Whatnot Says Shill Bidding Activity Down Nearly 80% After Expanding Enforcement
Whatnot says shill bidding activity on its platform has declined nearly 80% over the last six months following expanded detection and enforcement efforts.
In a new update, the live shopping marketplace also reported a 45% drop in user reports of suspected shill bidding and a fivefold increase in the number of signals used to identify suspicious activity.
Shill bidding occurs when a seller or someone connected to them places bids without a genuine intent to buy, driving up the price paid by legitimate customers.
Whatnot attributed the decline to increased investment in Trust and Safety, including additional investigators, data scientists and machine learning engineers focused on relationships between accounts, device information, bidding patterns and suspicious cancellations.
The Trust and Safety team more than doubled in size last year and is now the largest function within the company.
Mackenna Huntley
No underlying totals were provided, including how many accounts, auctions or transactions were affected. The post also leaves unclear whether the nearly 80% reduction refers to bids, auctions, accounts, sellers or another internal measure.
That limits how much can be independently concluded from the figure, although the post provides more detail than most marketplaces disclose about auction manipulation.
Whatnot withheld more specific information about its detection methods, arguing that additional disclosure could help users evade them, but said that confirmed violations can lead to warnings, restrictions, suspensions or permanent bans.
Live auctions create particular enforcement challenges because sellers, moderators and frequent buyers often interact closely. Other participants may have little way of knowing whether a competing bidder is an independent customer or someone connected to the seller.
The update comes as Whatnot faces private arbitration claims involving other practices in its trading card business.
Attorney Paul Lesko announced in March that he had filed arbitration demands on behalf of multiple users, alleging certain randomized card breaks and repack products amount to illegal gambling.
Liz Morton
The claims are being pursued through private arbitration and argue buyers pay for a chance to receive cards of varying value while sellers and Whatnot benefit from the money spent.
Whatnot has rejected the allegations, saying gambling is prohibited on the platform and card breaking is a longstanding collecting format used by card shops, conventions and hobby communities.
Sellers conducting breaks account for about 4% of its seller base, according to the company, which has also pointed to live video as a source of accountability when rules are violated.
Lesko has also accused Whatnot of failing to apply sufficient safeguards to high-volume sellers. Whatnot disputes that claim and points to its growing Trust and Safety investment.
Shill bidding predates online marketplaces, but digital platforms make it easier to operate multiple accounts while giving companies more data to detect suspicious relationships.
eBay has long prohibited the practice, including bids placed by sellers, employees, friends, relatives or other connected users to manipulate price or perceived demand, but some users say enforcement of the policy is often unevenly applied.
In 2021, eBay removed PWCC Marketplace, then one of its largest sports card sellers, after determining that individuals associated with the company had engaged in shill bidding.
PWCC denied the allegations and accused eBay of acting unfairly as the companies increasingly competed in trading cards, authentication and storage services. Fanatics acquired PWCC in 2023.
More recently, Rick Probstein’s attempted eBay competitor Snype shut down after a troubled launch involving technical failures, exposed customer information and allegations of internal shill bidding.
Probstein did not directly address the allegations before closing the platform and returning his consignment business to eBay.
Liz Morton
eBay has also tested changes aimed at reducing manipulation and other auction problems, including phone verification for some bidders and extended bidding on select trading card auctions, adding time when bids arrive near the end.
Liz Morton
Extended bidding does not prevent shill activity on its own, but it can make bidding patterns easier to observe and reduce the impact of a single late bid.
Whatnot faces a different problem in live auctions, where connections between sellers, moderators and regular bidders may be difficult for other buyers to see.
