There was a recent news article that
ebay suspended the largest card seller on the platform due to alleged shill bidding. So, it is definitely a thing and definitely against the rules.
But, I would like to clarify, the real shill bidding is when you drive up a price of your item (or your friend's item on their behalf) and DON'T win it. It is the art of knowing how high the highest bidder is willing to go (or has already put in a max bid for) and then making them pay the closest to that amount. Sometimes, accidentally, you will win the auction, and in those cases, there is a small side benefit to the shill bidding. That is the recorded sale of that item at a higher price. But, that is not the intended benefit.
To be clear, I would not and have not engaged in such activities. The mere fact that they are against
ebay's policy, which you agreed to by selling on
ebay, makes it unethical.
I struggle to define, though, what is the real issue with it. If a person bids $100 on an item that is worth $75, that is really their problem. Nobody can force you to bid more than you want to. I lose auctions all the time to people who bid higher than I did. I don't allow that to change my max bid willingness. I am willing to pay what I determined the value of the item to be.
I think though, that the unethical part is that you are misrepresenting your item by calling it an auction. Auction implies that you are willing to sell it for whatever price it settles at. If you call something an auction and then drive up the price that seems dishonest.
Again, it is sufficiently wrong on account of
ebay's policy and I would never engage in such behavior. But, defining the ethics for me is an exercise is moral introspection.