eBay Fraud Scams exposed

The latest numbers from ComScore confirm what most eBay sellers predicted in March of this year.

eBay changes enacted this and last year will result in both Sellers and Buyers abandoning eBay for more competitive marketplaces.

Last year eBay removed the transparency and hid the bidder ID’s so a few months later all the statistics on eBay Auctions showed a major decline. There were articles published by most financial and market magazines and newspapers speculating why eBay auctions lost their luster. The answer is simple. Auctions are alive and well, just not on eBay. eBay hid bidder’s IDs so eBay customers lost confidence in the eBay auction process because they could not determine if they are bidding against a real bidder or against a shiller bidder.

Then eBay enacted slew of changes starting with increased final value fees on Auctions and Fixed price items, raising the percentage charged to the seller from 5.25% to 8.75% and later followed by yet another fee increase to 12.75% on fixed price items. Next eBay attempts to extract additional revenues from eBay sellers by forbiding them to offer checks and money orders as an allowed payment method for eBay sales. (( PayPal charges eBay seller 3.2% fee, getting paid by check/MO does not cost the seller anything.)) eBay then removed another layer of transparency in the market place by allowing buyers to leave negative feedback removing this priviledge from sellers, which in turn left sellers vulnerable to scammers or competition potentially destroying seller reputation. This in turn drove many sellers away from eBay to alternative ways of selling online. Many buyers followed the sellers to these alternative venues. One beneficiary of this seller exodus is Amazon.

The good news keeps piling up for Amazon.com today.

Internet research firm comScore says the number of unique visitors to Amazon sites from Dec. 1 to Dec. 24 — the height of the holiday shopping season — surged 7 percent from the corresponding period in 2007, to 76.2 million.

Amazon’s strong traffic numbers come at a time when overall holiday ecommerce spending was down 3 percent, according to comScore.

eBay remained the most visited retail site with 85.4 million visitors but saw a decline of 4 percent in visitors.

On 2 year comparison, Amazon traffic increased past two years in the row, while eBay traffic declined 10% from 2006 to 2007 Holiday Season and this year saw another 4% decline.

This clearly points to eBay management killing the goose that laid the golden egg, slowly but surely. They may blame the economy, recession or Uncle Bob, but the statistics on millions of users do not lie, eBay has alienated sellers, buyers, employees and stock holders alike.

Browsing the news this morning, I noticed that an article of interest on PayPal was deleted from the original source at SeekingAlpha. Before it dissappears from CACHEd pages, I thought it was worth preserving. Although this is a free country, where freedom of speach is paramount pillar, some speech has more freedom than other, especially if you speak against a corporation with billions of dollars worth of influence over something as fragile as freedom of speech.

Here is an belated Christmas present for those who value this freedom.

Paypal Ruins Christmas for eBay Customers
by: Dinah Balk December 25, 2008 | about stocks: EBAY
Dinah Balk

This could happen to you. I recently read a very sad story posted on eBay’s (EBAY) Paypal discussion board. It’s about a fantastic mom (eBay id: seasonalstuff) who sold holiday decorations to earn Xmas money for her family. Unfortunately all her hard work was for nothing because the Paypal Grinch froze her account two weeks before Santa’s arrival.

What did this seller do wrong? She sold too many Xmas decorations. Then she was selected for an “account review” by the Paypal Grinch because her sales triggered Paypal’s built in false positives. She also refused to give Paypal her SSN and driver’s license number out of fear of identify theft on the advice of her attorney. I don’t blame her. I wouldn’t give Paypal my SSN or license number either because all members’ personal information is shared with eBay’s entire corporate structure, subcontractors, and God knows who else, which is really scary when you think about it .

Now multiply this situation by thousands of sellers whose funds have been held or charged back for ridiculous reasons such as: 1) false positives; 2) less than 100 feedback; 3) sold too many items; 4) etc. etc. etc. and a pattern begins to emerge.

I doubt if Donahoe ever asked himself the following questions before he added the mandatory use of Paypal to eBay’s user agreement.

What buyer will tolerate shipping delays due to a seller’s funds being held?
What seller wants their funds to be held for up to 180 days for no good reason?
What seller wants charge backs if they have a no refund policy or when a buyer experiences remorse or neglects to read an item description?
John’s mandatory Paypal policy is why Xmas Mom’s children may not have Xmas this year. Other sellers are reporting the same thing. I’m sure family members are helping out but it’s sad to think eBay’s new CEO could not have foreseen this occurring. Perhaps he didn’t care.

Here’s Xmas Mom’s story, in her own words:

Due to circumstances beyond my control I am going to have to cancel some orders and give full refunds and end all listings tonight. Paypal has decided that after over 300 completed transactions and NO problems, they need to freeze my account for a minimum of 21 days. Over the last few months I’ve sold here on eBay to save money for Christmas, times are tough as many of you know and this is a great way to earn some extra money.

The problem is they have frozen my shipping funds and all of my Christmas money. I don’t have much cash. I can’t pay for the remaining shipping out of pocket without completely ruining Christmas for my kids. I hope you can find it in your hearts to understand. I will be leaving eBay. After I get through this mess I’m moving my inventory over to Amazon (AMZN). Those of you who are sellers too…you may want to consider it too some day. I pray that it doesn’t take something like this. I wish everyone the best and I hope your Holidays are wonderful. My apologies again.

This article has 26 comments:

» eBay +++ 31 Comments Dec 25 04:56 AM This is a real beauty — “I don’t blame her. I wouldn’t give Paypal my SSN or license number either because all members’ personal information is shared with eBay’s entire corporate structure, subcontractors, and God knows who else, which is really scary when you think about it .”

Dinah Balk you have got to be kidding? To say something like this without knowing a anything about how eBay handles it’s information is deformation of character with no basis. Watch out you Donahoe may freeze everything you have. LOL

There is no better way to pay on the internet than Paypal. I had an Account since they were bought by eBay use it frequently and have never once had an issue. I use it off eBay whenever it’s offered. Can’t how many times I’ve found something that I wanted to purchase and saw that they didn’t offer Paypal and didn’t feel like getting up to search for my Credit Card and just thought I’d come back to it latter and never purchased it. With Paypal I just log in and I’m done, no long CC # to punch in, just too easy. If I were a Seller that conversion acceleration alone is worth the fee.

That 21 days is nothing, it’s keeping everybody safe including her. If her business can’t weather that than it’s time to find a new business…

Watching the Wheels 65 Comments Dec 25 05:45 AM Ebay+++, Don’t you think that it might be a bit wiser to withhold commentary UNTIL You sell on Ebay ?

You stated that you have a Paypal account, so it would be a fairly easy thing to click a few buttons and list an item or 2 on Ebay. It would be interesting to study how willing you would really be to ship an item to an unknown person without having the money in your hand.

You might want to read through the actual Paypal contractual segments before you attempt this so you can fully appreciate these wondrous protections.

I had planned to sell on Ebay because venues offer an incredibly low cost opportunity to start a business.After watching the sweeping policy shifts that began in January of 2008, I decided that there were NO PROTECTIONS in place for the seller.

I sell on a different venue and I do utilize Paypal because of the brand recognition and increase in sales that I will receive due to their service. Fortunately I have only encountered one minor problem. I did not appreciate attempting to resolve this problem via an outsourced call center because the phone rep didn’t understand a single thing that I was attempting to convey. I did not appreciate the amoount of time it took to track down the TOLL NUMBER to be able ot speak with a rep whose primary language was the same as mine. I don’t appreciate the cost of this phone call, but on the plus side, by being willing to incur said cost, I have also provide myself with better documentation.

During the time frame that I was dealing with a glitch I attempting all the online possible solutions and got nowhere. The supposed online help’s transcripts are comical.If you repost and leave your address, I’ll send you copies.

Have you reached your spending limit yet? Are you really comfortable giving Paypal access to a bank account?

