assessed the seller Final Value Fees based on the $275.00 winning bid. IF the 0-feedback newbie paid the seller, ALL is good as far as the seller and eBay are concerned. In this case, I surmise, you would not have received a Second Chance Offer for $270.00.

Now, since the 0-feedback newbie did not complete the transaction, the seller, at his/her absolute discretion, issued you a Second Chance Offer for $270.00 and IF you were to accept the SCO and act on it, then eBay would assess the seller Final Value Fees based on $270.00. IF you pay the seller, ALL is good as far as the seller and eBay is concerned.

Now, if you feel that because the 0-feedback newbie were a suspected shill bidder, and that your Second Chance Offer should be based on the third place bidder's bid plus one bid increment of $2.50 at that price level, you (rightly) feel that you should be paying $167.50 and not $270.00 as I see things from at-arms-length.

OK.  If the Second Chance Offer price is based on the legitimate bidder's (losing) bid that is just below your $270.00 bid, eBay would only assess the seller Final Value Fees based on a price of $167.50 and not on $270.00 which is your full proxy bid.

To me, eBay, by using the 0-feedback newbie's $275.00 bid to calculate the Second Chance Offer price (to be paid) is just a way for eBay itself to extract the unused portion of your Proxy Bid. NOTHING MORE. In this respect, since eBay itself calculates the Second Chance Offer price by comparing your $270.00 losing bid with the 0-feedback newbie's $275.00 winning bid, eBay is able to assess the full amount of Final Value Fees without any regard to the legitimacy of the bidders' bids. The 0-feedback newbie could be completely unrelated to the seller, but by eBay itself calculating the Second Chance Offer price in the manner in which it is done, eBay is able to extract the full amount of your proxy bid and in your case, it is significantly MORE than the third place bidder's $165.00 bid.

Let's look at the same auction but with you as the listed winning bidder and that $270.00 is the full amount of your proxy bid, OK?

blackbeardstreasurechest:   $270.00 (winning bid)

0-feedabck newbie:   $265.00 SHILL bid

third place legitimate bidder:   $165.00 bid

IF the 0-feedback newbie was, in fact, a shill bidder, then you should have won the auction for $167.50 and not $270.00. In this case, eBay would assess the seller Final Value Fees based on a $270.00 winning bid. Had the 0-feedback newbie not placed the $265.00 SHILL bid, then you would have won for $167.50 and $102.50 of your proxy bid would have been unused. By, by allowing the 0-feedback newbie's SHILL bid to stand, eBay is able to use up your entire proxy bid with nothing left on the table.

[e-sister11]

I'm a new seller and this situation pretty much happened to me, but the high bidder asked if she could cancel because she found out the item wouldn't fit. I hadn't shipped it yet, so I agreed and made the second chance offer. I was wondering why I haven't gotten a reply if the bidder wanted to buy the item. Now I can understand your issue.

My answer is, as a new and honest seller, I've put up perhaps 8 items and in 2 cases the highest bidders wanted to bail at the last minute. Why? Not because they are shill bidders, but because they didn't read the description carefully, do their homework, and examine the photos that I spent a lot of time getting just right.  

But as a seller, I also want these eBay customers to have a positive experience. In one case I worked it out with the bidder and she ended up completing the sale. But understand... that's so far  2 out of 8 sales! If this happens every 4 sales on average, that would also add up to a lot of lost time and frustration for the seller to figure out what to do with their item. 

I was concerned that it might give the impression that there is something defective with the item and the second highest bidder would be turned off? 

So it's not fair to come to that conclusion without any proof.

If you don't want to pay that much, then you have the option of not buying it. But the seller loses 3-7 days letting the second bidder mull it over until the bitter end of the offer.  If you want to try again for a lower bid, then you will just have to wait until the item is listed again and start bidding. Don't draw it out based on a very negative assumption that incriminates the seller! Refuse the offer and let it get listed again.

It's not a perfect system and the seller experiences quite a fgood deal of inconvenience on their end when a high bidder backs out at the last minute.

And why would we want to sell to a bidder who's balking? Then if we force it, we risk retalliation with a negative feedback rating, which is devastating to any seller, much less a new seller trying to build a reputation.

Thanks for your understanding in future.

[e-sister11]

I meant to also say that for a seller, when the high bidder backs out at the last minute, you want to get that 2nd chance offer out ASAP because the second bidder may have a tight budget and want to move on to greener pastures.

I suppose you could also contact the seller and see if they would be willing to take your lowest bid, but if the seller believes they can fetch a similar price by trying a new listing (as is the case with me) then they will obviously do that instead. 

However, if they just want to move the item, they may actually accept your initial offer (even though they now know you would be willing to pay more).

I don't know how that would play out with the eBay system if you initiated a lower offer to seller and the seller accepted.  I dont imagine it would happen frequently. 

Just going by my own feelings as a seller here, using hypotheticals.

[e-sister11]

BTW, So far NO buyers have left me any feedback even though all except the one have proceeded like textbook. Why won't buyers leave positive feedback? We leave it for them.