Andrew Rosener, a well known domainer, has proposed that
If a domain is listed for sale with no reserve I actually don’t see the problem with an owner bidding for the domain.
We at xynames, disagree! This is a not an ethical policy, and is in fact illegal (Shill bidding was included in the definition of criminal fraud in the 2006 Fraud Act).
I would point out that contrary to what Rosener suggests, the MOST damage from shill bidding occurs when there is no reserve because that is when every bid made has a real impact on the actual price at which someone might end up having to pay for the auctioned item. In fact, shill bidding by the domain owner UNDERMINES the entire “no reserve” auction process and allows the owner to manipulate the price higher.
As far as auctions where the owner NO LONGER OWNS the item being auctioned, lost it at foreclosure, seizure, forfeiture, etc. well – that’s not shill bidding, and has no relevance to this discussion, certainly not as ammunition to propose that owners should be allowed to shill bid! (BUT, I would point out that even there there might be an ethical question. For example most insurance companies do not allow a previous owner to buy back an asset that was forfeited until after it is back in the open market.)