I fail to see the sence of the 21 day hold. In order to sell, there has to be some sort of bank account attached to the Paypal in order to actually get your money. If there is the necessity of refunding money, Paypal can freeze said account making the 21 day hold completely unnecessary. I f Paypal or Ebay choose to extend credit to an individual, that’s fine. I choose not to.

Hirorir 1 Comment Dec 25 06:20 AM Sorry to hear about this, Paypal can be a real annoyance sometimes; it’s also real cruddy that you had to be hit down on Christmas season too.
I’d advise you to go hardcore on this and file complaints on them for holding your funds for these 21 days (with intention to use on Holiday Season) with improper reasoning (if possible lead to sue). Your SSN should NOT be asked by Paypal, regardless of the reviewer. I believe Paypal should have a “don’t ask, don’t tell” policy? After all, they have all the information they’ll ever need right in their storage.

lucky lenny 33 Comments Dec 25 06:29 AM To combat fraud, to hold funds for a a month or so to make sure the seller isn’t a fraud, makes sense to me. I’m in agreement with Paypal on this one.

fairytrixy 5 Comments Dec 25 06:43 AM HoHoHo ebay+++

Next time you post it might be wise to do so prior to having a cocktail:)

Cheers!

eBuyer Feedback 3 Comments Dec 25 06:48 AM I had basically the same thing happen to me last year. I had a lot of listings going on (featured plus) with immediate PayPal payment required. eBay wouldn’t close the listings and refund my fees even though it was their fault my listings couldn’t sell. They told me it was my problem and I needed to contact PayPal. They even had the nerve to hang up on me in the middle of the conversation.

I had a customer from Russia that had paid the day before. I normally use Stamps.com and Endicia to do my postage but those wouldn’t work for their address. USPS Click-n-ship wouldn’t work either. That only left PayPal shipping. But since my account was limited I was expressly forbidden from printing postage through them.

PayPal took several days to clear up the block but by then my listings were all ruined and I lost several customers. I guess I trusted them with my personal information (that’s the only thing I trust eBay/PayPal with) and that is what led to the different outcome for me.

I was very lucky that I avoided a wave of negative feedback and chargebacks in the middle of that ordeal. I know how eBay users are and if they strongly suspect a scam they’ll rush their trading partner right out of business and then eBay uses those negs and chargebacks to justify kicking you off and holding your money indefinitely (which also leads to even more chargebacks).

Funny thing is one week they were congratulating me on becoming a gold powerseller. The next week they told me I was selling too much and almost trashed my 5 year old business.

Paul Price 176 Comments Dec 25 06:52 AM The vendor states she “had to give refunds” as her payments were being held up.

Why her account had been credited when the buyers paid. She could ship normally and her funds (if they were actually held up by PayPal) would have been released after 21 days.

We have no evidence that her story is even accurate. Anybody can say anything. Perhaps this whole episode was planted by someone short EBAY stock?

Regardless of that, I don’t see how cancelling transactions was necessary or what it accomplished. The buyers get the merchandise- the seller got paid.

If she didn’t like PayPal she could arrange for other forms of payment that she thinks are more acceptable to her.

Paul Price 176 Comments Dec 25 06:58 AM Every single article from this author’s name is a critical piece on EBAY.

She does not appear to have any intent here on Seeking Alpha other than to create ill-will towards EBAY and/or to hurt the stock.

Dinah Balk is not a stock analyst- she is working for the shorts on EBAY.

redbaron 169 Comments Dec 25 07:20 AM Paul, you need to try to sell on eBay first, before commenting on this situation. If you really have an interest here, why not go ahead and give it a try? You likely have some merchandise laying around, and the software is easy to use. Selling would for sure give you a different perspective on the situation, and would certainly add some credibility to your comments.

Without some personal experience, your thoughts have no substance or credibility. Ebay and PayPal are changing the rules to their advantage, during the holiday seasonal selling climax, and putting their customers (sellers are the only ones paying fees here) at risk of financial ruin. You are making assumptions here on a situation about which you know nothing.

You are correct about one thing, however, Dinah Balk is not a stock analyst, and that to me makes her very much more credible.

Dinah Balk 157 Comments Dec 25 08:37 AM Good morning everyone -

Got lots of Xmas stuff to do. Will be stopping by later when I have more time.

Merry Xmas!

arlin 18 Comments Dec 25 09:42 AM Dear Dinah
Manty thanks for your informative reports throughout the year.
Merry Christmas.

Paul Price 176 Comments Dec 25 11:03 AM redbaron,

I do sell through Ebay and use PayPal regularly with zero problems.

fatseal 5 Comments Dec 25 11:33 AM Do you not know that there is no other form of payment on ebay? It’s paypal or a merchant account.

Dinah Balk 157 Comments Dec 25 11:34 AM Here is Paypal’s Privacy Policy just in case anyone is interested.

You must log into your Paypal account. Go to the bottom of the home page and click on Legal Agreements. On the next page, underneath Agreements For All Users, click on Privacy Policy.

Please note that eBay’s corporate family is substantially larger than what was stated. My website has a complete listing of the entire corporate family.

How we share personal information with other parties

We may share your personal information with:

Members of the eBay Inc. corporate family — like eBay, Shopping.com or Skype — to provide joint content and services (like registration, transactions and customer support), to help detect and prevent potentially illegal acts and violations of our policies, and to guide decisions about their products, services and communications. Members of our corporate family will use this information to send you marketing communications only if you have requested their services.

Service providers under contract who help with parts of our business operations; (fraud prevention, bill collection, marketing, technology services). Our contracts dictate that these service providers only use your information in connection with the services they perform for us and not for their own benefit.

Financial institutions that we partner with to jointly create and offer a product such as the PayPal Plus credit card where we share information with GE Money Bank to determine whether you should receive pre-approved offers for the PayPal Plus credit card. These financial institutions may only use this information to market PayPal-related products, unless you have given consent for other uses.

Credit bureaus to report outstanding negative balance accounts, as allowed by law.
Companies that we plan to merge with or be acquired by. (Should such a combination occur, we will require that the new combined entity follow this privacy policy with respect to your personal information. If your personal information could be used contrary to this policy, you will receive prior notice.)

Law enforcement, government officials, or other third parties when
we are compelled to do so by a subpoena, court order or similar legal procedure
we need to do so to comply with law
we believe in good faith that the disclosure of personal information is necessary to prevent physical harm or financial loss, to report suspected illegal activity, or to investigate violations of our User Agreement.
Other third parties with your consent or direction to do so.

fatseal 5 Comments Dec 25 11:36 AM The seller got paid, but she left all her money in paypal( there is a very long thread on the boards about it) and all her paypal money ($1600) was frozen. She has no money to even pay for shipping. Glad you can take having $1600.00 frozen in your account. Most people can’t.

ezduzit 30 Comments Dec 25 12:05 PM any person who comments about a “short” attacking e-bay, on this site, is off the deep end in his (her) thinking. the stock price has its own mind.
as far as the other posted comments, when you can’t get in touch with customer service, without jumping through hoops, that’s a serious problem. it shows a lack of respect and consideration towards people who work for a living.

bigger companies than e-bay have bitten the bullet because of flawed company management and poor customer relations. Reply | Link to Comment +10 RicRoe 4 Comments Dec 25 12:22 PM eBay’s problems are self inflicted. The more eBay has done in the name of bringing business back to their site, the more they have alienated current users that were once infatuated with the market place as both buyers and sellers.

eBay started to seriously slide when John Donahoe as CEO came out in front of changes which gutted the core of the marketplace and referred to any member that spoke out against the changes as ‘noise’. His arrogant ‘noise’ label insulted the very customers he was trying to keep.

Led by an executive team that has barely used the marketplace, eBay is now headed for obscurity because they do not ‘get’ it anymore.

eBay, unlike Amazon, does not own inventory, and relies on sellers to provide merchandise to the site. This said, it is hard to understand why eBay executives have instituted so many anti seller policies over the past year.

