He has decided to go public after another auction house, quoting the Data Protection Act, did not warn him about a rogue phone bidder when he carried out due diligence despite asking them directly whether they had had any problems with the individual in question.
Legal opinion sought by ATG indicates that passing on this vital information can remain a serious risk to the supplier of that information even when there appears to be very good reasons for doing so.
Mr Nicholson has since discovered that the bidder owes tens of thousands of pounds to other auction houses and that at least one of them had banned him from bidding. However, fear of breaking data protection rules meant that no industrywide alert had been issued about the bidder.
The result for Nicholson's was an unpaid bill of £200,000, and a very distressed vendor.
The Chinese bidder, based in Italy, gave Nicholson's photos of his credit card, identity card with photo and even invoices from other auction houses for goods bought there under his name, including at Christie's in Paris, which showed a client account and bidding number.
The auction house contacted Christie's but were unable to ascertain whether the bidder had paid for his purchases because of the Data Protection Act. It is still not known whether that bill was paid.
"Calculated Gamble"
A further complication arose because the bidder did not pay the promised deposit for bidding before Nicholson's sale, and attempts to process that deposit using the card details failed, so Mr Nicholson had to take the decision whether to risk allowing him to bid or alternatively risk his vendor losing a sale.
"Having made all the relevant checks - including whether he had been flagged up as a problem as an online bidder, which he hadn't been - I took a calculated gamble.
"He had a Christie's bidding number and a quarter of a million pound account with them, and I thought that you had to be someone to have got that. It seemed OK but I had no way of checking him, apart from the details he supplied and phoning Christie's, and they couldn't tell me anything because of data protection. It's ridiculous."
Matters did not improve following the sale. "After the sale we sent him the bill and we heard nothing. Within a day we rang and got nothing and then continued to ring and got no reply."
One Nicholson's employee speaks Mandarin Chinese and when she rang she managed to speak to a woman who claimed to be the bidder's daughter, who said he was not there. Mr Nicholson thought that as it was around Chinese New Year, it was possible that the bidder had gone to China for the celebrations and so might pay later.
Last week, however, he said a follow-up call with the same woman made it clear that the bidder was uncontactable and that they were unlikely to be paid.
Mr Nicholson believes that one of the main reasons rogue bidders con auction houses is to get hold of the invoices which can then be used in secondary fraud, either in China itself or elsewhere.
"It's possible that it is used in money laundering and bribes," he said.
He and his research assistant have since found evidence that a man of the same name and age, and from the same town in Italy as their bidder, entered a plea bargain in the Italian courts four years ago on charges linked to tax evasion and fraud running into hundreds of thousands of euros.
"The problem is that auctioneers don't talk to each other like they used to. We may all be rivals, but we also have an interest in protecting each other from this sort of thing and it's about time someone did something about it, which is why I'm speaking out," Mr Nicholson told ATG.
Nicholson's have banned another rogue bidder after his name showed up on a list linked to online bidding, but he says that there is no such alert system for phone and commission bids.
"Exactly who should this data protection be protecting?"
Legal Principles
ATG legal columnist Milton Silverman, a partner with law firm Streathers, has been studying the data protection issue and is preparing a more detailed commentary for a future issue.
He told us: "There is arguably a case for disseminating information under certain circumstances but the principles in the Act would have to be applied on a case-by-case basis."
A ray of hope then, but no more than that because, as it stands, it appears that this would mean a detailed assessment of each set of circumstances as they arose, which would not deal with late or last-minute registration of bidders.
What Nicholson's have done, in the meantime, is to introduce new rules for phone and absentee bids, which are being published in their catalogues and online. They state that bids will not be accepted without prior proof of ID, address, a valid email address, mobile and landline phone numbers. Where accumulated bids are expected to go above £5000, a deposit will be mandatory.
Finally, successful bids must be paid for in full using cash or debit cards in the saleroom itself or by bank transfer, with goods not being released until funds have been finally cleared.
Call for Review
Mr Nicholson now wants parliament to review the Data Protection Act to deal with what he sees as a charter for fraud.
"I want the Act looked at again because it's stupid. All it does is to protect the guilty at the expense of the innocent," he said.
This is not the first time that auctioneers have expressed frustration that competition laws and the Data Protection Act prevent them from exchanging information regarding problem bidders.
In November 2010, Halls of Shrewsbury introduced new protocols to deal with purchasers unknown to the firm after a fraudster was allowed to operate for two weeks at numerous salerooms across the country because auctioneers could not tip each other off to his activities.
Martin Kidson-Trigg, whose own auction house near Swindon was one of the victims, recalls the investigating police officer at the time insisting that the public had a duty to prevent crime and report suspected fraud and that this superceded data protection rules. However, current legal opinion would not appear to concur with that view.
