As someone who’s been in courtrooms all over the United States, I can assure anyone that if you are the high bidder at exactly your maximum bid on numerous items in an online auction, there’s something fishy going on …
Let’s say Lauren here is looking at her phone and sees that she won all 17 items she bid on for exactly her maximum bid amount. So, what are the odds that genuine bids pushed her bids up to their maximum amounts, but nobody bid further on all 17 items? I can tell you the odds are nearly zero.
In other words, for this to happen for all 17 items, I would submit there’s a nearly 100% chance the auctioneer or seller saw Lauren’s highest bids and bid up to one bid less than her maximum bids to ensure she paid the most she could.
Unless the auction terms dictated otherwise, Lauren could have bid $300 on an item but won it for less if the highest other bid was $150. The online system would have [probably] bid $160 for Lauren and with no other bidding, her purchase price would have been $160 plus any buyer’s premiums, tax, or other charges.
Instead, Lauren’s maximum bids were $300, $250, $175, $400, $350, $1,000, $750, $100, $25, $5, $200, $425, $810, $360, $705, $65 and $120 and she won each of those items for $300, $250, $175, $400, $350, $1,000, $750, $100, $25, $5, $200, $425, $810, $360, $705, $65 and $120. What do you think those odds are?
Auctioneers will no doubt complain that I’m writing about this, but if you’re an auctioneer doing this, you need to be called out. Auctioneers treating their bidders (like Lauren) in this fashion can be assured Lauren will shop elsewhere next time.
Can a bidder win 1 or 2 or even 3 items for his or her maximum bid? Sure, it does happen — but for 17 items? While some items, especially commodities, have known prices, the odds are as we noted … well, maybe Lauren should play the lottery?
Does it help if the auctioneer or auction platform discloses that they have been granted access to see all bids placed including any maximum pre-bids? Almost every auctioneer will tell you bidders don’t read anything, so a disclosure like this likely goes unnoticed.
Always my maximum bid? 05/03/20
Even with some type of disclosure, it’s it not legal nor ethical to place fictitious bids to force maximum pre-bids into exactly their highest positions. In court, when a bidder was pushed up with fictitious bids to her maximum bid of $14 million, I watched her attorney successfully argue fictitious bidding, fraudulent inducement and wire fraud.
We previously wrote about wire fraud and fraudulent inducement here: https://mikebrandlyauctioneer.wordpress.com/2020/03/24/online-bidding-and-wire-fraud/. The penalties for wire fraud can be fines as much as $250,000 for individuals and up to $500,000 for organizations and imprisonment of individuals involved up to 20 years.
I’ll say it one more time … bidders and buyers have choices and it only takes one taste of this type of behavior to turn Lauren (and anyone else) to other ways of purchasing — where she has a much greater chance of being treated honestly, fairly and with integrity.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.