There’s an interesting new development that every buyer should be aware of before even bidding for a site at Flippa. It’s a new due diligence tool. It’s completely free and you would be crazy to not spend a few minutes using this tool on any Flippa listing you’re considering bidding on.

First, some background.

Flippa has long suffered from a problem of sellers opening multiple accounts. This is in violation of the Flippa rules and creates opportunity for shill bidding. A seller could pretend to be somebody else and bid on his own auctions to keep pushing the price up. You, as a buyer, don’t know the identities of other bidders and you’ll keep increasing your bid to compete with the seller himself who strings you along to a point of his choosing before he drops out.

This is illegal, but this is the internet and if Flippa don’t know about a seller’s multiple identities, they can’t block one of those identities from bidding.

To be fair, Flippa have made some progress in this regard. If multiple accounts log in from the same IP, they flag the accounts as “possibly connected” and you can see that note on the seller’s profile page.

However, people like the admin of the Experienced-People.net forum of website buyers and sellers, argue that Flippa aren’t going far enough. He points out that as it’s sellers who pay Flippa, it’s in Flippa’s interest to allow a bit of this shill bidding particularly if they can be seen publicly to be taking actions against some accounts by banning the occasional miscreant. That protects their public reputation while allowing some shill bidding to happen that ends up enriching fraudulent sellers and, indirectly, Flippa themselves.

Buyers have no way of querying a seller’s details to see if he has multiple accounts at Flippa and is a likely candidate for shill bidding. The only information they have is when Flippa discloses on a seller’s profile that he is “possibly connected” with another account. In most cases, there isn’t any connection disclosed here.

That has all changed. The Experienced-People forum has worked out an ingenious way of detecting these fraudulent connections.

It’s a bit technical, but bear with me here. Example: A seller has several accounts in Flippa, let’s call them account A, B, C and so on. He lists sites for sale using these different accounts and uses his other accounts to bid on his own auction. There is no real public information available about the seller – no name, no phone number, no email address, no IP! But, and this is the clever bit, all those sites listed under different names may be hosted in the same hosting account and may be registered to the same person! These sites may share the same hosting IP, the same obscure name servers, the same WHOIS phone number.

That’s what the new tool does. It goes behind the scenes to connect these dots for you. You can take it for a test run here. It is completely free and we understand it will always stay free. If you need a demo of what can be done with the tool, have a look at this post on their forum. Other parties have also started using it to expose some of the scammers, shill bidders and other less than honest sellers on Flippa.

Bookmark the page, and get familiar with using it. It’s going to become a key tool in the due diligence arsenal of every buyer.