Shill bidding has become a hot topic of conversation in the sports memorabilia industry in the wake of an FBI investigation that could be focused, at least in part, on that practice.
The growth of auctions as a method of buying and selling created opportunities for dealers to increase their bottom line by placing bids on items they’re selling—or have someone do it for them.
It happens at virtually every level—from $10 transactions on eBay to high dollar pieces. The more valuable an item is, the more potential that collectors will spend hundreds, if not thousands more than necessary.
In its auction that closed Friday night, MEARS Online Auctions took the highly unusual step of intentionally shill bidding a game-worn Eddie Mathews Atlanta Braves jersey to demonstrate the effects such a move can have on collectors’ bank accounts. MEARS made the FBI aware of what it was doing ahead of time.
Playing on an unsuspecting bidder’s interest in the item, the company bid the item up late in the auction. The result was a final price that was about $5,000 higher than the last legitimate high bid. MEARS then placed a final bid so high that no other collectors would ‘win’ the jersey. According to Dave Grob of MEARS, the company emailed bidders after the auction and followed up Saturday with phone calls to apologize for the intentional ruse and to explain what it had done.
“This demonstration was completely an internal idea,” Grob told Sports Collectors Daily. “It was not asked for or prompted by a request from anyone. Because of how sensitive this topic is, we wanted to make sure the FBI knew what we were doing and why. That is the only link between this experiment and outside efforts, one of advance notice and intent.”
House bids are used in collectible auctions of many different types, something many collectors may not be aware of. Many believe the practice also inflates values in an artificial manner.
“I do think shill or in house bidding is still a huge problem, and one that is laid out in the fine print of many current auction catalogs,” Grob stated.
Read more about the demonstration here.