Shill bidding and the law
In 2010 Paul Barrett became the first person to be prosecuted in the UK for bidding against himself on eBay (a practice often referred to as “shill bidding”). He was fined £3,500, ordered to pay costs of £1,456 and ordered to carry out 250 hours of unpaid work. On sentencing him Judge Peter Benson, sitting at Bradford Crown Court said that he only escaped a prison sentence because he had no previous convictions for dishonesty.
The prosecution was brought under the Business Protection from Misleading Marketing Regulations 2008 and the Consumer Protection from Unfair Trading Regulations 2008.
How do the Consumer Protection from Unfair Trading Regulations 2008 protect consumers from shill bidding?
The Consumer Protection from Unfair Trading Regulations 2008 prohibits unfair commercial practices.
The Regulations classify unfair commercial practices in two ways, those which are unfair where the practice causes a consumer to take a different decision and those which are always unfair.
The Regulations specifically ban 31 types of commercial practices. Such practices are always unfair. Certain other practices may be unfair. These are as follows:
Commercial practices which are in general unfair
Under the Regulations a commercial practice will be unfair if it contravenes the requirements of professional diligence and it materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product.
This general prohibition will apply where a trader’s practice is unacceptable and had or was likely to have an effect on the economic behaviour of the average consumer.
In deciding whether a practice is unacceptable a Court will consider the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers which is commensurate with either honest market practice or the general principle of good faith in the trader’s field of activity. This is an objective test by which traders are required to act professionally and fairly as judged by the standards of a reasonable person.
A consumer’s behaviour will be materially distorted if the practice impairs the average consumer’s ability to make an informed decision, for example where the average consumer would not have otherwise bought the product or would have exercised cancellation rights.
Since the practice of shill bidding artificially increases an item’s price or apparent desirability it will be difficult for a trader to convince a Court that the practice is not unfair. Given that most consumers do not like to pay over the odds and like a bargain it will be difficult for a trader to convince a Court that the average consumer would have still bought the product had they known that the price had been artificially increased.
Misleading actions and omissions
A commercial practice is misleading if it contains false information and is therefore untruthful or if it or its overall presentation in any way deceives or is likely to deceive the average consumer even if the information is factually correct and it causes or is likely to cause the average consumer to make a transactional decision he would not have taken otherwise. A commercial practice is also misleading if it creates confusion with the products of competitors.
For more information on:
- Aggressive practices
- What is the relevance of the Business Protection from Misleading Marketing Regulations 2008?
- The relevance of the Fraud Act 2006 to shill bidding