Auction Alliance’s founder and CEO, Rael Levitt, has been found guilty of contravening Section 45 of the Consumer Protection Act. The National Consumer Commission found Levitt guilty of using a ‘ghost bidder’ in a recent property auction involving the Quoin Rock wine farm in the Western Cape. Levitt could face a year in prison or a million rand fine.
The wheels began to fall off when Wendy Applebaum filed a complaint against Auction Alliance with the National Consumer Commission regarding irregularities that she believed took place at the said auction. Levitt conducted the auction himself. Applebuam’s suspicion was raised when the identity of the person she was bidding against could not be revealed. Applebuam immediately reported the matter to the authorities who consequently ruled against Levitt.
A ghost bidder has no intention of purchasing the property on auction, but drives the selling price higher and higher. The practice is prohibited by the SA Institute of Auctioneers. However, it is rumoured that sellers, on occasion, place ghost bidders in the auction room for their own gain.
The fallout of the verdict has understandably been quite severe for Auction Alliance. Staff have been leaving the company in their droves and those who haven’t left have been given one month’s notice. It would appear Auction Alliance’s days are numbered.
While this may have been an isolated incident, the debacle has been a PR nightmare for the auction industry. Those who trusted the industry are bound to view auctions through different eyes. Auction houses will have to develop new strategies to win back the trust of the public.