Further proof of how out of sync eBay leadership is, they fail to understand that sellers are buyers as well. Alienating sellers diminishes their interest in purchasing from the site or doing business in any way with a company that is viewed as seller unfriendly.

eBay’s increased fees across the board and forcing sellers to accept PayPal to entitle them to an even larger slice of sellers profits, has not improved the company’s fortunes, but has motivated sellers to take their business elsewhere.

eBay has become a ship without a rudder, adrift in a marketplace they have lost control of.

eBay execs fail to understand that word of mouth is essential to the success of their marketplace. With sellers having nothing positive to say, buyers are going elsewhere.

Until eBay is led by a team of executives with vision and experience in what makes eBay tick, eBay is destined to become the next Internet bubble to burst.

Buyers and sellers alike have lost trust and confidence in current leadership over the series of poorly implemented policies, feedback changes, imposition of the failed DSR system, constant technical glitches, search that is horrible, forced PayPal etc…

eBay is now beyond reversing failed policy and system changes. eBay now has to replace the entire core of enthusiastic members which they have managed to chase in addition to changing the failed policies and defective systems.

The simplest solution would be for eBay to simply get out of being in the marketplace business since it is obvious they have no clue as to what it takes to make and keep a marketplace relevant and successful.

John Donahoe, Lorrie Norrington and company will go down in history as the executives that managed to screw up a free lunch.

They are not the team that will lead eBay out of the disaster they created, they are the team that turned a marketplace with millions of happy members into a poor imitation of its competition with customers who have nothing good to say about the new experience.

This is unlikely to change until the book smart MBA’s are removed, and replaced by a team of executives that know and understand what the eBay marketplace is.

The fix would be for Mr Omidyer to get back to work, and restore the core principles upon which eBay was founded. He had the right ideas and the company became a worldwide multi billion dollar success under those principles.

eBay’s only chance to restore itself to that level of success will be when the existing leadership is tossed and replaced with a team that ‘gets’ eBay.

steve577 9 Comments Dec 25 12:51 PM This article is SO typical of sellers with bad attitudes that enjoy criticizing
ebay for the wonderful changes that made it a better, safer place for
buyers. As to the specifics of this article, anybody that doesn’t trust
paypal doesn’t deserve PayPal’s trust.

o.c.d.collectibles 34 Comments Dec 25 01:12 PM I was banned from posting on the discussion boards after 10 years here, never has this EVER happened to me. I have the best documentation, because legally, I understand (from being a Nurse!!), which policies and procedures are, that place me at risk. To have me suppressed when I state my opinion in non-confrontative ways, is a form of suppressing freedom of speech on a public forum. I’ve been given a “7 day sanction” so that I can “spend more time” reading and digesting ebay’s board posting policies.

After 10 good 100% 4.9 rated years, I just disconnected my reports subscription and deactivated the credit card associated with my account.

Not only will I not allow ebay to treat me this way as a customer, but I will make it my business to let every stock and financial site that I can register on, know what is going on amongst ebay’s most loyal and longest law abiding citizens and their unscrupulous tactics in censorship.

Censoring the ability to mention the names of other sites to sell on is not advertising. If it WAS advertising, I would be making an income doing that. At this point in time, I have NOTHING posted to sell on any site AT ALL. I sell “live” in antique booths. I do not need online sales to make my life complete. I used to enjoy them, and the socialzation I had from ebay selling. Now that THAT is gone, I have nothing to lose letting the world know of ebay’s censorship rules amongst their discussion boards.

I will not let up until I see the desired effect, you guys can all count on it!
So far, I have already described the ridiculous changes and the re-design of the site, with all of it’s glitches, malfunctions, and breakages. Now I will be focusing on something else….abuse of it’s oldest and most loyal, “high grade” sellers, who simply voice their opinions.

riversniper 2 Comments Dec 25 01:23 PM Never get verified, If you do then open a separate bank account that is not connected to your personal banking or checking account. Trust me on this riversniper

o.c.d.collectibles 34 Comments Dec 25 01:43 PM I have no need to sell on a site that treats me with so much indignity. After all the income provided for them,over the many years I was there, and so many happy customers, they will not get another dime from me now.
My rating is excellent. I left the site SIMPLY because of the WAY they treat their honest sellers.

They are selectively “deaf, dumb and blind” to their registered racketeers who really ARE swindling the new buyers on their site with poor service. They manipulate the bad ratings of these large retailers who get a free ride, listing on their site, just to make the seller still look good. There have been detections of this practice going on, and it is highly fraught with favoritism not based on ebay’s own policies. Ebay is scamming every OTHER fee paying member/seller due to this issue, and it won’t be long before someone exposes this publicly.
Paypal only practices the exploitive practices on ebay. They would not be doing that on anyone else’s site

There is something really wrong on this site, they deserve a SEC investigation.

Dinah, thank you for posting invaluable information to the public. They deserve to read the truth about this company before they decide to invest.
I wouldn’t invest unless I knew the CEO team was being fired.

eBay +++ 31 Comments Dec 25 02:06 PM I have sold on eBay whenever it’s time to clean out the garage and I have only offered Paypal. They are linked to my Acccount, no problems, not once. Would not think of Selling any other way.

o.c.d.collectibles 34 Comments Dec 25 02:20 PM The cheerleaders are no more than investors in ebay stock who have lost their shirts after investing when the stock was in the 20’s and 30’s. Sorry guys, you made a big mistake buying stock in this company so late in the game, OR maybe too early! If the imbeciles who run this company, finally leave, THEN you should buy some more stock! Wait till it hits $5 a share. It will. Maybe by then, the Board of Directors will wake up and hire some qualified leaders.

Patricia013 62 Comments Dec 25 02:21 PM How very strange…..I’ve had a Paypal shopping cart on my own website for years now. Never had a chargeback, never had funds held and don’t forget there is no feedback or DSR’s to consider. I would like to know why Paypal turns into a different animal when an Ebay transaction is concerned? Then they hold funds and act like thiefs in plain english. I think we all know Ebay is making money off the float of all those held funds. They have found yet one more way to skin a seller! Ebay, you go far beyong “its only business” and into a realm of sleaziness the depths of which I have never seen before!!! If, as a seller, they held my funds then they would have one angry buyer on their hands. Nothing ever leaves here that isn’t paid for with the funds in my account where they belong! If that means gathering a neg…so be it. If that means having my account closed…so be it! That would be the final straw for me.

Philip Cohen 11 Comments Dec 25 02:45 PM eBay is knowingly facilitating fraud on buyers

Can anyone explain to me why users in Australia, the UK, Ireland and the Philippines, have the absolutely anonymous alias (”Bidder N”) while New Zealand (and the rest of the world) has the effectively bidder-specific alias (”a***b (N)”)?

The material difference between these two forms of anonymous alias is, in the case of the “a***b (N)” alias, at a given point in time when viewed in conjunction with the accompanying feedback count, it is effectively bidder-specific: experienced buyers can still check a seller’s other auctions to watch out for at least any instances of blatant shill bidding; and with the absolutely anonymous alias (”Bidder N”), buyers have got absolutely no chance of detecting even the most blatant of shill bidding by an unscrupulous seller.

And, please, don’t try to tell me that the new “Bidder History” page enables buyers to spot a shill bidder: that is simply one more blatantly nonsensical and disingenuous eBay claim. Nor does eBay have any “sophisticated software” for the detection of shill bidding: they still rely primarily on user reports: trouble is, users can no longer report, because users can no longer detect! And, eBay’s excuse for introducing such anonymous aliases, to stop fraudulent second chance offers, is pathetic and undoubtedly disingenuous.

Further, in the US, eBay initially introduced the absolutely anonymous alias (”Bidder N”) and then retreated therefrom to the effectively bidder-specific alias (”a***b (N)”). Strangely, the opposite has been the case in the UK where eBay went from “a***b (N)” to “Bidder N”! (Does anyone in this organisation actually know what is going on?)

