US Says Online Car Auction Platform Used Fake Bids To Quietly Raise Prices

Auctions are interesting to watch as prices can soar as bidding comes to a close. However, two companies reportedly engaged in a “bid-rigging conspiracy.”

According to the Department of Justice, Eblock, an online dealer-to-dealer auction company, acquired a competitor in November of 2020. This firm, known as Company A, was reportedly involved in fraud and bid-rigging. This should have set off alarm bells at Eblock, but the government says the company did not take immediate action to stop it.

More: Commenters Just Shut Down An Entire Cars & Bids Auction With Their Questions

The DOJ is playing a close hand, but said “From November 2020 to February 2022, individuals at Company A conspired with individuals at Company B to suppress and eliminate competition for used vehicles sold on Company A’s online auction platform, in violation of the Sherman Act.”

They also claimed Eblock didn’t stop “shill bidding” on Company A’s platform. This resulted in fake bids that were intended to artificially increase the sales price of used vehicles.

How Auction Data Was Leaked and Profits Split

The government went on to say “employees at Company A conspired with employees at Company B to share bidding information and agree on the maximum amount Company A or Company B would bid on certain vehicles.” Employees at Company A also shared “special access and user permissions” with Company B, which enabled the latter firm to see private bidding information from other users of the auction site.

If that wasn’t shady enough, the DOJ said conspirators shared an inventory of purchased vehicles and would relist them for sale. On top of that, the companies reportedly developed “software that would automatically place shill bids under the names of actual auto dealerships without those dealerships’ consent.” The government went on to note “co-conspirators pooled and split the profits from the scheme.”

While it’s unfortunate the government isn’t naming and shaming all the companies involved, Eblock agreed to a deferred prosecution agreement and will pay a $3.28 million criminal fine. The company also agreed to implement a compliance program and cooperate with the ongoing investigation as well as any resulting prosecutions.

The crime paid off for one whistleblower, who received $1 million from the DOJ’s Antitrust Division. It was their first-ever whistleblower reward and the FBI’s Mark Remily said, “In this case, information from a whistleblower led to the identification and dismantlement of a criminal antitrust conspiracy, that if unreported, would have continued to harm American consumers who were unknowingly overpaying for automobiles.”

We’ve reached out to Eblock for comment and will update this post if we hear back.