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I recently noted some policy changes an online “auctioneer” had released. They seemed to be generally very good changes.

In essence, they are now being more upfront with bidders when the bidder’s maximum absentee bid [maximum pre-bid] is disclosed to the auctioneer.

Too, they are attempting to address the UCC 2-328 and when the seller can/cannot bid, with necessary disclosure.

A few things seemed a bit odd, which I have noted here [1], [2], [3] and [4] (leaving out the actual name of the online company and the person they quoted in the release.)

First, here is essentially what was released:

    At our company we want to ensure our auction partners and bidders have a safe and trusted experience. We are making some changes to ensure your auction is compliant with federal [1] guidelines.
    Policy change #1: We understand having knowledge of the maximum pre-bid can have a significant effect [2] on your auction. However, bidders deserve to know if their maximum pre-bid is being shared with the auctioneer. Therefore, we will be disclosing to bidders if you as the auctioneer are granted access to those maximum bids.
    Policy change #2: Per the UCC 2-328 (4) — If an auctioneer knowingly receives a bid on the seller’s behalf or if the seller makes or procures such a bid, and notice has not been given that liberty for such bidding is reserved, the buyer may at his option avoid the sale or take the goods at the price of the last good faith bid prior to the completion of the sale. Because of this, auctioneers wishing to participate in their own auctions [3] will require us to disclose such bidding is reserved to your bidders.

“These new policies are very important for auctioneers,” said a auctioneer quoted in the story. “We need to ensure we are working within federal [1] guidelines.”

The new messaging being included in terms and conditions is as follows:

    PLEASE READ: At the request of the auction company, this auction permits bids to be placed by the seller or on the seller’s behalf, even if such bids are placed solely for the purpose of increasing the bid. While [our] Unified User Agreement [4] prohibits this behavior, in accordance with UCC 2-328, this auction is permitted to engage in this activity by providing this clear disclosure to you, the bidder.
    PLEASE READ: This auction company has requested and been granted access to see all bids placed including any maximum pre-bids. This auction is permitted to engage in this activity by providing this clear disclosure to you, the bidder.

My [1], [2], [3] and [4] notes in the above are explained here:

    [1] The UCC 2-328 is not a federal guideline, nor federal law. The UCC 2-328 is state law in 49 of the 50 states in the United States, and has been used in court cases in all 50 states.
    [2] A significant effect? I can’t come to any other conclusion other than by the auctioneer knowing the maximum bid, the auctioneer is able to run the bid or otherwise use unethical or illegal tactics to take unfair advantage of the online bidder. Hardly something I would merely term “a significant effect.”
    [3] There is a key difference between the auctioneer bidding for himself (or herself) with a bona fide intention to purchase, versus the auctioneer bidding for the seller with the intention to ensure a certain price and/or bidding to raise prices without good faith. It seems clear in the announcement’s preface that there is no such distinction.
    [4] This too is confusing. The “unified user agreement” prohibits such behavior, but it is permitted if disclosed? In other words, you can’t do this, but we’re going to let you do this?

Again, the actual changes are very good — and long overdue. While the announcement could have been much better worded, I applaud this company for being more honest, transparent, up-front and in compliance with state law.

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.