Ebay

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This article is about the online auction center. For the parody of "I Want It That Way", see eBay (song).

eBay Inc.
Type	Public (NASDAQ: EBAY)
Founded	San Jose, California, USA (September 3, 1995)
Headquarters	San Jose, California, USA
Key people	Meg Whitman, CEO & President Pierre Omidyar, Founder and Chairman John Donahoe, Chief of eBay Marketplace
Industry	Auctions
Products	Online auction hosting, Electronic commerce, Shopping mall PayPal, Skype, Gumtree, Kijiji
Revenue	▲$7.67 billion USD (2007)
Employees	11,600 (Q1 2006)
Slogan	What ever it is, you can get it on eBay., and Shop victoriously!
Website	www.ebay.com List of domain names
Type of site	online auction
Registration	required to buy and sell
Available in	Multilingual
Launched	September 3, 1995
Screenshot The eBay homepage.

eBay headquarters in San Jose

eBay North First Street satellite office campus (home to PayPal)

Countries for which eBay is localized.

eBay Inc. is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. website, eBay has established localized websites in thirty other countries. eBay Inc also owns PayPal, Skype, and other businesses.

Contents 1 Origins and early history 2 International 3 Items and services 3.1 PayPal-only categories 3.2 eBay Express 3.3 eBay Specialty Sites 4 Auction types 5 Bidding 6 Profit and transactions 7 Acquisitions and investments 8 Controversy and criticisms 9 Fraud 9.1 Other controversial practices of users 9.2 Stealing ebay accounts 9.3 Forgeries 9.4 Intellectual property in auctions 9.5 Other eBay controversies 10 Prohibited or restricted Items 11 Unusual sale items 12 Charity auctions 13 Customer support 14 See also 15 Notes and references 16 Further reading 17 External links

Origins and early history

The online auction web site was founded in San Jose, California on September 3, 1995 by French-born Iranian computer programmer Pierre Omidyar as AuctionWeb,misc.forsale.non-computer post about Auctionweb part of a larger personal site that included, among other things, Omidyar\'s own tongue-in-cheek tribute to the Ebola virus.Cohen, Adam. The Perfect Store. ISBN 0-316-16493-3. 

The very first item sold on eBay was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder and asked if he understood that the laser pointer was broken. In his responding email, the buyer explained: "I\'m a collector of broken laser pointers."How did eBay start?, About.com. Retrieved on 2007-01-26. The frequently repeated story that eBay was founded to help Omidyar\'s fiancée trade PEZ Candy dispensers was fabricated by a public relations manager in 1997 to interest the media. This was revealed in Adam Cohen\'s 2002 book and confirmed by eBay.

Chris Agarpao was hired as eBay\'s first employee and Jeffrey Skoll was hired as the first president of the company in 1996. In November 1996, eBay entered into its first third-party licensing deal, with a company called Electronic Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products. The company officially changed the name of its service from AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology Group, Omidyar\'s consulting firm. Omidyar had tried to register the domain name echobay.com (the domain has recently been put up for sale) but found it already taken by the Echo Bay Mines, a gold mining company, so he shortened it to his second choice, eBay.com.http://www.happynews.com/living/online/history-ebay.htm

eBay went public on September 21http://moneycentral.hoovers.com/global/msn/factsheet.xhtml?COID=56307, 1998, and both Omidyar and Skoll became instant billionaires. The company purchased PayPal on October 14 2002.

International

In addition to its original U.S. website, eBay has established localized websites in several other countries:

