I think anyone who is genuinely shill bidding should have their account closed for good. It is a disgusting practice & extremely unfair to the bidder.
A seller asked an ebay aquaintance of mine to place a shill bid for her of course she didn't do it, imagine my horror when I heard this story I had actually purchased an item from that seller so no doubt I paid well over what the price should have been!
You may have done.....or you may have paid about what it was worth (and/or the minimum the seller was prepared to take for it).
I think there are at least three levels of shill bidder:
The first and worst kind will, intentionally, nibble the price up, until they have just overtaken your maximum bid and then they will offer you a second chance offer, due to the supposed 'winner' being a non NPB. If you accept that offer, unless your maximum bid was exactly what the item was worth, you will almost certainly end up paying over the odds.
The second kind just use shill bidding as a preventative measure (like a free reserve price) and will shill bid auctions up to the minimum they are prepared to receive, to avoid an item selling at their, ridiculously low, starting price. But, if they happen to outbid you by doing this, they will not offer you a second chance offer; because, even though they are breaking the law by shill bidding, they do not view themselves as criminals.
The third kind fall somewhere in between. They will not, intentionally, set out to uncover your maximum bid, by nibbling up the price, like the first kind do; but they will bid the amount they want to receive, in one go. If, by doing so, they happen to outbid you and your maximum bid is over their minimum acceptable amount, they may offer you a second chance offer.
So, although shill bidding, of any kind, is illegal, I think it is easier to forgive the second kind of shill bidder, as if you start your auction at the minimum you are prepared to receive (against all the advice of eBay, who
constantly recommend that you lower the starting bid, to draw more interest); you always seem to get far less interest than all of the shill bidding sellers who start their auctions at a ridiculously low amounts.
I totally agree that anyone caught doing it should be banned from eBay for life and probably arrested, too(!), though. Because if all the shill bidders were banned, regardless of how extreme they are; every seller would be forced to start their auction at the, genuine, lowest price they are prepared to receive for the item and buyers wouldn't have any phony, low starting bids to be tempted by.
