eBay Fraud Scams exposed

The PayPal fiasco in Australia has not lost it’s juice yet, it’s indeed getting more and more interesting. Today’s article in The Sydney Morning Herald titled Clerical error exposes Google as anonymous eBay critic shows a document source screenshot identifying Google as the source of a very good document prepared in response to eBay’s attempt to stifle payment methods competition on it’s Australian site.

This 38 page document demonstrates an excellent knowledge of eBay’s inner workings and summarizes eBay’s motivations quite well:

It is submitted that:
(a) There are two markets relevant to eBay’s proposed conduct. They are:

(i) the market for the supply of online marketplace services to online buyers and sellers in Australia - in which eBay operates; and
(i¡) the market for the supply of peer-to-peer online payment processing services in Australia - in which PayPal operates or, alternatively, the market for the supply of online payment processing services in Australia (including peer-to-peer and non-peer-to-peer online payment systems) - in which PayPal operates.
(b) eBay has substantial power in the market for the supply of online marketplace services to online buyers and sellers in Australia.
(c) PayPal is likely to have substantial power in the market for the supply of peer-topeer online payment processing services and the market for the supply of online payment processing services, more generally.
(d) eBay’s proposed conduct will immediately increase transaction costs for all eBay sellers and buyers, and remove any impediment to PayPal further raising prices to eBay sellers in future.
(e) eBay’s proposed conduct will reduce the quality of producVservice provided by PayPal on the eBay Site and elsewhere as PayPal will have little incentive to innovate, improve its product offering, or provide beüer quality customer service and support once it has secured a ‘captive market’ of online sellers on the eBay Site.
(f) eBay’s proposed conduct will foreclose competition from all competitors of PayPal currently allowed on the eBay Site.
(g) eBay’s proposed conduct willforeclose competition from existing competitors of PayPal, more generally. Exclusion from the eBay Site and the network effect of increased adoption of PayPal outside the eBay Site will deter or delay innovation by existing competitors.
(h) eBay’s proposed conduct will foreclose potential competition from new entrants into the market. Exclusion from the eBay Site, the network effect of increased adoption of PayPal outside the eBay Site, and the difficulties of building critical mass against PayPal’s installed customer base, will prevent or delay entry by new competitors.
(i) The proposed conduct is not necessary to achieve eBay’s claimed purpose, nor is likely, of itself, to be effective in achieving that purpose. One of eBay’s substantial purposes for the proposed conduct, is anti-competitive.

1.3
0) The public benefits claimed by eBay should be disregarded entirely, or alternatively, be given very little weight, by the Australian Competition and Consumer Commission (the Gommission), because they either:
(i) will or are likely to exist in the absence of the proposed conduct and, as such, cannot be said to result or be likely to result from the proposed conduct; or
(ii) are illusory.
(k) eBay’s proposed conduct will result in significant public detriments including a reduction in consumer choice and a reduction in the overall quality of online payment processing services in Australia.
1.4 Accordingly, it is submitted that the proposed conduct has the purpose and is likely to have the effect of substantially lessening competition in the market for the supply of online payment processing services, and that any likely benefit to the public from the proposed conduct will not outweigh the significant detriment to the public from the substantia, lessening of competition,
1.5 The Commission should revoke eBay’s Notification by giving eBay a notice pursuant to section 93(3) of lhe Trade Practices Act 1974 (Cth) (the Act).

Here is the 38 Page Document submitted to ACCC, most likely by Google requesting that ACCC prevents PayPal from being the only payment method allowed on eBay Australia.

Last year in June, eBay temporarily discontinued it’s ads on Google in retaliation to Google’s plans to hold a Party that coincided with eBay Live event. I guess we’ll see if the retaliation streak still permeates eBay’s corporate culture or if it has left the building with Meg Whitman.

