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‘Shill’ coin bids in eBay auctions draw complaints

By Glenn R. Simpson (The Wall Street Journal)

A 1937 buffalo nickel for sale on eBay.

THE NUMISMATIC COMMUNITY has been abuzz with stories of misidentified wares and dubious offers shill bidding that appear designed to boost prices for coins, precious metals and paper currency.

The problems are akin to scams in eBay’s sports-memorabilia and art auctions, and many coin collectors and dealers are angry. I personally consider shill bidding to be larceny, collector Phil DeMayo says. Unfortunately, eBay does not have the same view. Dealer Fred Murphy says: Shill bidding does happen. We see a lot of it.

Officials at eBay say they have no indication that the coin-auction problems are any worse than those elsewhere on the site. Overall, spokesman Kevin Pursglove said, problems with misrepresentation and shilling appear in only a tiny fraction of transactions.

While most collectors sympathize with eBay’s daunting task of policing its millions of auctions, they complain that the firm lets abusers off too easily by suspending them rather than banning them from the site. The company says it takes action proportionate to the offense, and does in fact ban some offenders.

The numismatists also accuse eBay of moving slowly when problems appear. Last month, eBay users complained that an item was misidentified. The purity of a 32-ounce bar of platinum offered at $15,000 was questioned when a collector pointed out that the dimensions of the bar indicated didn’t have the theoretical density of platinum.

Coin dealer Fred Murphy says he repeatedly warned eBay that the bar was almost certainly a fake. The reply from [eBay] was basically that they weren’t going to do anything about it, even [after] being told that it’s probably $160 worth of silver being misrepresented as $15,000 worth of platinum, Mr. Murphy said, providing copies of several e-mails he received from company representatives. In one, an eBay official explained: Unfortunately, eBay doesn’t actually handle the merchandise that is offered for auction.

Three days later, the bar was labeled a fake by the British company that purportedly had made it, Johnson Matthey PLC. I wish to draw your attention to the fact that Johnson Matthey has never manufactured platinum [or any other metal] bars bearing the marks shown in the photograph contained in this listing, a company official wrote in a May 18 letter to eBay. Additionally, a solid-platinum bar of the dimensions shown would weigh approximately twice the indicated weight.

The auction, which eBay never interrupted, expired later that day after bids reached $13,100, below the $15,000 sought by Roy Thompson, a seller from Bali, Indonesia. Mr. Thompson and a U.S.-based associate didn’t respond to e-mailed requests for comment. Mr. Thompson, dubbed a power seller by eBay for the high revenues his auctions generate, remains a member of the site in good standing.

The company said it didn’t ignore the May 18 letter, and said it asked Johnson Matthey for a sworn statement asserting trademark infringement. We did not hear back from them, said eBay lawyer Jay Monahan. Under those circumstances, it would be inappropriate to remove the item. Many products come under attack from rival sellers, so the company won’t take action without a formal complaint from someone with a legal stake in the matter, Mr. Monahan said. That is there to protect our users from people asking just willy nilly to get things taken down, he said.

To combat problems with shilling, some coin collectors, including Atlanta computer technician Robert Shaw, have turned to online vigilantism, joined a posse that calls itself the Shill Hunters. The group exposes what it believes are frauds on rec.collecting.coins, an Internet online-discussion group.

Mr. Shaw’s tales of detective work, and those of compatriots, offer a revealing look at the inner workings of eBay. Some of the smartest alleged con jobs net a few dollars each, but are undertaken in great volume.

Mr. Shaw gave an account of a recent bust. The case concerned a seller identified as “evangelism.4.him, who also offered testamony [sic] with his sales. I am using this Auction Site to spread the Word of God, evangelism.4.him wrote.

After purchasing two Mercury dimes from evangelism.4.him for the sum of $6, Mr. Shaw grew suspicious of the transaction when he noticed that one of the other bidders seemed to limit his other offers on eBay to just two particular sellers. When buyers exhibit such an unusual preference for particular sellers, it is a clue that they may be in league or the same person.

EBay members have the right to request the real name behind the screen name of other members, and Mr. Shaw did so for the sellers he found suspicious. They listed the same real name of evangelism.4.him, Mr. Shaw recounted in an e-mail. That person didn’t respond to an e-mail request for comment.

A bit more searching by Mr. Shaw located additional eBay accounts allegedly used by the man to place bids on his own wares, such as gila-monster, namrap, and debbielynn44. EBay tries to ensure the credibility of buyers and sellers through a vouching process known as feedback, whereby buyers and sellers accumulate testimonials or criticisms from customers in past transactions. When Mr. Shaw examined the feedback for each name, he found that the three had vouched for each other, but no one else had. All seven accounts have since been suspended by eBay.

While the Mercury dime auction was inflated by only a few dollars, if at all, eBay records indicate that the seller may have conducted more than 1,000 auctions before he was suspended.

The incident, and Mr. Shaw’s contribution, were confirmed by eBay. He absolutely helped us identify individuals who were shilling, and we suspended them, said the spokesman, Mr. Pursglove.

Mr. Monahan, the eBay lawyer, said the company is in a difficult legal position because too much oversight could leave it liable for transactions that go bad. The company, he said, has drafted proposed legislation to give it some protection.

Copyright © 2000 Dow Jones & Company, Inc. All Rights Reserved.

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