23 May 2013

Car dealership fined for secret online bids

5:22 pm on 23 May 2013

A car dealership that secretly bid on its own online auctions to drive up the sale price has been fined $42,000.

The Auto Co Ltd, which is also known as Millennium, convinced genuine TradeMe users to let it use their accounts to place bids on its vehicle auctions that had $1 reserves.

Judge Singh described the 13 Fair Trading Act breaches laid by the Commerce Commission as premeditated.

Between June 2011 and July 2012 the company bid 7000 times on 530 auctions, the Auckland District Court was told on Thursday.

The company's lawyer, Donald Webster, said it did not realise it was acting illegally, as the practice is common in the owner's home country of Japan.

Mr Webster said that Auto Co Ltd has paid Trade Me $122,000 in reparation, which meant there was no profit from the offending.

TradeMe has distributed $90,000 of that so far to 110 affected buyers.

It has banned Auto Co Ltd's owner Masashi Umeoka, the company and 15 other people from using the site and described the crime as the most prolific, systematic and damaging campaign against it and its users in its history.

TradeMe has referred what it believes is another case of secret bidding by another car dealer to the Commerce Commission, which is currently investigating.