In late January we have heard of eBay acquiring an Israeli security firm Fraud Sciences, reportedly to help make eBay PayPal a safer place, although it was rumored on TechCrunch that:

January 28th, 2008 at 11:10 am

Guys, it’s an inside job. The new president for Paypal knows the VC firms for FS and his first act of president is to help out his friends by buying some no-name fraud company. BTW, some factoids, 1) revenues weren’t $10M a year, they were $1M their last year, 2) It wasn’t $169M all in, but that was based on performance expectations which will never be met because they just alerted all their customers they were closing their doors and killing off any revenue streams …

OK, it’s three months later… How is that x million investment doing? I sincerely hope that millions of investor’s funds are not just squandered away. Security area is a best place eBay should invest some capital and we would like to get some upates on what’s new and exciting following this acquisition.

Technorati Profile

In hindsight of recent eBay strike that took place from 2/18 to 2/25 there has been a lot of buzz amongst eBayers that eBay is using dirty tactics to pad their listing numbers in order to minimize impact of the strike on it’s listing numbers. Today the Blogs and eBay Finance forums and eBay Seller forums are buzzing with examples of mysterious listings of items on which you cannot bid or which you cannot buy. These number in tens of thousands on seller accounts that were located today. We took some screenshots for the record.

eBay seller stc_prod_434012 auction snapshot

eBay seller sdc_prod_301013 auctions count snapshot

one of the items listed by seller sdc_prod_301013

Transaction Blocked screen if you try to bid on any items listed by sdc_prod_301013

Lot of these “seller” accounts have a prefix sdc_ which is an abbreviation for ShopingDotCom, an eBay property.

One poster on eBay Seller Forum took time to track some of them down and offered this summary:

Here is a list of Ids we found last night and the ebay express Id they are connected to.

sdc_prod_434012 = SpectrumSuperStore
sdc_prod_9021_2 = Buy.com (who is NARU!)
sdc_prod_9124_14 = TheNerds, Inc.
sdc_prod_9452 = eTronics, Inc.
sdc_prod_409455_97 = Sababa Shopping
sdc_prod_9090 = CompSource Inc.
sdc_prod_310426 = ANTOnline (who is NARU!)
sdc_prod_9074_35 = pcRUSH.com (who is NARU!)
sdc_prod_9352_67 = Digital Foto Club
sdc_prod_301013_74 = The Twister Group
sdc_prod_305839_99 = BargainBasementBatterie

Some still have auctions running. At last count it was a total of 280,000 auction listings that could not be bidded on. All had “sdc_prod” in the seller ID

I notice a couple more post here since I took my nap. so the total grows.
Most of the auctions had dutch auctions so the actual Total # of auctions is in the millions.

Another user said:

Looks like they are removing the listings, however they are being replaced just as quickly with new ones… try this: Go to the categories page… pick a category, say consumer electronics, then pick a sub category. Sort by “Time ending soonest” and scroll to the bottom of the page. It will say “Page 1 of 400″ or whatever. Go to the last page by typing the page number in the box in the lower right corner of the page. This is where they are hiding them. Because the have no end time, the always stay at the back of the real listings and never move forward. They are in just about every category I checked. And there are who knows how many of these SDC seller IDs, hundreds, even thousands, all with thousands of listings. There could be millions of these listings all included in the auction counts. If Wall Street uses these counts to rate ebay, then this might be interesting to the SEC or the FTC.

More interesting info on this Blog take a look at the transcript with the eBay Live Chat rep there.

It this is just a glitch and some programmer promoted bad code to production environment, so be it (bad for eBay at any rate, one would think that a company with 5 Billion Dollars in cash could afford better quality of personnel and a test server paired with quality control… ).

If this is a glitch and not some sort of intentional money business with auction counts, why would eBay censorship delete posts about this issue on it’s own forums? You can see posts being deleted in real time in this video on YouTube.

Update: 3/4/2008 AuctionBytes reported that eBay’s Usher Lieberman during the IMA conference on Monday said he had made a mistake when he called the Shopping.com listings a test on Saturday morning. He was trying to track it down and after talking to a few people, felt comfortable saying it was a test, and subsequently found out the listings had appeared accidentally. Usher said it was his fault for initially getting it wrong. AuctionBytes asked Usher if he could tell them more, and he could not. “Lots of things are on the table,” he said

From eBay’s company history:
“eBay was conceived initially as a result of a conversation between Pierre Omidyar and his wife, an avid PEZ collector (she currently covets a collection of more than 400 dispensers). She commented to Pierre how great it would be if she were able to collect PEZ dispensers and interact with other collectors over the Internet.”

and here is from CNN:

Speaking of eBay, its founder, Pierre Omidyar, dated a PEZ collector who used the site in its earliest incarnation to buy and sell rare dispensers.