The application of the absolutely anonymous alias, “Bidder N”, would appear to serve only one purpose and that is to obscure any blatant shill bidding, that would otherwise be obvious, so that buyers can’t detect it, can’t then report it, and eBay does not have to waste any of their valuable resources pretending to do anything about it.

Whether intentional or not, eBay’s application of the absolutely anonymous alias (”Bidder N”) is effectively an “aiding and abetting” of fraud on buyers. What is our governmental consumer affairs regulators doing about this reprehensible behaviour by eBay?

Lengthy, detailed comments on this matter commence at
http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6499794#6499794

User 325862 1 Comment Dec 25 03:09 PM I have been using eBay and PayPal. Once someone tried to cheat me on ebay and paypal helped me their buyer protection. this is true and it happened earlier this year. i am an occassional seller on eBay too.

there is so much anti-ebay and paypal being posted. maybe your stories are true, only god knows. I dont want to just antogonize someone, atleast on christmas day (for god’s sake). I see the same set of people posting junk about companies time and again in various forums.

I dont have any issues on ebay or paypal. if someone’s account is locked, either they have been alerted on fraud for anti-money laundering or some other genuine reason.

why would anyone just freeze anyone’s account, especially your customers? use commonsense.

As our financial institutions crumble many have been asking if the funds they keep in PayPal are FDIC insured. No they are not. Whatever balance you keep in your PayPal account is vulnerable and not protected in any way. We recommend that you do not keep any balance in your PayPal account, transfer it to your bank account. Your bank account if FDIC insured which means if PayPal goes insolvent, you lost whatever funds you had in there because PayPal is not covered by Federal Deposit Insurance. If you have your money in the bank account, it is insured by FDIC up to the amount of $100,000 so if your bank goes under, the Federal Government will give you your money back.

PayPal has been known to advertise false information and reported by consumer protection agencies and media reporters and courts. The latest saga in Australia where PayPal executives promissed to reimburse victims of rogue eBay seller unravels. Australian IT news just reported AN INVESTIGATION into the activities of eBay Australia and its subsidiary PayPal are expected to air today on the ABC’s 7.30 Report, as foreshadowed in The Australian this week.

The Register reported another security hole and vulnerability in PayPal / Skype. We know that eBay owned companies are quite weak on security, ridden with bugs, lack customer service and sooner of later will overcharge it’s user base for whatever service is provided. Here are some details from The Register article:

Ballard says he sent Skype’s support team 34 emails, one each day since the account was hijacked, but never received a live response. Late last week, a Skype rep contacted him to acknowledge the problem and offered him a refund. He remains locked out of the account he’s used for three years.

Several of the victims work in the information technology industry and say they take pains to use strong passwords and log in to their accounts only from secure machines located at home.

Sounds like a typical eBay owned company, doesn’t it?

Another Class Action Lawsuit against PayPal is being settled. In particular, the lawsuit alleges that PayPal’s policies and practices constitute deceptive trade practices, fraudulent inducement and misrepresentations, and breach of the PayPal User Agreement. In plain English: this Class Action accused PayPal that it illegally cheated it’s customers who were not smart enough to back they PayPal purchase by a credit card.

So if you were denied full refund by PayPal on purchase you have made and could not recover your funds using a chargeback via your credit card, please take a look at the official Steele Case Settlement website for further information. Officially, here is the description of who qualifies:
On July 24, 2008, Judge Glasser entered an order granting preliminary approval of the Settlement and certifying the following “Class” for purposes of the Settlement: all U.S. based PayPal account holders who funded a PayPal transaction after February 1, 2004, using a source other than a credit card: (i) who subsequently requested a reversal of the transaction through PayPal’s prevailing Buyer Complaint Policy and/or Buyer Protection Policy (collectively, “Policies”); (ii) who did not receive a refund equal to 100% of their transaction payment in response to such request from PayPal or their bank; and (iii) who, through the timely submission of a Claim Form under oath, attest to a reasonable and good faith belief that they would have received a full reversal of such payment had they used a valid credit card in their possession at the time of the subject transaction to fund the payment and filed a timely chargeback request with their credit card issuing bank.

How does PayPal protection scam work?

In this case I am referring to a scam perpetrated by eBay who owns PayPal, not by some nickle and dime scammers utilizing eBay platforms.

There have been many accusations that PayPal Purchase Protection policy is only illusionary and that PayPal is by far not as safe as using credit cards for payment.

Here are some real time facts that will illustrate how eBay frauds victims when it comes to presenting PayPal Purchase Protection as a selling point but when it comes time to “make good” on this protection, real users report they are getting screwed by eBay/PayPal.

OK, let’s get to it:

• One of the top ten eBay Australia sellers appears to have skipped the country leaving what looks like close to 1,000 or so eBay buyers who paid for product during past 60 days without receiving their product. The seller’s feedback is currently logging over 650 negative feedbacks in past 30 days from defrauded buyers.. Todays estimates (and this number may grow) range from $500,000 to over $1,500,000 in funds this seller accepted without delivering the product.
• IT Wire published this article about PayPal Protection being completely illusory. This article cites a group who warns eBay PayPal users against using PayPal because the buyer protection is very limited and definitely not as advertised. They also point out that eBay Forums have had numerous warning posts about this failed seller and eBay Censors deleted those posts. The article links to one eBay Forum thread that seemed to escape the censorhip, so far.
• The eBay seller ebusiness_supplies is still a registered user, however all their auctions have been terminated on about July 8th. We have archived screenshots of the feedback page, just ready to publish in case eBay censors it out and tries to hide the evidence on their site.
• Anticipating the censorhip, as it is a favorite eBay way to prove there is no fraud on eBay, we are also archiving the current eBay Forum thread, as it is in a danger of being dissappeared by accident.

While reading an article about eBay hiring new Director of Reputation Management and giving him a $1,000,000 plus sign up bonus… (later post will probably follow on that topic alone), I hopped through footnoted.org blog post on the subject who had a nice link to eBay’s filing for 2nd quarter 2008 which offers wealth of interesting information on PayPal policies and strategy. Here are some quotes from this document that appear to be relevant as you read on:

• In addition, because a large percentage of PayPal transactions originate on the eBay platform, declines in growth rates in major Marketplaces markets also adversely affect PayPal’s growth rate. The expected future growth of our PayPal, Skype, StubHub, Shopping.com, and other lower margin businesses may also cause downward pressure on our profit margins because those businesses have lower gross margins than our Marketplaces platforms.
• PayPal is subject to anti-money laundering and counter-terrorist financing laws and regulations that prohibit, among other things, its involvement in transferring the proceeds of criminal activities. Although PayPal has adopted a program to comply with these laws and regulations, any errors or failure to implement the program properly could lead to lawsuits, administrative action, and prosecution by the government. In July 2003, PayPal agreed with the U.S. Attorney for the Eastern District of Missouri that it would pay $10 million as a civil forfeiture to settle allegations that its provision of services to online gambling merchants violated provisions of the USA PATRIOT Act and further agreed to have its compliance program reviewed by an independent audit firm. PayPal is also subject to regulations that require it to report suspicious activities involving transactions of $2,000 or more and may be required to obtain and keep more detailed records on the senders and recipients in certain transfers of $3,000 or more. The interpretation of suspicious activities in this context is uncertain. Future regulations under the USA PATRIOT Act may require PayPal to revise the procedures it uses to verify the identity of its customers and to monitor international transactions more closely.
• Negative publicity and user sentiment generated as a result of fraudulent or deceptive conduct by users of our eBay and PayPal services could damage our reputation, reduce our ability to attract new users or retain our current users, and diminish the value of our brand names. We believe that negative user experiences are one of the primary reasons users stop using our services.
• Although there have been no definitive interpretations to date, PayPal has assumed that its service is subject to the Electronic Fund Transfer Act and Regulation E of the Federal Reserve Board. As a result, among other things, PayPal must provide advance disclosure of changes to its service, follow specified error resolution procedures and reimburse consumers for losses above $50 from transactions not authorized by the consumer. PayPal currently voluntarily reimburses consumers for all financial losses from transactions not authorized by the consumer, not just losses above $50. PayPal seeks to pass most of these losses on to the relevant merchants, but PayPal incurs losses if the merchant does not have sufficient funds in its PayPal account.
• PayPal pays significant transaction fees when senders fund payment transactions using credit cards, nominal fees when customers fund payment transactions by electronic transfer of funds from bank accounts, and no fees when customers fund payment transactions from an existing PayPal account balance or use buyer credit issued by GE Money Bank. Senders fund a significant portion of PayPal’s payment volume using credit cards, and PayPal’s financial success will remain highly sensitive to changes in the rate at which its senders fund payments using credit cards. Senders may prefer funding using credit cards rather than bank account transfers for a number of reasons, including the ability to dispute and reverse charges directly with their credit card provider if merchandise is not delivered or is not as described, the ability to earn frequent flier miles or other incentives offered by credit card issuers, the ability to defer payment, or a reluctance to provide bank account information to PayPal. The proportion of PayPal’s payment volume funded using credit cards has increased over time.
• In September 2006, PayPal entered into a settlement agreement with the attorneys general of a number of states under which it agreed to pay $5.2 million to the attorneys general, shorten and streamline its user agreement, and communicate more information regarding protection programs to users. Also in September 2006, PayPal announced that it had reached a preliminary settlement agreement under which it agreed to pay approximately $3.5 million into a settlement fund for the benefit of a class represented by plaintiffs in a suit that alleged, among other things, that PayPal’s disclosure regarding the effects of users’ choice of funding mechanism was deceptive. Although PayPal did not admit any liability for any of the allegations in the two cases, changes to our disclosure practices could result in increased use of credit card funding, which could harm PayPal’s business.
  .

• Our PayPal website has suffered intermittent unavailability for periods as long as five days.

• Reliability is particularly critical for PayPal, especially as it seeks to expand its Merchant Services business. Because PayPal is a regulated financial entity, frequent or persistent site interruptions could lead to fines, penalties, or mandatory changes to PayPal’s business practices, and ultimately could cause PayPal to lose existing licenses it needs to operate. Some of our systems, including our Shopping.com and Skype websites, are not fully redundant, and our disaster recovery planning is not sufficient for all eventualities. We do not carry business interruption insurance sufficient to compensate us for losses that may result from interruptions in our service as a result of system failures.

In the article eBay: pro-choice, but only when it suits the writer brought up an interesting point when he said:

“… and certainly hasn’t done much to neutralise the increasing toxicity of the eBay brand.

Ding Ding Ding Ding Ding!, I thought. eBay Brand is becoming increasingly toxic. What caused this? Major Media finally noticed and begun publishing news of too many years with too many complaints by eBay customers who were ripped off, cheated, scammed and simply ignored by eBay management.

Then I found another article by the same Author: eBay trashed its brand for sake of profits he wrote earlier.

Randy Smythe published this Article: eBay death of thousand cuts in February 2008
warning about management’s questionable decisions and changing marketplace conditions.

eBay’s managemen IS aware they are losing marketshare, as eBay’s spokesman Griff mentioned just a few days ago at eBay Live! 2008:

“
Griff: We had to make these changes because, without buyers, there will be no eBay in two years.

“

But unfortunately it appears that solutions offered by eBay top brass are still in the spirit of money grabbing, uncompetitive, monopolistic strategy which permiates everything eBay has done for the past 5 years. Thus eBay continues to be perceived as a marketplace full of fakes, cheats, scammers, stolen goods headed by the type of management who will close their eyes to the crimes perpetrated on their website (since they derive revenues from such crimes) till they get sued out of millions and forced by courts to make the venue safer.

Just before I completed publishing this, another news source appeared with the same observation: Sydney Morning Herald published just one hour ago: eBay pays the price for PayPal debacle

It’s hard to imagine anyone doing more damage to eBay’s reputation than the auction giant has done to itself over the past few months.

Finally bowing to public (and potential legal) pressure, eBay last week announced it has scrapped plans to force its members onto the PayPal payment system, which it owns, by excluding all other payment options except cash on delivery.

Everyone from the Reserve Bank to the Australian Competition and Consumer Commission could see it was anti-competitive and monopolistic. EBay insisted it was for the protection of the buyers and sellers. My only surprise was that it could maintain this public stance with a straight face.

Update: 7/12/2008 Here is a link to eBay Brand discussion from 2005. So three years later time has shown that many of the industry experts were right three years ago.

As predicted, eBay’s stance of ‘just a venue’ bringing buyers and sellers together had no leg to stand on in European courts yesterday. Louis Vuitton, Christian Dior and Givenchy won their lawsuit against eBay and a hefty US $63,000,000 fine will perhaps make those at eBay helm think about ignoring the counterfeit problem across eBay sites.

The case against eBay in a commercial court in Paris was brought jointly by six brands belonging to the LVMH group.

Louis Vuitton Malletier, the group’s handbag and luggage section, and clothing brand Christian Dior Couture accused eBay of “negligence” in allowing illegal copies of their goods to be sold in online auctions.

Four perfume brands - Dior, Guerlain, Kenzo and Givenchy - sued for what they called “illicit sales” of their products.

They alleged that even auctions involving their legitimate perfumes were illegal, because only specialist dealers were permitted to sell them.

The court barred eBay from selling the four perfumes in future

According to the judgement, eBay must pay 19.28m Euros in damages to Luis Vuitton Malletier, 17.3m to Christian Dior Couture and 3.25m to the perfume brands.

The BBC’s Hugh Schofield in Paris says the ruling is seen as a landmark, because it could oblige eBay to rethink its business model.

In the traditional tone spin and deny, eBay spokesman defended eBay platform by saying:

“If counterfeits appear on our sites, we take them down swiftly, but today’s ruling is not about our fight against counterfeit. ”

( WHOAAA! BS - eBay does not take fakes down SWIFTLY! As a matter of fact attorneys involved in eBay VERO program continuously complain and document cases where they reported fakes yet eBay refuses to take them down… I mean why would eBay be reluctant to do so? Simple: every sale = percentage of it goes to eBay pocket.)

eBay spokesperson further spins eBay’s position on this ruling:

“Today’s ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers everyday. “

(GEEEZ! Now eBay talks about “uncompetitive commercial practices at the expense of consumer” HA HA HA HA … Tell me another one! Pot calling a kettle black. Just as we speak eBay is trying to remove PayPal competitors from eBay Australia site being told by the Australian Competition Watchdog Agency this is illegal, preventing Google Checkout from competing on eBay properties, issuing a new rule eBay sellers cannot advertise their own web page on eBay ABOUT ME pages…. the list goes on and on!… how is that for uncompetitive commerce practices? Here is an awesome article just published linking these two issues together: eBay: pro-choice, but only when it suits and some quotes from this article:

” eBay is screaming blue murder over being banned from selling Louis Vuitton goods by a French court… meanwhile it is pushing on with banning all payment methods except PayPal.”

“While eBay has reluctantly backed down from imposing its PayPal-and-nothing-else policy after a strict talking to from the ACCC, it hasn’t officially abandoned the policy. A public meeting in Sydney to discuss issues with the ACCC doesn’t seem to have advanced the cause much, and certainly hasn’t done much to neutralise the increasing toxicity of the eBay brand.“

I suppose I am not the only one making the same connection.)

The court barred eBay from running ads for the perfume and cosmetic brands or face a fine of $79,000 per day.

Heather McDonald, partner at law firm Baker Hostetler, said: “eBay has policies and procedures in place where they will intervene in an action between a buyer and seller if there’s a problem, and they profit directly on the basis of every item that is sold on their Web site.

