I was bidding for some software on eBay this weekend (new, unopened, never registered). I had the winning bid for a long time and just as the auction ended I was outbid and lost the auction. Fair enough… that’s life on eBay. Sniping happens all the time. What made the story more interesting is that soon after I was informed that I lost, I got a “Second Chance Offer”. According to the offer, “the high bidder was either unable to complete the transaction or the seller has a duplicate item for sale.” Something about this struck me as odd, but since I had already done my comparison shopping and convinced myself that my offer was a good value, I went ahead made the purchase.
But the experience got me thinking about the Second Chance system. You’re officially forbidden to bid for your own items (known as shill bidding), but I suspect a lot of people do it anyway. But I had always assumed that at least the seller would have wasted their time with a shill bid. For example, say you run a week-long auction and end up winning your own item. Now, oops! you’ve got to start another auction with the same item. So at least there is some real cost to the seller, besides the risk of getting caught. But the Second Chance policy lets you run a very efficient shill-bidding process. Your sock-puppet shill makes a very high bid to draw out the highest prices people will pay. Your sock puppet wins the auction, but of course is unable to pay (sock puppet insolvency is rife). Now you double back to offer the item to the next highest bidder who has been completely exposed at their high water bid. No need to re-offer the item, and you squeeze optimum value out of your market. That’s got to be a pretty tempting hack for your average seller. Anybody heard of this kind of thing?
As a coda to this story, I googled around for “eBay Second Chance scam” and learned of an entirely different hazard associated with this transaction. After a legitimate sale has closed, a third party thug claiming to be the seller can contact a losing bidder. The losing bidder happily sends money, and the phisherman departs with his cash. In the meantime, the actual seller is completely unware this is happening. So beware of phishy addresses if you get a Second Chance offer.
Hearing about this scam made me nervous, but the details of my sale checked out. Then again, I haven’t received my goods yet, so you never know…