Country/region	Website	Language	Launch date
Argentina	http://www.mercadolibre.com.ar/	Spanish	2 august 1999
Australia	http://www.ebay.com.au/	English	01999-10 October 1999eBay Fact Sheet (PDF). eBay. eBay Inc. (2006-03-31). Retrieved on 2007-11-09.
Austria	http://www.ebay.at/	German	02000-12-18 18 December 2000eBay Launches Service for Austria. eBay Inc. - Investor Relations. eBay Inc. (2000-12-18). Retrieved on 2007-11-09.
Belgium	http://www.ebay.be/	Dutch, French	?
Brazil	http://www.mercadolivre.com.br/	Portuguese	?
Canada	http://www.ebay.ca/	English, French	02000-04 April 2000Gary Briggs Appointed Vice President and Country Manager of eBay Canada. eBay Canada. eBay Inc. (2004-04-28). Retrieved on 2007-11-09.
China	http://www.ebay.com.cn/	Chinese	?
France	http://www.ebay.fr/	French	02000-10-05 5 October 2000WORLD\'S LARGEST ONLINE TRADING COMMUNITY LAUNCHES NEW WEB SITE IN FRANCE(French) eBay France, lancement officiel du site d\'enchères
Germany	http://www.ebay.de/	German	01999-06 June 1999
Hong Kong	http://www.ebay.com.hk/	Chinese, English	02003-12-21 21 December 2003eBay Launches Service For Hong Kong. eBay Inc. - Investor Relations. eBay Inc. (2003-12-21). Retrieved on 2007-11-09.
India	http://www.ebay.in/	English	?
Ireland	http://www.ebay.ie/	English	02001-03-29 29 March 2001eBay Launches Service For Ireland, New Zealand And Switzerland. eBay Inc. - Investor Relations. eBay Inc. (2001-03-29). Retrieved on 2007-11-09.
Israel	http://www.ebay.co.il/	English	?
Italy	http://www.ebay.it/	Italian	02001-01-15 15 January 2001eBay Launches in Italy. eBay Inc. - Investor Relations. eBay Inc. (2001-01-15). Retrieved on 2007-11-09.
Malaysia	http://www.ebay.com.my/	English	02004-12-01 1 December 2004eBay Launches Service for Malaysia. eBay Inc. - Investor Relations. eBay Inc. (2004-12-01). Retrieved on 2007-11-09.
Mexico	http://www.mercadolibre.com.mx/	Spanish	?
Netherlands	http://www.ebay.nl/	Dutch	?
New Zealand	http://pages.ebay.com/nz	English	02001-03-29 29 March 2001
Philippines	http://www.ebay.ph/	English	02004-11-16 16 November 2004eBay Launches Service for the Philippines. eBay Inc. - Investor Relations. eBay Inc. (2004-11-16). Retrieved on 2007-11-09.
Poland	http://www.ebay.pl/	Polish	02005-04-22 22 April 2005eBay Launches Service for Poland. eBay Inc. - Investor Relations. eBay Inc. (2005-04-22). Retrieved on 2007-11-09.
Singapore	http://www.ebay.com.sg/	English	02001-10-24 24 October 2001eBay Launches Service for Singapore. eBay Inc. - Investor Relations. eBay Inc. (2001-10-24). Retrieved on 2007-11-09.
South Korea	http://www.auction.co.kr/	Korean	02001-02-15 15 February 2001[Internet Auction] Auction "eBay will start Korean service next month". Hangyore News (Yonhab News). (2001-01-08). Retrieved on 2007-11-29.
Spain	http://www.ebay.es/	Spanish	02002-01-08 8 January 2002eBay.es Dossier de Prensa (PDF). eBay.es. eBay Inc. (January 2001). Retrieved on 2007-11-09.
Sweden	http://www.tradera.com/	Swedish	?
Switzerland	http://www.ebay.ch/	German, French	02001-03-29 29 March 2001
Taiwan	http://www.ruten.com.tw/	Chinese	?
Turkey	http://www.gittigidiyor.com/	Turkish	02007-05-03 3 May 2007
United Kingdom	http://www.ebay.co.uk/	English	01999-10 October 1999eBay Worldwide. eBay.co.uk. eBay Inc.. Retrieved on 2007-11-09.
United States	http://www.ebay.com/	English	01995-09-03 3 September 1995
Vietnam	http://www.ebay.vn/	Vietnamese, English	02007-06-27 27 June 2007Nhịp sống số.

Items and services

Millions of collectibles, appliances, computers, furniture, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily. In 2005, eBay launched its Business & Industrial category, breaking into the industrial surplus business. Some items are rare and valuable, while many others are dusty gizmos that would have been discarded if not for the thousands of eager bidders worldwide. Anything can be sold as long as it is not illegal or does not violate the eBay Prohibited and Restricted Items policy.Prohibited and Restricted Items - Overview. eBay. Retrieved on 2006-06-28. Services and intangibles can be sold, too. Large international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts. Regional searches of the database make shipping slightly faster and cheaper. Separate eBay sites such as eBay US and eBay UK allow the users to trade using the local currency as an additional option to PayPal. Software developers can create applications that integrate with eBay through the eBay API by joining the eBay Developers Program.eBay Developers Program. eBay. Retrieved on 2006-06-28. As of June 2005, there were over 15,000 members in the eBay Developers Program, comprising a broad range of companies creating software applications to support eBay buyers and sellers as well as eBay Affiliates.

