What is shill bidding at an auction and is it illegal?

Shill bidding is when someone bids on an item for the seller or auction house without intending to buy it, just to push the price higher. It can be a friend of the seller placing fake bids, an employee bidding on the house's own goods without disclosure, or fake accounts at an online auction. The bidder thinks they are competing with a real buyer when they are not.

Many states have laws against it, and many auction terms prohibit it, but the rules vary by state and by each auction's terms. Some states allow a seller or auctioneer to bid on the seller's behalf only if that right was clearly announced, often tied to a reserve, while others restrict it further. Bidding a price up with fake bids is generally considered deceptive.

Before you bid, read the terms and conditions and ask whether the seller may bid. Set your own limit and stick to it. If you believe shill bidding happened, raise it with the auctioneer first, then with your state's auctioneer licensing board if your state has one.