“This gives them an affirmative obligation to take steps to make sure that illegal goods aren’t sold, and they certainly have the ability to do that.

“They have been able to make sure that you can’t buy a handgun and they have been able to make sure that you cannot buy pornography or prescription narcotics or other medicines on eBay.

“They have the ability to do this, they have just chosen not do and to rest the entire burden of policing eBay on the shoulders of the trademark and copyright holders whose rights are being infringed here.”
Sources:
BBC News
CNN News

The Tiffany lawsuit is next in line…I doubt eBay will win that one….
This is an article from the NYTimes: http://www.nytimes.com/2006/01/29/technology/29ebay.html
Highlights below:
“Company officials say they do everything they can to stop fraud. The company says only a minute share of the items being sold at any given time — 6,000 or so — are fraudulent. But that estimate reflects only cases that are determined by eBay to be confirmed cases of fraud, like when an item is never delivered.”

“The Tiffany lawsuit, in addition to accusing eBay of facilitating counterfeiting, also contends that it “charges hundreds of thousands of dollars in fees” for counterfeit sales.

In 2004, Tiffany secretly purchased about 200 items from eBay in its investigation of how the company was dealing with the thousands of pieces of counterfeit Tiffany jewelry. The jeweler found that three out of four pieces were fakes.”

“The women say that by watching the listings they have uncovered a ring of a half-dozen or so counterfeiters, most of them living in Rhode Island within a few miles of one other. They say the sellers supply one another with fake jewelry, conceal the fact that they are buying from one another to boost their seller status, and regularly dole out positive feedback to each other to fool potential buyers.”

This just skims the surface. Everything from handbangs, makeup, perfume, autographs, software, movies, music, iPods, etc. are fake. Today, the consumer assumes that the item is fake until proven authentic.

You can fool some people all the time and you can fool all people some time but you cannot fool all the people all the time. eBay stock is reflecting the opinions of shareholders. As usual eBay is underperforming Nasdaq, EBAY shares lost 17.66% in June, compared to Nasdaq loss of 13.55%… so this bad economy stock market losses argument is out the window as well.

Feel free to post your opinion on the one of the most frequented eBay stock forums here:
http://messages.finance.yahoo.com/mb/EBAY

Update 7/11/2008 eBay denied stay in LVMH case

The French Court of Appeals today denied eBay’s (EBAY) petition to stay an injunction issued June 30 by a Parisian court that requires eBay to halt all sales of four LVMH (LVMUY) perfumes over any site worldwide that is accessible from France, according to an eBay spokesperson.

An eBay spokesman says the company “will comply as technically and humanly possible” with the injunction while it continues to pursue its appeal of the ruling.

In a statement, LVMH says that today’s denial of the stay “confirms the seriousness of the faults committed by eBay’s sites . . . and confirms the significance of the legal precedent set by the Paris Commercial Court’s Judgment on June 30, 2008.”

The perfumes brands affected are Kenzo, Guerlain, Christian Dior, and Givenchy.

The lower court’s order bans not just sales of counterfeits, but sales of genuine bottles of these perfumes, because LVMH chooses to limit sales of these products to exclusive licensed distributors, and it does not permit its licensed distributors to sell over eBay.

Thus, the order bans so-called graymarket sales — sales of genuine products through unauthorized channels — which are not considered illegal in the United States, but are in France. According to lawyers for both sides, the injunction even forbids individuals from reselling genuine LVMH products that they received as gifts.

The injunction apparently takes effect immediately, and violations will be punishable by daily fines of 50,000 euros (about $80,000).

Here is a notice eBay has placed on its French site about today’s ruling.

For those who don’t know, Leo Leporte has over 2 million listeners on his podcast TWiT, and his weekend radio show (KFI-AM) in Los Angeles which is also podcasted.

http://en.wikipedia.org/wiki/Leo_Laporte

You can listen to this MP3 broadcast snipped from Leo’s show (4.6 Megs)
where Leo Raporte and Dick DeBartolo account how they were scammed on eBay. They both used PayPal to pay for transaction and lost their money because in reality, PayPal protection was non existent. Listen to the podcast, it’s about 10 minutes long and will open your eyes and hopefully raise your caution when considering buying on eBay :

Click here to listen to the PodCast by Leo Raporte and Dick DeBartolo

After getting burned twice, this time for $2,200:

“eBay doesn’t seem to do very much to prevent [scammers] or discourage [scammers].”

“We’re not protected…[regarding Paypal]“.

“I will never buy anything on eBay ever again….and I going to go on my radio show on a regular basis and tell everybody that.”

Source: See show 588, about 1/2 way down the podcast.
http://twit.tv/dgw588 (Our recording starts at 7th minute of the original PodCast)

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.

I thought when CA Security Advisor reported PayPal XSS page vulnerability in Feburary of this year, PayPal assured the writer this phishing hole was closed. See the full article: PayPal Closes a Phishing Vulnerability Published Feb 17 2008, 10:44 AM by Stefan Berteau. Was that just a lip service by PayPal?

A new article, different researcher shows the same vulnerability here in yesterday’s report:

A serious scripting error has been discovered on PayPal that could enable attackers to create convincing spoof pages that steal users’ authentication credentials.

The cross-site scripting bug is made all the more critical because it resides on a page that uses an extended validation secure sockets layer certificate. The new-fangled SSL mechanism is designed to give users a higher degree of confidence that the page they’re visiting is secure by turning their browser address bar green.

But Finnish researcher Harry Sintonen figured out a way to inject his own code into a supposedly protected PayPal page even as the green bar lulled visitors into believing it hadn’t been tampered with. Sintonen’s code simply caused an Internet Explorer alert window to open with the words “Is it safe?” as evidenced by the screenshot …..

Full Article with the screenshot of the vulnerability has been published on ChannelRegister.Co.Uk ‘Secure’ PayPal page is… you guessed it by Dan Goodin in San Francisco
16 May 2008 20:57

PayPal’s site is silent about this vulnerability… I guess the “hide your head in the sand” approach or “if you do not admit to ut, it’s not there” speaks volumes about how concerned PayPal really is about safety of their users.

PayPal is no stranger to security vulnerabilities:

• PayPal fixes phishing hole by Joris Evers, CNET News.com Published: June 16, 2006 4:12 PM PDT
• July 20, 2006 Netcraft reports this same XSS PayPal vulnerability existed for 2 years!
  

It was speculated when eBay purchased over 25% share in Craigslist that eBay is on a fishing (not phishing) expedition to observe craigslist’s success and then copy it. It is a known fact that beyond it’s founder’s innovative idea to create an online auction, eBay’s executive team has not invented anything since. eBay’s management is great at spending it’s cash on mostly miss (Skype) sometimes hit (PayPal) acquisitions. Less then a month ago we have commented on a eBay vs. Craigslist lawsuit which set the stage for Craigslist initiating their own proceedings against eBay. The full document is available here and it provides some interesting insights into what allegedly goes on behind the scenes. Read the document, it provides a peak into the world of corporate espionage, false advertising, deception and other corporate shinnanagans you won’t find in official company press releases.

eBay is certainly not a stranger to being accused of unfair play and facing substantial fines and penalties for it’s mistakes. Here is a abbreviated history of some legal processes she has faced or is currently litigating:

August 11, 2003 SHARE PRICE 25.46
eBay Accounts for Lawsuit Loss: The auction giant shaves $30M from Q2 results after a patent verdict against it was upheld last week but says it will appeal. February 28, 2008 Case MercExhange vs. eBay settled, As a part of the settlement, eBay purchased all three patents from MercExhange involved in the lawsuit, and related technology and inventions, as well as a license to another search-related patent portfolio that was not asserted in the lawsuit

July 30, 2004 SHARE PRICE 39.16
PayPal Sends Users Notice of Class-Action Lawsuit Settlement: PayPal and plaintiffs reached a settlement in the class-action lawsuit stemming from 2002, when two PayPal users filed class action lawsuits against the online payment service owned by eBay. Some of the accusations by the plantiffs were that, as of early 2002, PayPal was understaffed, hid its customer service phone numbers to save money, had rude and unhelpful phone staff, did not answer customer service email, and “without notice or warning, erroneously and unnecessarily” limited or closed accounts and then made it difficult to restore the accounts.

