Legal Definitions - puffer

A puffer, also known as a by-bidder, refers to an individual who places bids at an auction with no genuine intention of purchasing the item. Instead, their purpose is to artificially inflate the bidding price, often on behalf of the seller, to create a false sense of demand or to prevent the item from selling below a desired minimum price.

Here are some examples illustrating the concept of a puffer:

• Example 1: Art Auction

  Imagine a prestigious art auction where a rare sculpture is up for sale. The seller's agent, discreetly positioned in the crowd, places several bids early in the auction. These bids are not made with the intent to buy the sculpture, but rather to encourage other genuine bidders to offer higher amounts, driving up the final sale price. This agent acts as a puffer, creating an illusion of intense competition for the artwork.

• Example 2: Real Estate Auction

  A property owner is auctioning off a house and is concerned it might sell for less than its market value. The owner asks a friend to attend the auction and place bids up to a certain amount, ensuring the price doesn't drop too low. The friend has no intention of buying the house but bids solely to push the price higher, acting as a puffer to protect the seller's interest.

• Example 3: Online Collectibles Auction

  An individual is selling a rare vintage comic book on an online auction platform. To ensure the comic book reaches a high price, the seller uses a secondary account, or asks an acquaintance to bid on the item during the final hours of the auction. These bids are placed without any real desire to purchase the comic book, but rather to create a bidding war and inflate the final selling price. The secondary account or acquaintance functions as a puffer in this scenario.