The Justice Department has uncovered a scheme where online car auction platforms artificially inflated prices through fake bids and collusion, defrauding buyers. Two companies, Eblock and an unnamed competitor (Company A), allegedly conspired to suppress competition and manipulate auction results from November 2020 to February 2022, violating the Sherman Act. This behavior raises questions about oversight in the rapidly growing online wholesale car market.
The Bid-Rigging Conspiracy
Eblock acquired Company A in 2020, but the DOJ claims Eblock failed to act on evidence that Company A was already engaged in illegal practices. The core of the scheme involved “shill bidding,” where fake bids were placed to drive up sale prices. Conspirators also shared confidential bidding data between Company A and another firm, Company B, allowing them to coordinate maximum bids and avoid genuine competition.
This was facilitated by giving Company B unauthorized access to private bidding information from other auction users. The companies then relisted purchased vehicles to further exploit the system, using automated software to place fake bids under the names of unsuspecting dealerships without their consent.
Profits Split, Whistleblower Rewarded
The scheme wasn’t just about inflating prices; the conspirators pooled and split the extra profits generated from overpaying buyers. While the DOJ hasn’t publicly named all involved companies, Eblock has agreed to a deferred prosecution deal, paying a $3.28 million fine and implementing a compliance program.
A whistleblower who provided key information to the DOJ received a historic $1 million reward – the Antitrust Division’s first-ever payout. The FBI’s Mark Remily emphasized that without this reporting, the fraud would have continued, harming consumers who unknowingly paid inflated prices for vehicles.
Why This Matters
The case highlights the risks of unchecked market manipulation in the online auction space. As more car sales move online, ensuring fair competition becomes critical. The fact that this scheme persisted for over a year before detection raises concerns about transparency and accountability within these platforms. This case could set a precedent for stricter enforcement against fraud in the digital wholesale car market.
