eBay Shill Bidder Agrees To $400k Fine

It’s terrible when you’re bidding on an eBay item, and the bids keep edging the price higher. One Manhattan jewelry detailer allegedly rigged the bidson his auctions, and has settled a civil fraud complaint with the New York attorney general for $400,000 because of it.   The EMH group has agreed to pay a $100,000 fine and $300,000 inrestitution, as well as not participating in online auctions for four years under the terms of the settlement.   According to the lawsuit, the EMH Group, headed by Ezra Dweck, would list itemson eBay without a reserve price in their online store, Jewelry by Ezra. Dweck would then prepare spreadsheets of the items and give them to employees with instructions to bid and raise the prices.According to the New York attorney general, the employees placed a total of 232,000 bids over a one-year period, with a total value of $5 million, under theprocess known as “shill bidding.” The attorney general’s office estimated that the practice inflated the price of EMH’s jewelry by some 20%.   The problems with EMH werefirst raised with the New York attorney general’s office in late 2005 by eBay, and a year-long investigation ensued.   A lawyer for Dweck and EMH stated,   “EMH and Mr. Dweckdid not intentionally encourage any fraudulent bidding. A buyback program, which was vetted by two attorneys, was created to give winning bidders an incentive to sell back to EMH certainitems.”   This is one of the highest profile cases made by state and federal prosecutors regarding shill bidding. In the last couple of years eBay has brought in new policies and tacticsaimed at curbing the practice.