What are “shill bids” and why are they illegal?

Shill bids refer to fake or fraudulent bids that are placed with the intention of artificially inflating the price of an item being auctioned. These bids are typically made by individuals or accomplices who are secretly working with the seller or auctioneer. The purpose of shill bidding is to create a false sense of competition among legitimate bidders, leading them to believe that there is significant demand for the item when, in fact, the interest is inflated by these deceptive practices.

This practice is illegal because it undermines the integrity of the auction process. Bidders who participate in an auction expect fair competition and transparency regarding the true value of the items being sold. When shill bids are introduced, it misleads honest bidders into potentially overpaying for items, which violates the principles of fair trade and consumer protection. This is why auctioneers, regulators, and most auction houses take strict measures to prevent shill bidding, ensuring a level playing field for all legitimate participants.