EBay

Controversy

eBay has its share of controversy, ranging from its privacy policy (eBay typically turns over user information to law enforcement without a subpoena) to well-publicized seller fraud. eBay claims that statistically fewer than 1 in 200 transactions fail.

Related Topics:
Privacy - Subpoena - Fraud

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Seller Fraud

While eBay has various measures in place to prevent seller fraud, it remains essentially an honor system: buyers send their money to sellers and trust that they will receive the promised goods. A relatively small amount of fraud occurs, but the sheer volume of business passing through eBay means many people are affected. Fraud has included:

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• Paying and not receiving merchandise
• Paying and receiving items other than those described
• Paying and receiving faulty merchandise
• PayPal fraud
• Credit card fraud
• Counterfeit merchandise
• Sale of stolen goods

Other Controversies

Other notable controversies involving eBay include:

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• On 28 May 2003 a U.S. District Court federal jury found eBay guilty of patent infringement and ordered the company to pay US$35 million in damages. The jury found for plaintiff MercExchange, which had accused eBay in 2001 of infringing on three patents (two of which are used in eBay's "Buy It Now" feature for fixed-price sales) held by MercExchange founder Tom Woolston. As of November 2004 this decision is under appeal.
• On 28 July 2003 eBay and its subsidiary PayPal agreed to pay a $10 million fine to settle allegations that they aided illegal offshore and online gambling. According to the settlement, PayPal between mid-2000 and November 2002 transmitted money in violation of various US federal and state online gambling laws. Paypal was also forced out of this market, which accounted for some 6% of its volume. These offenses occurred prior to eBay's purchase of PayPal.
• On 17th December 2004 Avnish Bajaj, CEO of eBay's Indian subsidiary Baazee.com, was arrested after a video clip showing oral sex between two Indian students was sold online. The company denied knowing the content of what they were selling and removed the offensive material as soon as they became aware of it. The Indian government attempted to make the case that Bajaj broke a law under India's IT Act, that forbids "publishing, transmitting or causing to publish" obscene material, even though the actual material was never published on Baazee's servers. eBay is strongly supporting Baazee.
• On 14th June 2005 eBay backed down and removed auctions listing the sale of free tickets for the Live 8 charity auction. Hundreds of people complained about such auctions, and following a statement from Bob Geldof, many of these auctions were bombarded with fake bids. Under normal circumstances, selling of charity tickets is not illegal under UK law.
• Paypal, eBay's subsidiary were forced by law to finally openly show their phone number after customers could not contact the company via telephone. The only reason their number can now be found is because they were forced to by law (EFTA Electronic Funds Transaction Act) due to complaints from users of this website now executing.
• In 2005, the Australian NRL tried unsuccessfully to persuade eBay to prevent scalpers from selling grand final tickets online.