Attorney General Mark Brnovich announced the resolution of a lawsuit filed against auction companies Auction Nation, LLC (Auction Nation) and Auction Yard, LLC (Auction Yard) and their owners. Consumers will receive $260,000 in restitution as a result of the consent decrees his office (AGO) obtained against Auction Nation and Auction Yard.
“Whether live or online, auction companies conducting business in Arizona must do so with integrity and transparency,” said Attorney General Mark Brnovich. “Bidders may face off with each other but should not have to contend with undercover shills and orchestrated house bidding designed to drive up the prices.”
The AGO alleged that Auction Nation and Auction Yard routinely engaged in “house bidding,” a practice where sellers and auctioneers place bids, typically to raise auction prices up to a “reserve price.” A reserve price is the minimum price a seller would accept from a buyer, so if the item does not reach the reserve price, the item does not sell. The AGO also alleged that Auction Nation and Auction Yard often placed multiple bids under multiple bidder numbers in their online auctions, and, in the end, items “sold” to house bidders often were relisted in later auctions.
In addition, the AGO alleged that Auction Nation and Auction Yard’s house bidders had the ability to view real bidders’ “max bids,” a type of bid where bidders set a maximum bid amount and Auction Nation’s auction software automatically outbids other bidders until the maximum amount is reached. Meanwhile, many real bidders informed the AGO that they had no idea that house bidding was taking place or that an item had a reserve price. Many real bidders also stated they would have bid differently if they were aware of house bidding, and some would not have bid at all.
The AGO’s lawsuit also alleged that prior to December 2018, Auction Nation and Auction Yard engaged in house bidding despite the fact that the user agreement in effect at that time for both sites prohibited house bidding and assured would-be bidders that Auction Nation was not involved in the transactions between buyers and sellers. In December of 2018, after receiving notice of the AGO’s investigation, Auction Nation updated the user agreement to disclose that house bidding may take place in Auction Nation and Auction Yard auctions, but many real bidders continued to be unaware of the house bidding.
The AGO filed a lawsuit against with Auction Nation and its owners Brian Long and Gabriel Prado, and Auction Yard and its owner William Russell in December of 2020. Under the consent decrees (pending court approval), Auction Nation will pay $210,000 and Auction Yard will pay $50,000 in consumer restitution.
The consent decrees also require strong injunctive relief whereby the two companies and their owners must provide transparency in their auctions and disclose more prominently that house bidding may take place in auctions with reserve prices, as well as more prominently identify which items have reserve prices. These changes will allow consumers to better understand that house bidding may take place and enable consumers to make an informed decision whether or not to participate in an Auction Nation or Auction Yard auction.
Am I eligible? What should I do?
The AGO has identified approximately 100 consumers eligible for restitution. Any additional consumers who believe they are eligible should file an AGO consumer complaint here or call 602-542-5763.
Senior Litigation Counsel Rebecca Salisbury, Assistant Attorney General Dylan Jones, Assistant Attorney General Joseph Hubble, and Senior Litigation Counsel Kristin Schriner handled this case.
If you believe you have been the victim of consumer fraud, you can file a consumer complaint by visiting the Attorney General’s website. If you need a complaint form sent to you, you may contact the AGO in Phoenix at (602) 542-5763, in Tucson at (520) 628-6648, or outside the Phoenix and Tucson metro areas at (800) 352-8431.
Copy of proposed Consent Decree (pending court approval) for Auction Nation here.
Copy of proposed Consent Decree (pending court approval) for Auction Yard here.