Normally, on eBay, the process works like this:
You place a max bid for the item. Say the item is an antique vase. You like it, think its worth $100. Bidding opens at $2. You place a bid of $100. eBay gives you the opening bid at $2. You are protected up to $100.
Another bidder. Bidder 2 comes along and he wants the vase for $50., so he bids that amount. Bidder 1 is still the high bidder, at $55 ($50 + $5 increment). So Bidder 2 comes back and bids again, this time at $105. Viola! Bidder 2 is now winning at $105 (he met your high bid of $100 + the $5 increment.
More bids. Bidder 3 thinks the vase is worth $125, and bids that amount. He becomes high bidder with a price of $110. Bidder 4 thinks the vase is worth $130, and becomes high bidder posting that amount. The auction continues in this way until the end. Usually, in the last minutes, the bidding gets very heated, and the vase may end up selling for $600., which is close to what your local antique shop might charge.
This is how the scam works:
Same vase, opens at $2. Only this time, Bidder 1 bids $1000. The opening bid still shows only $2. He immediately follows with a false identity Bidder 2, at $990. Bidder 1 becomes high bidder at $995. Since this is more than you can get a similar product locally, and in a price range the average user is not going to spend lightly, there are no other bidders.
Scam complete. 15 seconds before the auction ends, Bidder 2 rescinds his bid, the "high" price drops back to the opening bid of $2, and Bidder 1 wins at that amount. Unless the seller has a substantial reserve to protect his investment (which is discouraged by eBay) he will be obligated to sell the vase for $2. If he does have a reserve, he doesn't have to sell, but he still owes eBay posting fees and the auction was a waste for him. For those of you who will say that the seller is not obligated to sell -- two things:
Seller must first be aware he was scammed.
Seller will likely end up getting neg feedback from scammer if he does not sell!
