please explain, page-11

Frankly my own opinion is you would have to be crazy to buy a property via auction for a few reasons one of which being the ball is firmly in the vendors court, but ok.

A genuine bidder who suspects that a "dummy bid" is being made is entitled to remind an auctioneer of this by asking, "Is that a dummy bid, because dummy bids are a criminal offence."

Obtaining Financial Advantage By Deception

The criminal offence of Obtaining Financial Advantage is a form of fraud.

Section 82(1) of the Crimes Act 1958 states:

"A person who by any deception dishonestly obtains for himself or another any financial advantage is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years."

Examples of Obtaining Financial Advantage By Deception:

Dummy Bids (Whether by the Auctioneer or from an associate in the crowd)

There is a great deal of misunderstanding about the concept of "dummy bids". Estate agents incorrectly refer to dummy bids as "vendor bids". A true vendor bid is really a form of counter-offer. The purchaser says, "I offer to buy for $290,000." The vendor responds by saying, "I'll make a counter-offer to sell for $300,000." There is nothing wrong with the making of an open counter-offer.

The process becomes a crime when a "trick" is introduced by the auctioneer creating the false impression that there are genuine bids higher than those made by the actual bidders.

The trick usually takes the form of an auctioneer pretending that he has received a higher bid from another genuine, competing purchaser, when in fact it is no more than a counter-offer made by the vendor.

The reason for the trick is that a vendor can make only one counter-offer before the auction will stall.

Example: After bidding $290,000 the bidder hears the auctioneer declare, "The vendor makes a counter-offer of $300,000." The bidder knows that if he accepts the $300,000 counter offer the vendor can go no higher. (After all, what would the bidder say if he called out "OK, I'll pay $300,000" only to hear the auctioneer reply with "The vendor makes another counter-offer of $310,000"!)

In order to avoid this situation, the auctioneer tricks the bidder into believing that he is competing with other genuine bidders.

Note: Whether or not this occurs before the reserve price is reached makes no difference - if the eventual purchaser increases the amount he is prepared to pay because of the "trick", then the offence of Obtaining Financial Advantage By Deception has been committed.

What has attracted the higher bids is the belief by the true bidders, deliberately created by the auctioneer, that if they do not bid higher, they will be outbid by some other legitimate purchaser. That is the deception.

Reserving the right in an auction contract for the auctioneer to make bids on behalf of the vendor is no defence to a criminal offence.

If a purchaser, at the time he makes his higher bid, does so because he believes the prior bid is real (when it is actually a dummy bid), a financial advantage has been obtained by deception.

Another, far more insidious form of the trick is to have an associate of the estate agent in the middle of the bidders at an auction, making dummy bids to artificially inflate the auction price, by creating the impression that the property is much sought-after.

In this situation there may be only ONE genuine bidder, who is effectively bidding against himself, alternating with the dummy bids which can never purchase the property.

This conduct is blatantly deceptive, and clearly constitutes a criminal offence.

Comment: The only time an effective counter-offer can be made by a vendor is when it is the last offer being made.

If an auctioneer advises a vendor client that a series of vendor bids can legally be used to bring the price up to the vendor's "Reserve Price", this advice could itself constitute a trick and complete the criminal offence of an Obtaining Of Financial Advantage By Deception.
http://www.lawyersconveyancing.com.au/deception.asp#3