Variable bid fee: An online auction shill bidding prevention methodology

Abstract

A highly accelerated growth of e-market has lead to a well flourished online auctions scenario. Along with the attraction of numerous users world-wide, the online auctions have also allured in multiple frauds, periodically changing in nature and strategy to accustom to the proposed fraud detection and prevention approaches. As per the Internet Crime Complaint Center report 2013, auction fraud is enlisted as the topmost fraud accounting for drastic monetary losses. Amongst the online auctions frauds, shill bidding seems to be the most prominent fraud. In this paper, we present a variable bid fee methodology as a prevention technique for shill bidders. A bidder is charged for each of his bid based on the amount he bids. The winner of an auction wins back the charges he paid as bid fee; he gains an additional benefit to recover the bid fee he paid for the auctions he earlier lost in. This maintains the competitive spirit of an auction. On the contrary, the inherent nature of a shill bidder of frequently bidding in an auction and never winning one, will cause him perpetual monetary losses. We proposed this methodology based on the idea that the risk of losing money will reduce the tendency to exhibit shill behavior.