Trade Me pleased as shill bidder fined $42,000

MEDIA RELEASE
23 May 2013

Trade Me pleased as shill bidder fined $42,000

Trade Me welcomed the $42,000 fine imposed on a car trading company in the Auckland District Court today, as The Auto Co Ltd was sentenced for its part in the largest case of shill bidding in Trade Me’s history.

The case resulted from an investigation by Trade Me and involved more than 7000 fake bids on more than 500 vehicles listed on Trade Me between July 2011 and July 2012. Following the investigation, The Auto Co Ltd was banned from the online marketplace, despite being the site’s largest car trader.

Trade Me head of trust and safety Jon Duffy described shill bidding as “a blight” that sucked the oxygen out of an auction marketplace. “Intentionally inflating the sale price via fake bidders is dishonest, and it undermines the trust of our community and the integrity of our website.

“It’s also illegal under the Fair Trading Act and a breach of our terms and conditions,” he said. “We won’t tolerate this sort of underhand behaviour, regardless of the size of the membership.”

Mr Duffy said he was pleased to see the fine imposed. “The Auto Co Ltd has refunded more than $100,000 that it ripped off Trade Me members but this $42,000 fine provides a sharp reminder that systematically conning Kiwi consumers is unacceptable.

“It’s a good result, but on behalf of the Trade Me members ripped off along the way, we’d have liked the court to have issued a fine closer to the maximum which is $200,000.”

He said Trade Me was also pleased the case had prompted a review of the offence provisions under the Fair Trading Act. “It’s excellent to see the likely introduction of a specific shill bidding offence as part of the consumer law reforms currently before Parliament.”

Mr Duffy said the fine marked the end of ten months’ investigative work by Trade Me and the Commerce Commission. The Auto Co Ltd and several of its employees and associated third parties are permanently banned from operating memberships on Trade Me, and some had also received separate warnings from the Commerce Commission.

Trade Me has also banned a second motor vehicle trader currently under investigation by the Commerce Commission for shill bidding on $1 reserve auctions.

The Auto Co: Timeline

Auckland-based The Auto Co Ltd was banned from Trade Me in July 2012 following an extensive investigation by Trade Me’s Trust & Safety team into shill bidding by the motor vehicle trader.

The investigation revealed that between July 2011 and July 2012, employees of The Auto Co Ltd arranged for fake memberships and memberships run by associates to place 7000 bids on 500 motor vehicle auctions.

In late July 2012, Trade Me referred the findings of its investigation to the Commerce Commission in a formal complaint. Today’s sentencing marks the completion of the Commission’s enforcement action.

Trade Me calculated the loss suffered by victims of the shill bidding. As a result, The Auto Co refunded over $100,000 to Trade Me. This has been refunded to purchasers who suffered direct loss.

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