Bid-rigging is a form of collusion in which participants in a bid conspire to choose the bidding process’s winner. Bid-rigging is fraud and a federal felony. Individuals who expose bid-rigging can obtain whistleblower protections and financial rewards from the False Claims Act.
Common types of bid-rigging:
Bid suppression occurs when the conspiring bidders agree not to submit bids to let one of them win the bid.
Complimentary bidding occurs when conspiring bidders intentionally submit bids they know will not be accepted to let one of the conspiring bidders win the bid.
Bid rotation occurs when the conspiring bidders take turns being the successful bidder in designated bids.
Phantom bidding occurs when a seller conspires with a bidder to trick other bidders into bidding more than they would have otherwise by having the conspiring bidder submit false bids.
Buy-back occurs during no reserve auctions where the seller buys back the auction item to prevent it from being sold at a lower price.