Controversy has arisen over certain items put up for bid. For instance, in late 1999 a man offered one of his kidneys for auction on eBay, attempting to profit from the potentially lucrative (and, in the United States, illegal) market for transplantable human organs. On other occasions, people and even entire towns have been listed, often as a joke or to garner free publicity. In general, the company removes auctions that violate its terms of service agreement within a short time after hearing of the auction from an outsider; the company\'s policy is to not pre-approve transactions. eBay is also an easy place for unscrupulous sellers to market counterfeit merchandise, which can be difficult for novice buyers to distinguish without careful studying of the auction description.

eBay\'s Latin American partner is MercadoLibre.

eBay\'s rivals include Amazon.com Marketplace.

PayPal-only categories

Beginning in August, 2007, eBay required listing in "Video Games" and "Health & Beauty" to accept its payment system PayPal and sellers could only accept PayPal for payments in the category "Video Games: Consoles". August 10, 2007, 10:38AM BST post to eBay annoucement board by eBay\'s staff Starting January 10 2007, eBay says sellers can only accept PayPal as payment for the categories "Computing > Software", "Consumer Electronics > MP3 Players", "Wholesale & Job Lots > Mobile & Home Phones", and "Business, Office & Industrial > Industrial Supply / MRO".21 December, 2007 12:10PM GMT General announcement by eBay eBay announced that started in March 2008, eBay had added to this requirement that all sellers with less than 100 feedback must offer PayPal and no merchant account may be used as an alternative.Announcement posted in a section on ebay called Changes in 2008eBay February 2008 announcement board posted on 28 February, 2008 02:49PM GMT

eBay Express

In April of 2006, eBay opened its new eBay Express site, which is designed to work like a standard Internet shopping site to consumers with United States addresses (eBay Express). Selected eBay items are mirrored on eBay Express where buyers shop using a shopping cart to purchase from multiple sellers. The UK version was launched to eBay members in mid October 2006 but on 29 January 2008 eBay announced their intention to close the sitehttp://www2.ebay.com/aw/uk/200801.shtml#2008-01-28172536. The German version was also opened in 2006 (eBay Express Germany).

eBay Specialty Sites

In June of 2006, eBay added an eBay Community Wiki and eBay Blogs to its Community Content which also includes the Discussion Boards, Groups, Answer Center, Chat Rooms, and Reviews & Guides. Ebay has a robust mobile offering, including SMS alerts, a WAP site, and J2ME clients, available in certain markets.

eBay Matchups is a fun website created that allows users to put two items head-to-head and allow visitors to vote on their favorite item.

Best of eBay is a new specialty site to find the most unusual and unique items on the eBay site. Users can also vote on and nominate listings that they find.

eBay Pulse provides information about popular search terms, trends and most watched items.

Holiday Hot List 2007 is a comprehensive list of products that are in demand for the Christmas season.

Auction types

eBay offers several types of auctions.

• Auction-style listings allow the seller to offer one or more items for sale for a specified number of days. The seller can establish a reserve price.
• Fixed Price format allows the seller to offer one or more items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid.
• Dutch Auctions allow the seller to offer two or more identical items in the same auction. Bidders can bid for any number from one item up to the total number offered.

Bidding

For Auction-style listings, the first bid must be at least the amount of the minimum bid set by the seller. Regardless of the amount the first bidder actually bids, until a second bid is made, eBay will then display the auction\'s minimum bid as the current high bid. After the first bid is made, each subsequent bid must be equal to at least the current highest bid displayed plus one bidding increment. The bidding increment is established by eBay based on the size of the current highest displayed bid. For example, when the current highest bid is less than or equal to $0.99, the bidding increment is $0.05; when the current highest bid is at least $1.00 but less than or equal to $4.99, the bidding increment is $0.25. Regardless of the amount each subsequent bidder bids, eBay will display the lesser of the bidder\'s actual bid and the amount equal to the previous highest bidder\'s actual bid plus one bidding increment. For example, suppose the current second-highest bid is $2.05 and the highest bid is $2.40. eBay will display the highest bid as $2.30, which equals the second-highest bid ($2.05) plus the bidding increment ($0.25). In this case, eBay will require the next bid to be at least $2.55, which equals the highest displayed bid ($2.30) plus one bidding increment ($0.25). The next bid will display as the actual amount bid or $2.65, whichever is less. The figure of $2.65 in this case comes from the then-second-highest actual bid of $2.40 plus the bidding increment of $0.25. The winning bidder pays the bid that eBay displays, not the amount actually bid. Following this example, if the next bidder is the final bidder, and bids $2.55, the winner pays $2.55, even though it is less than the second-highest bid ($2.40) plus one bidding increment ($0.25). However, if the next bidder is the final bidder and bids an arbitrarily large amount, for example $10.00 or even more, the winner pays $2.65, which equals the second-highest bid plus one bidding increment.