“Pam Omidyar, the fiancée and now wife of the gentleman who started eBay, was a PEZ collector, and she still is,” said Kevin Pursglove, a spokesperson for eBay.

But then again, you can see articles like this:
Friday, July 19, 2002
The Times: eBay’s creation myth exposed

How did eBay make a boring tech firm look sexy? By inventing its own ‘creation myth’. David Rowan reports

It was the warm, smalltown story of a corporate giant’s humble beginnings that enticed Business Week, The Wall Street Journal, even the fact-obsessed New Yorker. When Pam Wesley wanted to boost her collection of Pez sweet dispensers, her fiance, Pierre Omidyar, built a website for her to trade them. That website grew to be the huge online auction house eBay, one of the internet gold rush’s few success stories - even though, in the words of the company’s PR chief, Mary Lou Song, it began simply “as kind of a love token”.

It was a touching tale, recounted in endless profiles on both sides of the Atlantic, with only one flaw: it was a lie. As Song admits in a new book by Adam Cohen, The Perfect Store: Inside eBay, she invented the story five years ago to generate publicity for an otherwise dull tech company. “No one wants to hear about a 30-year-old genius who wanted to create a perfect market,” Song confesses. So she constructed what corporate PRs call a “creation myth”, and hoodwinked some of the world’s most respected reporters. Some of her victims are furious.

“If they lied to me, and then to the New Yorker’s diligent fact-checkers, then I’m angry,” fumes James Gleick, who profiled eBay in the magazine three years ago and then in his book What Just Happened. “I am embarrassed. My readers are meant to be able to rely on me.”

Equally indignant is Susan Moran, who covered the company for the online magazine Salon. “I feel misled, duped, embarrassed, stupid and angry,” she says. “As a journalist I’m usually on guard against lies or smoother mistruths. But somehow I felt differently about Pierre. Now he’s just another US CEO to doubt.”

The issue raises questions about how far corporate publicists mislead journalists to generate favourable press. There is nothing new in a company’s PRs exaggerating its humble origins, according to David Brain, the joint CEO of the communications agency Weber Shandwick, but an outright lie carries huge risks. “These myths of inception are a powerful way of communicating some truth about a company’s DNA, and are usually told once the company has grown big,” he explains. “You’ll hear that Richard Branson started the Virgin record empire from a phone box at university, or Hewlett-Packard began in a garage. There’s probably an element of truth there, but we’d never advise a client to fib. Once you know you’ve been lied to, the whole reason for trusting that brand has been negated.”

Jon Aarons, the president of the Institute of Public Relations, insists that for this reason, such lies are rare. But he believes that journalists often conspire with PRs in “an unholy alliance” to enliven their stories: “The media are just as guilty for not checking out these myths.”

That is certainly eBay’s defence this week. “I honestly believe we did not intend to mislead anyone,” claims an eBay spokesman, Kevin Pursglove, rather unconvincingly. He admits that “Pez’s role in eBay’s creation may have taken on a life of its own”, but blames journalists for ignoring more mundane angles.

“Reporters didn’t show much interest in marketplaces, or battered keyboards or Star Wars artefacts for sale,” he says - until they heard the Pez story. “Inevitably, the finished story would mention the Pez angle but leave out virtually all the other factors.”

Tech companies, often those hardest to sell to journalists as “sexy”, are those most commonly linked with creation myths. Apple Computers and Hewlett-Packard even ran commercials celebrating their garage origins. When three management consultants launched an online betting site, Flutter.com, three years ago, it was widely reported that it stemmed from their own betting competitions during a Super Bowl party. “That wasn’t the case,” says a source close to the team, “but it didn’t stop them winning the column inches.”