June 22, 2004 SHARE PRICE 43.60
Tiffany Sues eBay over Fakes : Tiffany said 73% of items purchased on eBay in a study it conducted were counterfeit

April 29, 2005 SHARE PRICE 31.71
Tentative Settlement Reached in eBay Stock ‘Spinning’ Lawsuit : the settlement calls for the payment to eBay of $3 million by Meg Whitman, Pierre Omidyar, Jeffrey Skoll and Robert Kagle, who are officers/directors/controlling stockholders of eBay, and a payment to eBay of $395,000 by Goldman Sachs Group, eBay’s investment banking firm.

In June 6 2006 SHARE PRICE 31.59
Net2Phone, Inc. filed a lawsuit in the U.S. District Court for the District of New Jersey (No. 06-2469) alleging that eBay Inc., Skype Technologies S.A., and Skype Inc. infringed five patents owned by Net2Phone relating to point-to-point Internet protocol. The suit seeks an injunction against continuing infringement, unspecified damages, including treble damages for willful infringement, and interest, costs, and fees

August 7 2006 SHARE PRICE 24.12
Louis Vuitton Malletier and Christian Dior Couture filed two lawsuits in the Paris Court of Commerce against eBay Inc. and eBay International AG. Among other things, the complaint alleges that we violated French tort law by negligently broadcasting listings posted by third parties offering counterfeit items bearing plaintiffs’ trademarks, and by purchasing certain advertising keywords. The plaintiffs seek approximately EUR 37 million in damages.

September 6 2006, SHARE PRICE 27.53
Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy, and Guerlain Société also filed a lawsuit in the Paris Court of Commerce against eBay Inc. and eBay International AG. The complaint alleges that we have interfered with the selective distribution network the plaintiffs established in France and the European Union by allowing third parties to post listings offering genuine perfumes and cosmetics for sale on our websites. The plaintiffs in this suit seek approximately EUR 9 million in damages and injunctive relief

April 26th, 2007 SHARE PRICE 34.22
eBay, PayPal face court action Class action alleges unfair monopoly: eBay warned shareholders yesterday that it is facing a possible class action suit in the state of California and is likely to be hit by more patent cases. The suit alleges that eBay and PayPal acted “to improperly ‘monopolise’ the forms of payment that sellers can use on eBay”.

August 2007 SHARE PRICE 33.54
class-action lawsuit in which attorney John Fabry stated, “eBay has been deceiving millions of consumers over the years by claiming their auctions start when submitted, when in reality they do not begin for at least several hours, and up to 24 hours. However, the clock starts running on your selected auction time even though eBay hasn’t posted it yet

Jan. 10, 2008 SHARE PRICE 30.36
Lawsuit Filed against eBay Over Coin Listing Policy: The American Numismatic Association (ANA) and the Professional Numismatists Guild (PNG) are suing eBay for defamation and unfair and deceptive trade practices

May 13, 2008 SHARE PRICE 31.41
Craigslist has filed a countersuit against eBay, alleging that the auction site used its minority stake in Craigslist to engage in unfair and unlawful anticompetitive behavior, false advertising, trademark infringement, and other misdeeds.

Update: 5-15-2008 Craigslist illustrates on their blog how eBay uses deceptive advertising on Yahoo providing a screenshot of advertisements eBay ran up even on the morning of 5-14-2008. Interestingly enough, if you try to search on Yahoo for www.craigslist.org or craigslist.org those deceptive ads no longer appear.

Now that eBay came up with another way to remove competition from their site by imposing PayPal as the only payment method in eBay Australia, (and this is just a testbed market and if successful, the same is to follow for other markets where eBay can attempt to get away with it) some Aussie sellers and consumers are not happy about it and point out that Australian Competition and Consumer Commission cannot grant eBay Australia request for PayPal only payments

New US Sellers on eBay are already forced to accept PayPal or major Credit Card via merchant account if they are too new or if their feedback is not quantitative enough:

You can immagine that lot of sellers are screaming bloody murder because they do not want to be forced to accept PayPal and fork over 3% of the transaction to PayPal if they can receive Money Order or Cashier’s Check which costs the seller nothing… but then eBay would not be making that 3% additional profit forcing PayPal, eh?

This blogger just published Shame, eBay, Shame! describing PayPal promotion going to eBay buyers who do not use PayPal and concluded:

“That con will be brought down upon the eBay sellers – those who don’t wish to be involved in the hideous restraint of trade fiasco that eBay is attempting to wrought.

“

It is the vendor who should dictate which payment options he/she wants to permit to exchange his goods/services for money.

We have utilized many brick and mortar venues for our retail sales before, but I have never heard from a Mall Management or Swap Meet Operator something like: ‘well you know, cash is not safe … what if some buyer passed a fake bank note to you! …. or traveller’s checks may be fake as well, so for this reason if you wanted to sell in our venue/marketplace, you cannot accept cash, money orders or travellers checks… and ehm, since you are new around here, you can only accept Credit Cards or our Mall Gift Cards (… as we at the Mall get a percentage cut from our Gift Card transactions, which of course, makes it safer… ehm ..)’

Another fake claim eBay makes is that PayPal is cheap. I have personally recommended PayPal to many of our newbie merchants (we own a hosting company so we get lot of requests for recommendation in this area) but since PayPal increased their rates quietly, they are not one of the most expensive options out there so we recommend against PayPal.

Check these PayPal fees: 2.9% plus $0.30 per transaction so you would be paying $0.59 to PayPal on $10 sales
vs Real Merchant Fees here for example 2.1% plus $0.25 per transaction so you would be paying $0.46 to merchant CC processor

—
Update 5-8-2008 : here is an interesting news article
eBay boss: “not offering PayPal is like buying heroin” the folks Down Under are definitely not happy about being forced to PayPal and are very vocal about it. A smart credit card merchant service company should make a fortune marketing to eBayers.

—
Update 5-10-2009
Australian financial, commercial and internet industries appear to stand united against eBay’s attempt to stifle competition using “consumer safety” as a smoke screen to push through PayPal as the only payment method on eBay Australia property. Here are some interesting points made in submissions to Australian Competition and Consumer Commission:

• Australian Bankers’ Association:
  “2.1 ABA’s concerns
  The ABA opposes the Notification, its chief concerns being that:
  (a) the Conduct would limit the choice of both eBay buyers and sellers
  without justification for doing so;
  (b) the benefits of the Conduct as described in the Notification are overstated; and
  (c) the Conduct will have the effect of eliminating competition in an important segment of the market for online payment services, and of distorting competition in the balance of that market.
  2.2 The ACCC should revoke the Notification
  ABA submits that the ACCC should revoke the Notification under s 93(3) of the Trade Practices Act 1974 (Cth) (”the TPA”) because the Conduct:
  (a) has the purpose and/or is likely to have the effect of substantially lessening competition; and
  (b) is not likely to result in a benefit to the public, or to the extent that it would result in any likely public benefit, any such benefit would not outweigh the public detriment that would be caused by the lessening of competition likely to result from the Conduct. According to Phishtank.com, 72% of the phishing sites it identified in February 2008 were fraudulently imitating eBay or PayPal websites.’ More recently, eBay has been subject to phishing scams affecting sellersm6 The Conduct does nothing to prevent these phishing scams. A further potential security issue for PayPal is that PayPal does not take the same steps that banks take to verify the identity of their account holders by requiring the provision of drivers’ licences, birth certificates, etc.
  “

• Electronic Frontiers Australia Inc : ”

  Prevailing prices on eBay will increase
  PayPal impose various fees and commissions on users receiving payment through PayPal. eBay’s proposed conduct would impose these additional direct costs on eBay sellers who do not use PayPal, or who do not exclusively use Paypal. The direct per-transaction fees alone could cause affected eBay sellers to raise their fees by up to 5% to compensate.

  eBay and PayPal’s notoriously poor customer service record
  Many websites on the Internet are devoted to criticism of eBay and PayPal’s customer service, policies, and actions. Some examples include www.nopaypal.com and www.paypalwarning.com. A frequent criticism of eBay and PayPal’s customer service is that they are ‘faceless’ corporations, who to the greatest extent possible try to ‘hide behind’ email communication, typically conducted with boilerplate ‘form’ emails, and that they do not make available, or do not sufficiently make available other contact methods such as telephone. If eBay proceed with their proposed conduct, PayPal will in effect have a largely ‘captive market’ and will have no incentives to provide better levels of customer support, or a better service generally. In short, PayPal will be free to give less and charge more.