For Dutch Auctions, which are auctions of two or more identical items sold in one auction, each bidder enters both a bid and the number of items desired. Until the total number of items desired by all bidders equals the total number of items offered, bidders can bid any amount greater than or equal to the minimum bid. Once the total numbers of items desired by all bidders is greater than or equal to the total number offered, each bidder is required to bid one full bidding increment above the currently-displayed winning bid. All winning bidders pay the same lowest winning bid.

eBay has established detailed rules about bidding, retraction of bids, shill bidding (collusion to drive up the price), and other aspects of bidding. These rules can be viewed on the help pages.

In 2007, ebay began using detailed seller ratings of one to five stars on feedback. eBay labels the detailed seller ratings when filling out feedback as 5 being very reasonable and 4 being resonable, however sellers with any detailed ratings of 4.3 and below are penalized and less visible in its search listings and having all 4.5 DSR rating is required to be a power seller, making the rating of 4 as unreasonable.http://www2.ebay.com/aw/uk/200802.shtmlhttp://www2.ebay.com/aw/uk/200801.shtmlhttp://pages.ebay.com/services/forum/new.htmlhttp://pages.ebay.com/sell/update08/overview/index.htmlhttp://www2.ebay.com/aw/core/200801.shtml

Profit and transactions

This section may contain original research or unverified claims. Please improve the article by adding references. See the talk page for details. (November 2007)

eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. The U.S.-based ebay.com takes $0.20 to $80 per listing and 5.25% or less of the final price (as of 2007). The Mexican ebay "mercado libre" takes 1% (price of the article × number of articles to be sold), and 4.99% of the final price if there is a successful trade. The UK based ebay.co.uk (ebay.co.uk offices) takes from GBP £0.15 to a maximum rate of GBP £3 per £100 for an ordinary listing and from 0.75% to 5.25% of the final price. In addition, eBay now owns the PayPal payment system which has fees of its own.

Under current U.S. law, a state cannot require sellers located outside the state to collect a sales tax, making deals more attractive to buyers. Although state laws require purchasers to pay sales tax to their own states on out-of-state purchases, most non-professional sellers ignore this requirement. However, most sellers that operate as a full time business do follow state tax regulations on their eBay transactions.^{[citation needed]} However for the tax called Value added tax (VAT), eBay requires sellers to include the VAT fees in their listing price and not as an add-on and thus eBay profits by collecting fees based on what governments tax for VAT.eBay January 2008 announcement board. Posted on 30 January, 2008 06:20PM GMT

The company\'s current business strategy includes increasing revenue by increasing international trade within the eBay system. eBay has already expanded to over two dozen countries including China and India. The only places where expansion failed were Taiwan and Japan, where Yahoo! had a head start and also New Zealand where TradeMe, owned by the Fairfax media group is the dominant online auction website.

