Legal Definitions - by-bidder

A by-bidder is an individual who participates in an auction by placing bids on behalf of the seller, not with the intention of actually purchasing the item, but rather to create the impression of strong interest and drive up the bidding price among genuine prospective buyers. This tactic is sometimes used to prevent an item from selling below a desired price or to inflate its final sale value. By-bidders are also commonly referred to as "shills" or "puffers."

Here are some examples illustrating the role of a by-bidder:

• Art Gallery Auction: An art gallery is auctioning a painting by an emerging artist. The gallery owner wants to ensure the painting sells for at least $15,000 and generates buzz. They instruct one of their employees to attend the auction and discreetly place bids if the price stalls below $15,000 or if there's a noticeable lull in bidding. The employee, acting as a by-bidder, places several bids to keep the momentum going and push the price higher. This action signals to genuine art collectors in the room that the piece is highly desirable, encouraging them to bid more competitively to secure it, even though the employee has no intention of purchasing the painting.

• Luxury Car Auction: A private collector is selling a rare vintage sports car at a high-profile auction. They have a minimum price they are willing to accept and want to maximize the final sale value. The collector asks a trusted associate to be present at the auction and bid on the car whenever the price seems to plateau, especially if it's below their target. This associate functions as a by-bidder, placing bids that create an illusion of intense competition for the vehicle. This perceived demand can pressure genuine car enthusiasts to increase their offers, believing they might lose out on a coveted item if they don't bid higher.

• Online Collectibles Auction: An online seller is auctioning a rare, first-edition comic book. While they've set a low starting bid to attract attention, they hope to achieve a significantly higher final price. The seller asks a friend to create a separate, anonymous account and place bids on the comic book, particularly during the final hours of the auction, to drive up the price. The friend, serving as a by-bidder, artificially inflates the perceived value and demand for the comic. This tactic can mislead genuine collectors into believing there's more competition than there actually is, prompting them to bid higher than they might have otherwise to win the item.