When eBay, the Internet auction company, suspended the seller and voided the sale of a vivid abstract painting whose price shot from 25 cents to $135,805 last month, his offense had nothing to do with the authenticity of the painting or the story he invented to go with the work.
Rather, the seller, Kenneth A. Walton, had entered a bid of $4,500 on his own offering -- a practice known as shill bidding -- on the second day of a 10-day auction, long before speculation that the painting might be by the renowned artist Richard Diebenkorn sent the price soaring.
But a close analysis of that and other eBay art auctions reveals that the flourishing cyberauction world faces a deeper, more intransigent problem than lone self-bidders: the prospect of rings of shill bidders, acting as partners. Mr. Walton, a Sacramento lawyer who used at least five Internet names selling and buying on eBay, appears to be just one of a circle of people who have engaged in cross-bidding activities that may have influenced the outcome of eBay auctions.
Starting with the list of people who bid in the $135,805 auction, and with the help of upset eBay users, The New York Times researched eBay's auction records and assembled a list of 33 Internet names that repeatedly bid on one another's offerings. The participants also encouraged other bidders by posting glowing testimonials to one another on eBay's vaunted feedback system, the comment forum where people write about their experiences dealing with other individuals on the site.
This week, after using proprietary software called ''shill hunter'' to review the list, eBay said it planned to warn two of the names and noted that 13 of them -- including Mr. Walton's -- had been suspended after the company's own investigations.
EBay declined to disclose why, citing privacy concerns. But that makes 15 user names that have been disciplined in the wake of the canceled auction.
No one knows how many rings are operating in the online auction world -- or, for that matter, in the traditional auction world, where the practice is generally considered illegal under business codes and many state laws.
But critics of eBay contend that the company's screening system is not fine enough to detect all ring-bidding.
The company acknowledged that it reviewed bids made only in the last 30 days, which may not be long enough to discern shillers who spread out their false bids.
It also conceded that those in the circle may have changed their bidding patterns in recent weeks, lying low to avoid attracting attention once Mr. Walton's auction began making headlines May 9.
Indeed, experts in the art world, academia and law enforcement say, the fact that the circle surrounding Mr. Walton would not have come to light without the media glare illustrates just how easy it is for people acting in concert to fly beneath the devices eBay uses to root out rigged bidding.
''We look for rings,'' said Robert Chesnut, eBay's associate general counsel. ''We have detected rings. But there is a limit to shill hunter. And there are things that look like shill bidding that are not.'' EBay will not divulge how many people it has expelled for shill bidding.
One thing is certain: Every day the opportunity for shilling grows. This year, sales in consumer-based online auctions in the United States are expected to more than double, to $6.4 billion, up from $3 billion in 1999, according to Jupiter Communications, a research company. EBay's share of the market -- more than 90 percent, Jupiter says -- dwarfs that of Yahoo, Amazon and other rivals.
At last count eBay had 12.6 million registered users. On any given day they place 1,000 bids a minute on the more than 4.5 million items up for sale. EBay, whose revenue is expected to double this year, to $400 million, views the transactions on its site as private: it does not vet the offerings or descriptions, though it does try to remove outright frauds.
Though eBay explicitly forbids shill bidding, company officials say they recognize that there will always a few bad apples in such a large community.
And nothing in eBay's rules prevents a person from using more than one Internet name. Nothing prevents friends from bidding on one another's offerings, running up the price, so long as the bid is sincere. Nothing prevents friends from posting nice comments about one another. It was only on March 1 that eBay began requiring those feedback comments to be related to actual transactions.
While online auctions are thus ripe for manipulation, tracing possible bidding collusion is extremely difficult. It involves sifting through and cross-referencing dozens of bidding histories and user feedback records, hours of work.
''This is Joe Public,'' said Delores Gardner, a lawyer who specializes in Internet fraud at the Federal Trade Commission. ''I'm not convinced that many people are sophisticated enough to detect shill bidding. It takes a lot of work, and it's not the type of work that a buyer should have to do.'' Most complaints to the commission have been about shoddy merchandise or failure to deliver the goods, not about bidding shenanigans.
EBay, citing cost considerations and storage capacity, removes auction records from its site after 30 days, which makes detection harder. And even while a bidding history is available, the bid list discloses only the highest offer entered by each Internet name, which sometimes masks the progress of bids. Mr. Walton's painting, for example, drew 95 bids, but the bid history contains just 17 names, and prices on it leap from $7,701, entered by ''animationconnection'' on May 4, to $135,505, entered by ''howdyhi'' on May 7.
Exactly what happened in between is now a mystery, one that provokes other questions about the bidding of people using Internet names that include ''birdaroo,'' ''artpro,'' ''w.'' and Mr. Walton's own ''golfpoorly,'' ''advice,'' ''grecescu'' and ''cheesesix.'' (He has not disclosed his additional names.) Along with several others, these names have regularly bid on one another's items but have rarely placed the winning bid, and they have patted each other on the back in feedback.