Acquisitions and investments

• In July 1998, eBay acquired Cincinnati, Ohio based online auction site Up4Sale.com."Business Wire July 16, 1998", 1998-07-16. Retrieved on 2007-07-08. 
• In May 1999, eBay acquired the online payment service BillpointClark, Tim. "eBay Acquires Two Firms", CNET News. Retrieved on 2007-07-08. , an unsuccessful competitor to PayPal, which they closed following the 2002 acquisition of the latter.Wolverton, Troy. "Billpoint Failure a Lesson for eBay?", CNET News, 2002-07-08. Retrieved on 2007-07-08. 
• In 1999 eBay acquired the auction house Butterfield & Butterfield"eBay Buys Butterfield & Butterfield Auction House", Computergram International, 1999-04-27. Retrieved on 2007-07-08. , which it sold in 2002 to Bonhams.Wolverton, Troy. "eBay Sells Traditional Auction Arm", CNET News, 2002-08-01. Retrieved on 2007-07-08. 
• In 1999 eBay acquired the auction house Alando for $43 million, which changed then to eBay Germany."eBay wins German Bid", CNN Money, 1999-06-22. Retrieved on 2007-07-08. 
• In June 2000 eBay acquired Half.com for $318 million, which was later integrated with the eBay Marketplace.Wilson, Noel. "eBay Buying Half.com in Stock Deal", CNET News, 2000-06-13. Retrieved on 2007-07-08. 
• In December 2000 eBay acquired the Precision Buying Service portion of Deja.com.eBay Acquires Deja.com\'s Technology. www.internetnews.com. Retrieved on 2007-01-05.
• In August, 2001, eBay acquired Mercado Libre eBay and MercadoLibre Join Forces in Latin America. Retrieved on 2007-07-08. and Lokau, Latin American auction sites. eBay also acquired iBazar,"eBay Acquires iBazar", DSN Retailing Today, 2001-03-05. Retrieved on 2007-07-08.  a French auction site.
• In July, 2002 eBay acquired PayPal, for $1.5 billion in stock.Kane, Margaret. "eBay Picks up Paypal for $1.5 Billion", CNET News, 2002-07-08. Retrieved on 2007-07-08. 
• On January 31 2003, eBay acquired CARad.com, an auction management service for car dealers. eBay Motors Announces Acquisition Agreement and New Strategic Relationship. Retrieved on 2007-07-08.
• On July 11 2003 eBay Inc. acquired EachNet, a leading ecommerce company in China, paying approximately $150 million in cash.Berniker, Mark. "eBay Acquires Chinese Shopping Site EachNet", InternetNews.com, 2003-07-12. Retrieved on 2007-07-08. 
• On June 22 2004, eBay acquired all outstanding shares of Baazee.com, an Indian auction site for approximately $50 million in US cash, plus acquisition costs. Baazee.com subsequently became eBay India. eBay to Acquire India\'s Baazee.com. Retrieved on 2007-07-08.
• On August 13 2004, eBay took a 25% stake in Craigslist by buying out an existing shareholder who was once a Craigslist employee.
• In September 2004, eBay moved forward on its acquisition of Korean rival Internet Auction Co. (IAC), buying nearly 3 million shares of the Korean online trading company for 125,000 Korean won (about US$125) per share.
• In November 2004, eBay acquired Marktplaats.nl for €225 million. This was a Dutch competitor which had an 80% market share in the Netherlands, by concentrating more on small ads than actual auctions. Marktplaats is the Dutch word for Marketplace.
• On December 16 2004, eBay acquired Rent.com for $415 million in cash (original deal was for $385 million of the amount in eBay stock plus $30 million in cash).
• In May 2005, eBay acquired Gumtree, a network of UK local city classifieds sites.
• On May 18 2005, eBay acquired the Spanish classifieds site Loquo.
• In June 2005, eBay acquired Shopping.com, an online comparison site for $635 million.
• At the end of June 2005, eBay acquired the German language classifieds site Opus Forum.
• In September 2005, eBay bought Skype, a VoIP company, for $2.6 billion in stock and cash.
• In April 2006, eBay invested $2 million in the Meetup.com social networking site.Ebay ventures into social networking. blogspot.com. Retrieved on 2006-06-17.
• In April 2006, eBay acquired Tradera, Sweden\'s leading online auction-style marketplace for $48 Million.
• In August 2006, eBay announced international cooperation with Google. Financial details have not been disclosed by either party.Search Ads: Spreading the Word. iht.com. Retrieved on 2006-06-26.
• In February 2007, eBay acquired online ticket marketplace StubHub for $307 million.
• In May 2007, eBay acquired a minority stake in GittiGidiyor.
• In May 2007, eBay acquired the website StumbleUpon for approximately $75 million. eBay Investor Message. ebay.com. Retrieved on 2007-09-10.
• In October 2007 eBay wrote off $1.43 billion of its investment in Skype, admitting that it "drastically overpaid" for the company.EBay Reports 3rd-Quarter Growth, With Some Blemishes. Retrieved on 2007-11-17.

Controversy and criticisms

eBay has its share of controversy, ranging from its privacy policy (eBay typically turns over user information to law enforcement without a subpoena)^{[citation needed]} to well-publicized seller fraud. eBay claims that their data shows that less than .01% of all transactions result in a confirmed case of fraud. However, eBay states that their stated fraud statistic both undercounts and overcounts fraud. Chat with Rob Chesnut, Vice President of eBay\'s Trust & Safety Department

Fraud

One mechanism eBay uses to combat fraud is its feedback system. Before eBay\'s January 29th, 2008 policy change announcement, at the end of every transaction, both the buyer and seller had the option of rating each other. Both parties had the ability to rate each other and the experience as a "positive", "negative", or "neutral" rating and leave a comment no longer than 80 characters. As of incoming CEO\'s John Donahoe\'s announcement however, the option for sellers to leave anything other than positive feedback to buyers was removed. ebay.com, Home > Community > Feedback Forum > Upcoming Changes to Feedback. BBC, 5-Feb-2008, eBay to ban negative seller views. blog.auctionbytes.com, 29-Jan-2008, Upcoming Changes to Feedback on eBay.

