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External reserve for an auction

Fatwaa ID: 602

Question:
AsSalaamuAlaykum
Is it permissible to have an external reserve for an auction?

Usually auctions have the options of having a reserve price or a increased starting price to prevent the auction for selling below a certain price.

I’m wondering if it’s permissible to have a friend or someone else bid on my own auction at the reserve price istead of using the traditional reserve options for an auction. It seems like shill bidding, but shill bidding is usually unintentional bidding to inflate prices so that one can get the highest dollar bid for their own item. Which is impermissible in Islam. I’m asking if it’s permissible to have an intended reserve prior to the auction and having a singular bid done externally as the “starting price” or the “reserve” for the item.

That way if nobody bids above the “reserve” set by the external bid, then it’s essentially not sold. Once someone goes past the external “reserve” the reserve is not increased and no more external “intervention” takes place and the auction continues as is.

Or this still considered shill bidding and also impermissible?

Answer:
In the Name of Allaah, the Most Gracious, the Most Merciful.
As-salaamu ‘alaykum wa-rahmatullaahi wa-barakaatuh.

We take note of the details of your query. The above is deceptive and dishonest. One must be honest and transparent in his transactions. You may have a reserve price or starting price. The reserve or starting price may be announced prior to the auction. There is no difference in the outcome between this and what you have proposed. You should avoid the enquired method and instead have a starting price for the auction.

And Allaah Ta’aala knows best.
Mufti Muajul I. Chowdhury
Darul Iftaa New York
https://askthemufti.us/

07/24/1444 AH – 02/15/2023 CE | AMG3-3366

وصل اللهم وسلم وبارك على سيدنا محمد وعلى ءاله وصحبه أجمعين

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