• height of shill bidding on Flippa

    Quote Originally Posted by Thomas View Post
    I'm genuinely surprised there have not been more lawsuits in the industry - I would imagine once a few have been successful it will set a precedent for many more.
    There will probably never be many lawsuits in this industry.

    If someone gets scammed out of $5,000 or $10,000, the cost of the lawsuit itself would probably exceed the maximum recovery, at least in the U.S. where even the winning party normally has to bear its own costs of the lawsuit.

    In many cases the buyer and the seller are in different jurisdictions, often in different countries. Unless the purchase document provides that the seller agrees to submit to the jurisdiction of the courts where the buyer is located, the buyer might have to sue the seller in his "home court".

    Of course, before you can bring any lawsuit, you have to know who to sue. I suspect that in many scammy deals, the seller is either a shell entity or fake name. You may be able to dig enough to find the "true" seller but that is more work and may not even stand up in court.

    Finally, even if you obtain a judgment against the seller, you need to be able to execute on the judgment. First, you have to locate assets of the seller to levy. Assuming that the seller has no assets available to levy against in the buyer's jurisdiction, then collecting the judgment means bringing an ancillary action in the jurisdiction where the assets are located. That is another costly step.

    Until the buyers learn to conduct adequate due diligence and protect themselves with an appropriate escrow that holds the buyer's money for a reasonable period to discover any fraud or misrepresentations, the scammers will largely continue unharmed.
    This article was originally published in forum thread: height of shill bidding on Flippa started by flippingdesk View original post