Weaknesses of the feedback system include:eBay Feedback: Fatally Flawed?.San Francisco Bay Guardian - Bias on eBay.

• Small and large transactions carry the same weight in the feedback summary. It is therefore easy for a dishonest user to initially build up a deceptive positive rating by buying or selling a number of very low value items, such as e-books, recipes, etc., then subsequently switching to fraud.
• A user may be reluctant to leave honest feedback out of fear of negative retaliatory feedback (including "negative" in retaliation for "neutral").
• Users and generators of feedback may have different ideas about what it means. eBay offers virtually no guidelines.
• Feedback and responses to feedback are allotted only 80 characters each. This can prevent users from being able to fully list valid complaints.
• Although eBay protects sellers from getting a negative feedback from a deadbeat buyer when the deadbeat buyer/bidder did not respond to Unpaid Item dispute, they do not offer the same protection for a buyer who gets a deadbeat seller.

eBay acknowledges weaknesses in its feedback system on its own policy pages, noting several of the above points.eBay.com Feedback Policies - Overview.

When a user feels that a seller or buyer has been dishonest, a dispute can be filed with eBay. An eBay account (whether seller, buyer or both) may be suspended if there are too many complaints against the account holder.

Originally, feedback could be left for a seller or buyer whether or not it involved a transaction and could be left multiple times by the same person. While one upside is it allowed people to offset feedback in case of fortune reversals (as feedback can never be edited or retracted once it is left) and has even allowed people to leave feedback for a seller or buyer simply for answering a question, the downside of this more than offset it as it allowed people to flame others or try to ruin credibility (as every feedback also counted towards one\'s rating, no matter what). Eventually, one could only leave feedback if they won an auction, and only one feedback message could be left per transaction.

EBay allows Mystery Box and Mystery Envelope auctions, however these are almost all fraudulent auctions because the seller can manipulate the box contents to make sure it is never a good deal for the buyer.Scams And Scoundrels Book ISBN-13: 978-0-9774760-2-2 Mystery Envelope auctions offer cash prizes of an undisclosed amount to auction winners. The auction winner usually receives from 10% to 30% of the money they paid for the auction back in \'winnings\'.Scams And Scoundrels Book ISBN-13: 978-0-9774760-2-2 Chapter 8 Mystery Envelope auctions are considered by many to be illegal lotteries.^{[citation needed]} This was also the case with auctions for "repackaging" of collectible card game cards (such as Magic: The Gathering or Pokemon) with the promise that one of the repackages has an expensive rare card.^{[citation needed]}

Professional scammers target new members to take advantage of their unfamiliarity with how eBay or PayPal work.PayPal-Scam.com. New members can be easily tricked into thinking there is a special website they should make payments through (which is in fact a fake site setup by a scammer) or they may be tricked more easily into using a fake escrow company.

Many complaints have been made about eBay\'s system of dealing with fraud, leading to its being featured on the British consumer rights television program Watchdog. It is also regularly featured in The Daily Mirror\'s Consumer Awareness page. The complaints are generally that eBay sometimes fails to respond when a claim is made. Since eBay makes its money on commissions from listings and sales, it may not be in eBay\'s interest to take action against large sellers.^{[citation needed]}

Frauds that can be committed by sellers include:

• Receiving payment and not shipping merchandise
• Shipping items other than those described
• Giving a deliberately misleading description
• Knowingly and deliberately shipping faulty merchandise
• Counterfeit or bootleg merchandise
• Knowingly selling stolen goods
• Inflating total bid amounts by bidding on their own auction with "shill" account(s), either the seller under an alternate account or another person in collusion with the seller. Shill bidding is prohibited by eBay and, in at least one high-profile case involving Kenneth Walton (and his accomplices Kenneth Fetterman and Scott Beach) has been prosecuted by the federal government as criminal fraud.
• Misrepresenting the cost of shipping, or shipping at a slower service than that paid for."The safe eBay Scam!", Daniel Rutter, retrieved 3rd December 2007.

Frauds committed by buyers include:

• PayPal fraud: Filing false shipping damage claim with the shipping company and with PayPal.
• Credit card fraud, in the form of both stolen credit cards and fraudulent chargebacks.
• Receiving merchandise and claiming otherwise
• Returning items other than received
• The buyer sends a forged payment-service e-mail which states that the buyer has made a payment to the seller\'s account. An unsuspecting seller may ship the item before realizing the e-mail was forged.

Combatting fraud:

• Third party businesses, such as CheckMEND, are compiling lists of stolen goods from local authorities and businesses so eBay consumers can check to see whether the goods they are buying are stolen.
• Third party software is available which will alert users if they are tricked into going to a spoof website such as the MyLittleMole Toolbar which is free.MyLittleMole Toolbar. Use of such software could potentially eliminate eBay account hijacking.

