Most commonly referenced on eBay, shill bidding is when the seller of an item has a third party bid on their item solely with the intent of driving the price up and not for the purpose of buying the product.
Shill bidding is very popular with items such as cars and electronics. Individuals involved in shill bidding can sometimes be spotted on sites such as eBay by looking through a buyers betting history and comparing the number of items bet on compared with the number of items won (typically the number of items won is extremely lower than items bet on).
Normally a shill bidder is either a friend of the seller, a paid associate, or simply just a separate personal account of the seller. Shill bidding can be successful for its purpose due to the fact that if the third party shill bidding is the winner of the auction, he/she will simply be reimbursed by the seller for the purchase price and a re-listing of the item may occur.
Shill bidding can result in legal action if a serious enough infringement and/or a series of infringements occur.
Mike wanted to sell his car on eBay but he worried that the selling price might be lower than what he'd hoped, so he made sure two of his friends were shill bidding on it to help him out.