There is an online auction that has the option to place a max bid (an automated process for the bidder to bid up to a specified value). Also, in the terms & agreement for the auction, it is disclosed to the buyers that the auctioneer can place bids on behalf of the seller. If the auctioneer also knows the max bid (of the real potential buyer, let's called that person BidderA for clarification) and places shill bids (fake bids) to increase the price all the way to the BidderA's max bid, is that illegal?
The buyers and sellers do not know that the auctioneer can see max bids as well.
An example for clarification: ItemA's highest bid is $100 and has a minimum of $5 increases. BidderA places a bid on ItemA for $105 but they also are willing to bid up $200 so they place a max bid $200.
The way the max bid should should work is if BidderB places a bid of $150, the auction site will automatically place a $155 bid for BidderA and BidderA is still the highest bidder. If BidderB placed a $250 bid instead, they would become the highest bidder.
Instead, what is happening is that the auctioneer (the company running the auction) sees that BidderA placed a max bid of $200 and places a bid for $195 (for what they claim is on behalf of the seller). This then triggers BidderA to automatically place a bid $200. It basically ensures that whenever someone enters a max bid, they will pay that amount if they win the item regardless of whether or not someone else makes a bid.