Here's a way the seller can abuse this.
An item has a current high bid of $10 and you place a maximum bid of $30. Now you're the high bidder at $11. It's getting to the end and the seller wants more, so he uses another account to place a bid for $70, and "wins" the auction at $31.
Now he knows your high bid, and declares that the high bidder is "unable to complete the transaction" and so offers it to you for $30 versus the $11 you would have paid without the scam.
An item has a current high bid of $10 and you place a maximum bid of $30. Now you're the high bidder at $11. It's getting to the end and the seller wants more, so he uses another account to place a bid for $70, and "wins" the auction at $31.
Now he knows your high bid, and declares that the high bidder is "unable to complete the transaction" and so offers it to you for $30 versus the $11 you would have paid without the scam.