  PayPal’s ‘user agreement’
  Australian users of PayPal’s services are required to accept the terms of a contractual ‘user agreement’, which is posted on the PayPal Website. Many of the terms of this ‘user agreement’ are potentially misleading, unconscionable, unfair, or unenforceable. Some specific criticisms of the PayPal ‘user agreement’ include:
  The user agreement is in reality, not one agreement but constitutes more than a dozen separate documents. The ‘user agreement’ incorporates the terms of 13 other ‘policies’ by reference, including a ‘Privacy Policy’, ‘Closing Accounts and Limiting Account Access’ policy, ‘Buyer Complaint Policy and PayPal Buyer Protection Policy’, ‘Fees Policy’, ‘Acceptable Use Policy’, etc;
  PayPal reserve the right to amend the user agreement and policies at any time;

  The user agreement allows PayPal to place a ‘hold’ on any funds in a user’s account for up to 180 days and to ‘fine’ the user up to $3000 for contraventions of the Acceptable Use At common law, this ‘fine’ is likely a penalty and would be unenforceable for that reason; and The user agreement (and associated polices) contain many terms which may be ‘unfair terms’ within the meaning of Part 2B of the Fair Trading Act 1999
  (Vic), including terms which:
  o Permit PayPal but not the user to avoid or limit performance of the contract;
  o Penalise the user but not PayPal for a breach or termination of the contract;
  o Permit PayPal but not the user to vary the terms of the contract;
  o Permit PayPal unilaterally to vary the characteristics of the services supplied to the user;
  o Limit PayPal’s vicarious liability for its agents; and
  o Limit the user’s right to sue PayPal.
  The effect of eBayls proposed conduct will be to force eBay users who currently exercise an informed choice not to deal with PayPal to accept the current and future terms of PayPal’s user agreements and policies.

  On the whole, eBay appears to be arguing that:

  eBay customers are incapable of choosing the ‘best’ payment option, according to eBay’s definition of what the ‘best’ option is;
  For those customers’ own good, eBay must force them to use the ‘best’ payment option;

  It is impliedly irrelevant to eBay’s decision-making that the ‘best’ payment option is provided by a wholly-owned subsidiary of eBay, and will result in a significant financial benefit to eBay.

  eBay’s argument is condescending and paternalistic at best, and ignores the fact that eBay users are capable of making rational choices about what they view the best payment method to be

  Most if not all of the benefits claimed to result from eBay’s proposed conduct are already available to buyers and sellers who want those benefits. The only change in those benefits which eBay’s proposed conduct would cause would be to force those benefits upon people who currently choose not to receive them because they view the associated costs as too high. EFA submits that this cannot properly be characterised as a public benefit.

  EFA submits that the ACCC should revoke the notification lodged by eBay.

  “

• Australian Securities & Investments Commission :
  “However, unlike most AFS licensees that provide banking or non-cash payment services, PayPal has declined to become a signatory to the Electronic Funds Transfer Code of Conduct (EFT Code). The EFT Code is the key consumer protection code of conduct applying to the payment services industry, and covers fundamental issues concerning consumer rights, security, disclosure and resolution of mistaken or unauthorised payments.
  PayPal’s business involves the provision of EFT transactions in relation to EFT accounts within the meaning of Section 1 of the EFT Code, and, if it became a signatory to the Code, it would be regulated by Part A of the Code.
  Part A prescribes rules of conduct relating to the provision of EFT transactions, including around: record-keeping requirements, liability for unauthorised transactions, liability in cases of system or equipment malfunction, audit-trails, and complaint investigation and resolution procedures.
  ASIC considers that it is highly desirable that PayPal become a signatory to the EFT Code, given the large numbers of retail customers who use eBay, as it would provide an additional desirable layer of consumer protection that is not currently in place”

• RESERVE BANK OF AUSTRALIA: “
  The Reserve Bank sees some potential issues with the proposed conduct in terms of its impact on competition in the Australian payments system
  The issues: The proposed conduct by eBay is to mandate the use of PayPal for almost all transactions on the eBay site. This raises three potential issues in relation to the payments system.

  The first is that it could limit the ability of new on-line payment systems to become established and for alternative systems to compete in the on-line payments space.

  The second is that it could restrict merchants’ ability to negotiate lower fees.

  And the third is that it restricts choice for consumers

  eBay states that the service operated by PayPal offers some security advantages to consumers relative to other payment methods currently available for eBay transactions. Should consumers value PayPal’s security features highly, they will choose it over other payment methods and this may, in turn, place pressure on those other systems to improve security for similar transactions. It is possible that, in the long run, this competitive process may achieve safer payment facilities than would be the case if PayPal were the only payment option available.

  “

These comments by some of the best brains in major institutions of Australia are not just some bloggers rantings. They clearly summarize and expose the true motivations of eBay management.

Update: 5-26-2008 eBay has submitted their official eBay response to Objections against PayPal being the sole payment method in eBay Australia. The response reads oddly fractured and quite dissociated from eBay’s original underlaying claim that PayPal is the safest way to pay. It makes an interesting point:
“Condition 1
4.6 eBay buyers and sellers who do not wish to pay PayPal fees are able to avoid doing so by listing and purchasing items through competing services, such as other online marketplaces, list, search and redirect sites, online and offline classifieds, specialist listing sites, individual retailer websites, and the like.
4.7 It is also significant that, since the announcement by eBay of the proposed implementation of the Project, Oztion’s membership has reportedly increased by approximately 22% to over 250,000 members.’ It would appear that this is attributable to migration of buyers and sellers from eBay. Accordingly, there is evidence to suggest that a number of sellers will choose alternative sales platforms in response to the implementation of the Project, providing a strong incentive for eBay to maintain a competitive offering.”

Are we to understand that eBay is telling buyers: If you don’t like PayPal, go away-> the Oztion’s way. This does not appear to be a customer friendly approach. This take it or leave it attitude, verbalized, certainly enhances eBay’s bully image. But what else is new. The Australian Competition and Consumer Commission announced they will make a ruling within next 2 weeks.

Update 5-30-2008 It appears that GOOGLE submitted it’s objection to eBay’s attempt to push out the competitor payment systems from it’s Australian marketplace. AuctionBytes reporting on this here. :
“eBay prohibits sellers from accepting Google’s Checkout service as part of its Safe Payments policy, and apparently Google is concerned a move toward a PayPal-only policy in Australia would impact its market share. The anonymous ACCC submission reads in part:

eBay’s real purpose, or one of eBay’s substantial purposes, is to substantially lessen competition in the Market for Online Payment Processing Services, by preventing or hindering competitors of PayPal from competing effectively against PayPal in that market. eBay and PayPal are related bodies corporate. eBay is acting to increase PayPal’s share of the Market for Online Payment Processing Services, thereby increasing the revenues to the eBay group as a whole.

The submission also called the public benefits of the PayPal-only policy “illusory.”