Ruling expected on predatory bidders

A ruling from Germany's Federal Court of Justice expected on Wednesday could put an end to the controversial practice of bidding low on items on auctioneer websites like eBay and then suing for damages if the seller cancels the auction prematurely.

The basis for the new legal precedent is the disputed 2012 sale of a used Yamaha motorcycle. At the time, a bidder had agreed to pay 1 euro ($1.13) for the second-hand bike. Shortly thereafter, the seller canceled the listing, sold the motorcycle elsewhere - and got sued.

The bidder complained that her offer of 1 euro represented a valid sales contract, alleging that the seller had taken down the listing without a valid reason. EBay does permit auctions to be cancelled, but only under certain circumstances such as theft or a typo in the listing.

But rather than get in touch immediately after the auction was called off, the bidder waited six months, according to court documents. Then she demanded a pay out of 4,899 euros - one euro less than the bike's estimated market value.

Bid low, sue high

People who bid on products at an online auction, only to wait for the seller to get cold feet and back out so the bidder can sue for damages are known in Germany as "Abbruchjäger," or cancellation hunters.

"As a rule, 'cancellation hunters' aren't interested in the object they're bidding on at all. They wait for it to be sold elsewhere. That way, their claim for the product becomes a claim for damages," Christian Solmecke, an expert in IT, media and Internet law, told DW.

According to Solmecke, this kind of predatory bidding is a common practice at online auctions. They generally target inexperienced sellers who get nervous that the item they're selling isn't getting enough bids and take down the listing prematurely.

In the case of the used Yamaha motorcycle, a district court initially ruled in the bidder's favor, describing the online auction bid as a binding sales contract. The court noted that the seller had not given a convincing reason for taking down the listing.

That decision was later overturned by a higher regional court, which found reason to believe the bidder had been engaged in the sort of legal trolling particular to "Abbruchjäger" - bid low on listings, wait for the seller to cancel the auction early and then sue for damages once the item has been sold to another buyer.

Implications for eBay

Now it's up to the Federal Court of Justice to decide what exactly constitutes an "Abbruchjäger" and whether dealing with one is grounds for nullifying a sales contract. The Karlsruhe-based high court, known in German as the Bundesgerichtshof, is the court of last instance in matters of ordinary jurisdiction in Germany.

The decision could have major implications for users of the online auctioneer eBay. The company's general terms and conditions state that a listing can be ended early, but only under certain circumstances. There are, however, ambiguities in those rules.

For instance, eBay says a reason for cancelling an auction could arise if "the item is lost, broken or otherwise no longer available for sale," or if a mistake was made when creating the listing. A common mistake among inexperienced sellers was to remove a listing early because they managed to sell their ware outside of eBay or because they changed their mind.

"That's the worst thing a seller can do," Solmecke said.

But in the case of the used motorcycle, if the Federal Court of Justice rules against the woman who bid on the bike four years ago, it would send a signal to "Abbruchjäger" and it could prompt eBay to come up with new rules to rein in such practices.