Undesirable and fraudulent behaviour in online auctions

Abstract

Online auctions are a popular means for exchanging items over the Internet. However, are many inherent security and fairness concerns. Participants can behave in an undesirable and fraudulent manner in an attempt to gain an advantage at the expense of rivals. For example, a bidder might seek to suppress the price by bid sniping, or the seller could introduce fake bids to inflate the price. In addition, an outsider or rival seller can lure away bidders by directly offering them better deals, or a malicious seller can auction mis-represented or non-existent items. This conduct is a problem as it results in market failure, thereby inhibiting the usefulness of online auctions as an exchange medium. While cryptography has been used to provide security in terms of bid authentication and privacy, there is no documented means to prevent many of the aforementioned problems. This paper investigates undesirable and fraudulent behaviour in online auctions. We examine the following practices: bid shielding, shill bidding, bid sniping, siphoning and selling non-existent or misrepresented items. We describe the characteristics of such behaviour and how to identify it in an auction. We also provide recommendations for recourse against undesirable and fraudulent participants.