I can't help feeling that this is a law simply to protect the stupid. I was surprised that you could even be prosecuted for it in fact. I can't really see much difference between this and just setting a reserve price or a higher start price like Dan says. Unethical - probably, but fraudulent?
When bidding on anything, anywhere, don't bid more than you're prepared to pay for something - simple! Anyone who thinks something is more desirable just because someone else is bidding must be bonkers!