Bidding on its own TradeMe auctions has seen a Christchurch car company plead guilty to 55 charges of breaching Fair Trading laws.
Morrison Car Company were fined a total of $45,000 and ordered to pay $1,000 court costs in the Christchurch District Court today following their plea.
The company also admitted failure to display or provide Consumer Information Notices with the vehicles.
“Motor vehicle traders have legal obligations whether they are selling from a car lot or selling online via sites like Trade Me. Failure to comply can negatively affect consumers and also other businesses that are doing the right thing,” said Stuart Wallace, Commerce Commission Competition Branch Manager.
The company had claimed they were bidding on behalf of customers, something Judge Farish described as “implausible in the extreme” during sentencing.
The affect on TradeMe’s reputation was also noted, the Judge saying the company was a “real victim of the conduct”.
Between 2005 and 2009 Morrison Car Company listed vehicles for sale on Trade Me via two accounts ‘m_c_c’ and ‘mcctrades’.
About three quarters of the 200 listings by the m_c_c account were offered with a $1 reserve. The Commerce Commission’s investigation found that at least 39 of those listings were not truly available at a $1 reserve as employees of Morrison Car Company had made 344 bids themselves.
This type of bidding, banned by TradeMe, is known as shill or ghost bidding.
“It is not uncommon for sellers on Trade Me to list items with a $1 reserve. To avoid the risk of breaching the Fair Trading Act, sellers must be prepared to sell the item for $1 if no other bids are received for the item. Sellers cannot artificially raise the price themselves. Trade Me will investigate if shill bidding is suspected. Consumers should be wary when high value items are listed with a $1 reserve,” said Mr Wallace.
Additionally, none of the cars offered for sale via Trade Me included the display or access to a Consumer Information Notice (CIN) as required to comply with the legislation and Trade Me’s terms and conditions. In addition CINs were not provided to purchasers.
Trade Me disabled both the ‘m_c_c’ and ‘mcctrades’ accounts for breaches of Trade Me’s terms and conditions.
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