What is shill bidding?

Shill bidding refers to the illegal practice where individuals associated with an auction or seller place bids on an item with the intention of artificially driving up its price. This unethical tactic is used to create the illusion of competition among bidders, leading genuine bidders to believe that there is higher demand for the item than there actually is. This not only misleads legitimate bidders but can also result in inflated prices, ultimately harming consumers and the integrity of the auction process.

In contrast, sharing bids among insiders is not an accepted practice and falls outside the definition of shill bidding, which focuses specifically on deceptive bidding behaviors. Promotional techniques and negotiation methods do not involve manipulating bids in the way shill bidding does; they focus on ethical practices that aim to enhance auction participation or set prices fairly. Hence, the distinction of shill bidding as an illegal practice emphasizes the importance of fair play and transparency in auction environments.