Bidder Beware: Avoid Auction Scams

Fake estate sales are the other favorite ploy of travelling auctions. The auctioneers persuade real estate agents to let them hold auctions on the grounds of mansions that are for sale. They imply that the merchandise for sale has a connection to the grand house, when really it's just cut-rate crap trucked in for the auction. I went undercover to one such sale where the auctioneer was selling off "the entire state of Dr. Percy, leading figure in sports medicine." I asked the auctioneer whether it was the estate of the Dr. Percy, a professor at a nearby university. He said yes. So I called Prof. Percy, who was very much alive and startled to hear his name was being used to sell art and antiques. He laughed, and said he didn't know much about either one.

I attended another travelling auction where there were fake bidders planted in the audience. These shills repeatedly bid up the prices so the real customers would end up paying more. How do I know? It was right in the auction contract, only they were called "house bidders." The contract said the auctioneer reserved the right to employ house bidders to assure that he made a certain amount of money on each item. Customers had to sign the contract to get a bidder card, but apparently I was the only one who actually read it. Shills are illegal in some states. But many states don't regulate auctions or auctioneers at all.

That 'Bargain' Could Be Bogus

These schemes seem pretty transparent, but they work. I attended one travelling auction in which the auctioneer raked in $93,000 in a single hour. The auctioneer claimed one diamond ring was excellent quality and worth $15,000. A man in the audience bought it for his wife for $7,500. I approached him and offered to get the ring appraised for him. The appraiser said the ring was poorly cut, yellowish in color and had imperfections so bad they were visible to the naked eye. The value? Just $6,500, a thousand less than the man paid. This particular customer was so caught up in the auction that he also bought five oriental rugs, some furniture and a painting. His grand total? $20,000. The poor guy actually planned to delay his retirement to pay for the purchases.

Another travelling auction advertised "original signed Chagall lithographs." Again, I had one appraised. The piece turned out to be a fancy color copy. With the help of a magnifying glass, you could see the cheap dot matrix printing. And get this: It wasn't a Chagall. It wasn't even a copy of a Chagall. It was a composite of images from other Chagall works. So, if you raise your hand at a travelling auction, make sure your "bargain" doesn't turn out to be bogus.

Do Your Homework:

The reputation of the auction house is crucial. Call the Better Business Bureau and your county and state consumer protection offices to do a background check. If your state licenses auctioneers, find out which department is in charge and call and ask questions.

Even if the auctioneer comes up clean, be wary if the auction is being held at a hotel or some other non-permanent location. How will you track the company down if you have a dispute?

If you hear about a government auction third-hand, contact the government agency directly to confirm that it really is holding an auction.

Call ahead and get a copy of the auction rules in advance so you'll know how to proceed on the big day.

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