Of the 17 bidders on Mr. Walton's $135,805 painting, at least six -- in addition to Mr. Walton himself -- had bid on but not purchased the 36 other offerings he had placed for sale on eBay in the 30 days before his now canceled sale.
At least three of those six had already paid tribute to Mr. Walton on his feedback page. And that tally does not include Mr. Walton, who after buying a $2 CD from himself under a different Internet name commented that he was charged less than expected for shipping and called himself ''a really cool guy.''
During 1999 and early this year, Mr. Walton wrote equally flattering testimonials for five of the 17 bidders (four others plus himself). And seven of the 17 bidders have received positive feedback from several buyers and sellers who have links with Mr. Walton and with one another in other recent eBay auctions.
Some overlap is coincidental. It is in fact inevitable, because buyers and sellers who are interested in one kind of item, like paintings, will gravitate to those offerings, which are made again and again by the same sellers. Some buyers prefer to do repeat business with sellers simply because they know that those sellers deliver.
But if the extent of the overlap seems remarkable in this and similar cases, eBay disagrees. ''Sometimes bidding just looks suspicious,'' Mr. Chesnut said, ''especially in areas of collecting that are narrow, where of course you'll be bidding in the same area.''
He recounted the tale of a judge the company bounced for shilling who was indignant about the false accusation. ''I could give you a half dozen other examples where we accused people of shill bidding falsely, and they were outraged,'' he said. ''The evidence was circumstantial.''
Yet in the eyes of some bidders, online auctions, under the current rules, are hoaxes waiting to happen. Mr. Walton's offering simply brought to a head complaints many say they have already made to the company.
''EBay has created a monster that has grown beyond its capacity to monitor and to police the misdeeds of some very simple kinds of fraud out there,'' said Louis Richman, the financial editor of Consumer Reports. Mr. Richman, who believes that shill bidding and misrepresentation occur frequently online, said that his magazine had no statistics about them but was designing a research project to study online auctions systematically.
When the stakes are small -- the average eBay sale is about $40 -- the harm may be minimal, certainly too small for prosecutors to bother with. But a man who bid more than $126,000 on Mr. Walton's abstract painting, and who said that after spending a week researching Diebenkorn he had asked friends and relatives to chip in another $125,000 if he needed it to win, feels lucky to have escaped without mortgaging his life. (The painting's authenticity remains unclear.)
The man, a resident of the San Francisco Bay area who insisted on anonymity because he feared retaliation from eBay devotees, withdrew his bid after Mr. Walton refused to let him see the painting in person.
This bidder placed an offer of $126,200 at 2:30 a.m. on May 7, about 42 hours before the bidding was to close. Then he went to bed. ''By the time I got up, I had already been outbid,'' he said. He bid a little more, but when ''howdyhi'' suddenly ''came out of nowhere'' and upped the ante to $135,505 he decided he had to see the painting before going higher.
''Howdyhi,'' whose real name is Mark Therrell and who lives in Placerville, Calif., about 50 miles from Mr. Walton's home in Sacramento, did not respond to an e-mail message and could not be reached by phone.
Among the early bidders in this auction were several whose names regularly turn up, often in succession or nearly so, on other offerings by a small circle of sellers.
On May 2 Mr. Walton, using the name ''advice,'' put what he called an ''outstanding estate oil -- Arabs on Horseback'' up for sale. Among the bidders, 17 in all, were ''odona,'' ''astheworldturns,'' ''artpro,'' ''1ackley'' and ''jgle,'' the last four in succession, according to the posted bid history. Mr. Walton, using the name ''grecescu,'' also bid on the item, but that bid was canceled by eBay on May 10, when the company suspended Mr. Walton for 30 days.
In April, 10 of 17 bidders -- including ''jgle,'' ''astheworldturns,'' ''artpro,'' ''birdaroo,'' ''estate-queen'' and ''flipbackwards'' -- who seem to cross-bid were bidders on an exotic genre painting put up for sale by ''w.''
Also in April, ''astheworldturns,'' ''jgle,'' ''1ackley,'' ''big-fat-mamba-jambas'' and ''cheesesix'' -- one of Mr. Walton's names -- made offers in near succession on an ''abstract oil painting by Hager'' put on the block by ''boyscoutsofamerica.'' They comprised five of the 14 bidders for the painting.
And in April, Mr. Therrell's sister, Alice Therrell, who also lives in Placerville and uses the name ''[email protected]'' on eBay, put up for sale a ''large oil painting by Califano -- his best!'' Among the 16 bidders were ''astheworldturns,'' ''education1,'' ''birdaroo,'' ''artpro'' and Mr. Walton, using the name ''grecescu.''
Of those names, eBay has suspended ''education1,'' ''w.,'' ''flipbackwards'' and Mr. Walton's names. It plans to warn ''boyscoutsofamerica'' as well as another name submitted to eBay by The Times, ''docharpo.'' The others remain registered users in good standing.