Other controversial practices of users

• Sellers of inexpensive items may benefit from inflating the shipping cost while lowering the starting price for their auctions,...Plus Shipping and Handling: Revenue (Non) Equivalence in Field Experiments on eBay. Berkeley Electronic Press. Retrieved on 2006-06-26. because some buyers overlook the shipping cost when calculating the amount they are willing to spend. Since eBay charges their fees based on final sales price without including shipping, this allows sellers to reduce the amount they pay eBay in fees (and also allows buyers to reduce or avoid import fees and sales taxes). This is called "fee avoidance", and is prohibited by eBay policy,Circumventing Fees. eBay. Retrieved on 2006-06-11. as are excessive shipping and handling charges.Excessive Shipping & Handling. eBay. Retrieved on 2006-06-11. A danger to the buyer in such cases is that in the event of defective merchandise, the seller may claim to have met his refund obligations by returning only the minimal purchase price and not the shipping costs.

• Sellers sometimes charge fees for use of PayPal as well to cover the fees that PayPal charges them. Although this is officially banned by eBay and PayPal (except in the UK^{[citation needed]}) and is against some local laws as well as violating merchant agreements with Visa, MasterCard, and Discover (again, except in the UK), eBay does sometimes police for this and will suspend auctions where the seller requests an additional fee for taking PayPal. This could lead inexperienced users to pay these illegal and unenforceable fees.

• Auction sniping is the process of watching a timed online auction, and placing a winning bid at the last possible moment (often literally seconds before the end of the auction), giving the other bidders no time to outbid the sniper. Some bidders do this manually, and others use online services and software designed for the purpose. While disliked by many eBay users, sniping is not against eBay rules as users are expected to put in their maximum bid from the start and the system will automatically bid up on their behalf.

• Burying shipping charges or undesirable terms in a large amount of text.^{[citation needed]}

Stealing ebay accounts

According to Ofer Elzam from Aladdin Knowledge Systems Ltd., there is a botnet which steals e-bay accounts. Custom-built botnet steals eBay accounts.. The attacks use such techniques as compromising genuine websites with SQL injection, inserting IFrame code which redirects visitors to other sites which host a Trojan. Trojan-infected computers are used to provide a brute search for login/password pairs, using XML-formatted code to communicate with ebay servers directly.

Forgeries

It is estimated that about a quarter of all ancient coins and about two-thirds of all antiquities sold on eBay are modern forgeries.Counterfeit Coin Detection. Retrieved on 2008-01-21.

Intellectual property in auctions

Holders of intellectual property rights, have claimed that eBay profits from the infringement of intellectual property rights. eBay has responded by creating the Verified Rights Owner (VeRO) program, which provides to rightsholders expedited auction takedowns and private information on eBay users, but has likewise been criticized.

• In June 2004, the jeweler Tiffany & Co. sued eBay claiming that eBay profits from the sale of counterfeit Tiffany products."Tiffany sues eBay, says fake items sold on Web site", USA Today, March 22, 2004.  As of July 2006, a trial date has not been set."Sure you bagged a bargain?", Courier Mail, News Limited, May 24, 2006. 

• In September 2005, eBay\'s privacy practices relating to its VeRO program came under scrutiny when WNDU-TV reported that the Embroidery Software Protection Coalition was accusing United States buyers, identified by eBay, of copyright infringement, and demanding monetary settlements. eBay\'s privacy policy warns that eBay may disclose personal information on the request of any VeRO rightsholder investigating illegal activity;eBay Privacy Policy. Retrieved on 2007-01-10.. Although, according to a University of Notre Dame law professor, there is no legal basis, in the United States, for copyright infringement claims against buyers,"Contact 16: Embroidery software buyer under investigation", WNDU-TV, 2005-09-07.  eBay\'s VeRO program may have allowed the ESPC to obtain private information without judicial oversight.

• Some manufacturers have abused eBay\'s VeRo program, through which copyright and trademark owners can quickly protect their rights, by seeking to prevent all sales of their products on eBay.^{[citation needed]}

• In November 2006, a U.K. High Court ruled that a VeRO rightsholder\'s takedown request to eBay constituted a legal threat under design patent law. Since groundless legal threats under design patent law are unlawful, the ruling holds that groundless VeRO takedown requests based on design patents are also unlawful. Further, the text of the ruling appears critical of the VeRO program in general: "It is entirely wrong for owners of intellectual property rights to attempt to assert them without litigation, or without the threat of litigation, in reply.""Design right threat fails to stop eBay sales", 2006-11-14. 

