To pile up the $5 rewards offered by Andale, which posts auction listings, manages inventory and tracks sales, about a dozen sellers listed questionable items such as "a piece of fudge," said Andale chief executive Munjal Shah.
The accusations underscore the hazards of doing business on the Net. Just this week, stalwart auction firm eBay had at least 100 customers complain that scam artists swindled them.
Shah declined to say whether Andale had filed a complaint with law enforcement officials.
In addition, it has promised to honor all legitimate listings posted prior to the promotion's cancellation Wednesday, Shah said, adding that the company is conducting an audit and is postponing payment to all participants until its conclusion.
"We have to go through every single item," he said. "We will not pay for any items we feel are illegitimate. It's too bad that a few people have ruined it for the rest."
He added that Andale intends to run a similar promotion "as soon as we can figure out how to prevent this from happening again."
The company said it began the promotion almost two weeks ago and had intended to end it today.
On Tuesday, however, the company began noticing that some sellers were requesting that Andale post an inordinate number of items, Shah said.
The company began investigating. At the same time, auction Web sites contacted Andale to notify it that all the listings might not be on the level, he said.
According to Shah, several Web sites, which he declined to name, requested that Andale discontinue the promotion over concerns that the questionable listings may damage the integrity of their auctions.
The company notified participating auctioneers Wednesday that it was ending the promotion.