Not every painting sold by ''advice,'' ''boyscoutsofamerica'' or others who appear to be in the circle has attracted such cross-bidding. But many do.
Mr. Walton said that he was ''absolutely not'' part of a ring. ''There is nothing going on,'' he said. ''EBay got me, and I'm off, and that's it.''
In the past he has said that all of his questioned bids were made on behalf of friends.
Guy Sbar, a New Jersey doctor who uses the name ''docharpo,'' also said he was not part of any bidding ring. E-mails or phone calls to the other Internet names were not returned.
Eric Greenleaf, an associate professor of marketing at the Stern School of Business at New York University who has researched the traditional auction process, said that there were two good clues to indicate that someone is shill bidding for a friend: ''if the only time he bids is when some one person is selling and if the underbidders are very geographically close.''
According to the information eBay users provide for other eBay users, many in this circle of repeated interacters live in northern California or Colorado.
Without help from eBay, it is difficult to determine how frequently members of this circle bid or buy. But some clues are available through eBay's feedback system, as evident from a feedback posting on eBay about a year ago.
Within four days, 10 of the names that regularly appear in relation to Mr. Walton placed complimentary comments on the feedback site for a seller named ''pigroast.'' ''Eh . . . eh . . . You sure do know how to 'cook' up one good game deal, pigroast,'' wrote ''1ackley'' on May 27, 1999. A day later, ''big-fat-mamba-jambas'' added: ''Hallelujah, Pigroast! May the Lord Come Down And Bless Your Kind Soul!! Amen.'' Other compliments are either equally obscure or underscore ''pigroast's'' dependability, as in ''thriftstorebob's'' comment: ''bargain city . . . deal of a lifetime . . . an asset to the Ebay community!!!''
Within hours of the appearance of those comments, ''pigroast'' had posted return compliments for each Internet name.
Three of ''pigroast's'' 10 admirers -- including Mr. Walton, using the name ''grecescu'' -- bid in the $135,805 auction.
Yet eight of the 10 names in the ''pigroast'' feedback have two or fewer feedback comments from other eBay users -- and they include comments from ''pigroast'' himself. The scant number usually indicates that these bidders rarely complete transactions.
Of these names, eBay has suspended ''pigroast'' and ''thriftstorebob,'' while the rest remain members in good standing.
In another odd episode, Ms. Therrell, who as ''pogdog'' is an active art seller on eBay, offered a painting about six months ago that stirred notice.
According to a few eBay users, including David J. Carlson, a Carmel, Calif., art dealer who employs three ''e-pickers'' to search for authentic paintings on eBay that he might buy for resale, ''pogdog'' put up for sale an abstract painting that also resembled a Diebenkorn. The description never used Diebenkorn's name and made no claim about the artist. Like Mr. Walton's, Ms. Therrell's offering included a close-up of the work with the signature ''R.D.'' easily discernable. Ms. Therrell did not return a phone call seeking comment or respond to an e-mail.
Auction records for that offering on eBay are no longer accessible, and the company declined to provide a bidding history or any information about the offering, citing policy and an inability to track the offer now. But Mr. Carlson recalls that the work fetched more than $10,000.
''Pogdog's'' feedback record includes many highly complimentary comments from some of the same people. ''Artpro,'' for example, posted two, including ''THE MOST HONEST SELLER, WITH THE BEST ITEMS AND CUSTOMER SERVICE ON EBAY-BY FAR!,'' while ''1ackley'' wrote, ''PAINTING WAY BETTER THAN DESCRIBED! THE MOST HONEST SELLER ON EBAY!''
Mr. Greenleaf, the N.Y.U. professor, said he believed that Internet companies like eBay could detect rings of friends who bid on one another's online offerings if they wanted to. ''There should be patterns that would be very suspicious,'' he said. ''These companies have powerful computing ability, and it would be easy to search for coincidences. But it's time-consuming, and eBay is very laissez-faire.''
So far, eBay has responded to reports of shill bidding mainly by suspending a user for 30 days on the first violation and indefinitely on the second. The company, however, said that to date most incidents of malfeasance involve credit card fraud and the failure to deliver goods.
But as online auction fever grows, bidding fraud could get worse. ''The Internet offers more opportunities to shill than traditional auctions because you have a lot of time to think about it,'' Mr. Greenleaf said. Furthermore, he said, the cost to a shill bidder who gets stuck with his own property is lower, because commission rates are just 1 to 5 percent online compared with as much as 30 percent at Christie's and Sotheby's and at least 10 percent on Sotheby's online sites.
Alan Bamberger, an antiquarian book dealer in San Francisco who applauds eBay for broadening the art and antiques market, also said companies like eBay could do more to reduce fraud. ''One of the things I've lobbied for is to get the records left up on the site longer,'' he said. ''They could play it into great P.R., and they hardly have to do anything.''