Other eBay controversies

Other notable controversies involving eBay include:

• In May 2000, eBay seller Kenneth Walton auctioned an oil painting on eBay for $135,805, due to speculation that it might be the work of California modernist Richard Diebenkorn. Walton pretended to know nothing about art and claimed to be surprised by the price the painting fetched, and the auction attracted international media attention. In several investigative reports by The New York Times, it was revealed that Walton was in fact an experienced eBay art dealer with several unhappy customers, and that he had colluded with two other eBay sellers to bid up each other\'s auctions. The Times described this as a "shill bidding ring".New York Times Article Walton and his cohorts were banned from eBay and eventually convicted of fraud by the federal government in the first ever prosecution for shill bidding on eBay.

• On May 28 2003, a U.S. District Court jury found eBay guilty of willful patent infringement and ordered the company to pay $35 million in damages. The plaintiff was MercExchange, which had accused eBay in 2000 of infringing on three patents (one of which is used in eBay\'s "Buy It Now" feature for fixed-price sales, 30 percent of eBay\'s business and growing). The decision was appealed to the U.S. Court of Appeals for the Federal Circuit (CAFC). The CAFC affirmed the judgment of willful infringement, and reversed the lower court and granted a permanent injunction. eBay appealed the permanent injunction to the U.S. Supreme Court, which on May 15, 2006 found an injunction is not required nor automatic in this or any patent case where guilt has been established. The case was sent back to the Virginia district court for consideration of the injunction and a trial on another MercExchange patent the inventor claims covers the remaining 70 percent of eBay\'s business model (see eBay Inc. v. MercExchange, L.L.C. EBAY INC. ET AL. v. MERCEXCHANGE, L. L. C. (PDF). US Supreme Court. Retrieved on 2006-06-17.). This case has been particularly controversial since the patents involved are considered to be business method patents (see Software patent debate).

• On July 28 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, between mid-2000 and November 2002, PayPal transmitted money in violation of various U.S. federal and state online gambling laws.http://www.usatoday.com/tech/news/2003-07-25-paypal-gambling_x.htm eBay\'s announcement of its acquisition of PayPal in early July said that PayPal would begin the process of exiting this market, and was already doing so when the ruling occurred.http://news.com.com/2100-1017-941964.html These offenses occurred prior to eBay\'s purchase of PayPal.

• In late 2006 eBay effected a policy change which showed less information about bidders once auctions reached a certain value. This policy has been criticized for making shill bidding much harder to detect, to the potential disadvantage of buyers and significant advantage to unethical sellers who may artificially inflate the price of an auction. An investigation by The Sunday Times in January 2007 uncovered substantial evidence of shill bidding on eBay.http://www.consumeraffairs.com/news04/2007/01/ebay_shilling.html

• April 2007 lawsuit in California over monopoly practices. http://www.theregister.co.uk/2007/04/26/ebay_lawsuits/

• An August 2007 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." http://www.itnews.com.au/News/59641,ebay-deceiving-millions-of-users.aspx

• On January 29, 2008, a series of new policy changes were announced including an increase in the final value fee and a decrease in the listing fee (when averaged out, the fees actually cost sellers more).http://www.auctionbytes.com/cab/abn/y08/m01/i29/s05 Among the more controversial moves was the announcement that sellers would soon only be able to leave positive feedback for buyers, and would no longer have the ability to provide negative or neutral ratings regardless of the experience.http://bits.blogs.nytimes.com/2008/01/29/sellers-give-negative-feedback-on-ebay-changes/?ref=technology The policies also give greater benefits to higher volume sellers. eBay now explicitly gives higher volume "Powersellers" a 5% to 15% discount on the final value fees. These sellers can also receive better terms on shipping costs and preferential positioning in search results.http://pages.ebay.com/sell/update08/overview/

• On February 18, 2008, sellers and buyers who felt the new fees and feedback structure were unfair commenced a one-week strike against eBay.

Prohibited or restricted Items

eBay in its earliest days was essentially unregulated, but as eBay grew, it found it necessary to restrict or forbid auctions for various items. Note that some of the restrictions relate to eBay.com (the US site), while other restrictions apply to specific European sites (such as Nazi paraphernalia). Regional laws and regulations may apply to the seller or the buyer. Among the hundred or so banned or restricted categories:

• Tobacco (tobacco-related items and collectibles are accepted.)http://pages.ebay.com/help/policies/tobacco.html
• Alcohol (alcohol-related