The Arizona Republic

How to protect yourself in online auctions.

- Agnel Philip and Dennis Wagner

Online auctions are a great place to score deals, especially on big-ticket items like cars, TVs and appliances.

But online bidders are sometimes competing against more than fellow bargain hunters: Many auction sites bid on their own items, driving up prices with little trace.

This house-bidding practice is allowed under Arizona law as long as the auction house discloses it. It is typically done in auctions with “reserves,” or a minimum sale price that’s been set by the seller. Bidders aren’t usually told what the minimum price is or even which items have them. But all auctions by default have a reserve price unless the company expressly says they don’t.

An Arizona Republic analysis of two months of activity at Auction Nation, an Arizona-based online auction, found a subset of accounts likely controlled by the company bid up prices on items in the closing hours of their auctions. In total, 40 accounts raised the price of items a combined $139,000, according to the analysis.

No one likes to read fine print, but it’s in the terms and conditions where sites typically disclose they bid on their own items.

They often provide a general warning. For example, Auction Nation’s terms of service says: “Notice is hereby given that in the event of a reserve, Auction Nation or its affiliates may implement such reserve by bidding on behalf of the seller.”

So read all the way to the bottom and don’t get confused by the jargon. If a company says it might bid on behalf of the seller or itself, assume a house bidder is lurking on your auction.

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