In the world of penny auctions, bid rigging or bid shrilling is a rampant practice followed by many new sites simply because they lack the required number of bidders per auction to declare a profit. Such clouded parties often force bidders into increasing their bid or placing more bids much after all other competing bidders have quit the auction by placing phony bids under pseudo names. This allows them to reach the reserve price for the item and breakeven in unprofitable auctions.
Bid rigging was a term initially used for government auctions where the government agency would enter into a contract with a bidder much before the auction and stage the bidding process later on. In both the above methods of bid rigging, other competitors or bidders get affected and the interest of the seller or auctioning party is entertained. This is why bid rigging is banned in most parts of the world with harsh punishments for those found guilty.
Nevertheless, there are some grey practices which come under bid shrilling but is still accepted a part of auctions. This includes, bidders manually enticing others into spending their limited cash or bid allowance on unworthy items so as to render them incapable of competing for more valuable lots in the auction.
