Criticism of eBay

eBay has experienced controversy, including cases of fraud, its policy requiring sellers to use PayPal, and concerns over forgeries and intellectual property violations in auction items.
Fraud.
eBay Customer Support claims that its data indicate that less than 0.1% of all transactions result in a confirmed case of fraud. One mechanism eBay claims combats fraud is its feedback system. When a user feels that a seller or buyer has been dishonest, a dispute can be filed with eBay. An eBay seller may be suspended if there are too many complaints made against them. eBay does not allow sellers to give negative feedback to buyers, but did at one time.
Until June 2008, eBay allowed Mystery Box and Mystery Envelope auctions. However, these are almost all fraudulent auctions since the seller can manipulate the box contents to make sure it is never a good deal for the buyer. 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 he paid for the auction back in 'winnings'.
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 fails to respond when a claim is made.
Frauds that can be committed by sellers include:
Frauds committed by buyers include:
Fraud is prevented by:
Shill bidding.
Shill bidding is undisclosed vendor bidding that is used to artificially inflate the price of a certain item. It is usually carried out with "shill" account(s), by either the seller under an alternate account or another person in collusion with the seller. Shill bidding is prohibited by eBay. However, eBay has been criticized for not doing enough to combat the problem. Still, there are techniques, like sniping, which let buyers avoid shill bidders.
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. In March 2008, Professional Coin Grading Service issued an alert noting counterfeit PCGS slabs and various United States and Chinese coins originating from the People's Republic of China being sold on eBay.
In court papers introduced by attorney for jeweler Tiffany & Co., it was claimed that researchers for Tiffany had determined that over 70% of the Tiffany silver jewelry offered for sale on eBay was fake. Tiffany & Co. filed a lawsuit against eBay in 2004 which claimed that eBay profited from the sales of counterfeit Tiffany items that infringed on its trademark. On July 14, 2008, a Federal District Court judge ruled that eBay does not have a legal responsibility to monitor users selling counterfeit items. In 2010, the Second Circuit affirmed this decision (see "Tiffany v. eBay").
Feedback system.
eBay does allow buyers to rate any seller using a feedback system that allows both positive and negative comments; however, sellers are prohibited from leaving anything other than positive feedback for buyers.
Before eBay's January 29, 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 CEO's John Donahoe's announcement however, the option for sellers to leave anything other than positive feedback to buyers (in response to an outcry from buyers who received negative feedback in retaliation for leaving the seller a negative) was removed.
According to critics, weaknesses of the feedback system include:
Intellectual property in auctions.
Holders of intellectual property rights, have claimed that eBay profits from the infringement of intellectual property rights. The company responded by creating the Verified Rights Owner (VeRO) program, which provides to rights holders auction takedowns and private information on eBay users on demand.
eBay requires sellers to use PayPal.
In some countries, eBay requires sellers to offer the PayPal payment service, which was formerly owned by eBay's parent company. eBay stated that this mandate was due to the safety and security of the service. However, critics contended that the requirement was meant to leverage their former co-ownership, as eBay would receive service fees, on top of transaction fees via PayPal for product and shipping payments.
Although, since July 2015, PayPal and eBay have operated as separate companies, a five-year agreement between the two companies contractually requires that PayPal serve at least 80% of eBay transactions. In August 2015, eBay announced that it would ban the use of competing services Propay and Skrill effective September 27, 2015, citing low usage. However, critics argued that the change was meant to comply with eBay's requirement to maintain the integrity of the PayPal service.
Australia.
In April 2008 eBay announced an introduction of a 'PayPal only' policy in Australia. The new policy would have meant that sellers will only be able to offer PayPal or cash payment on pick-up as payment methods. eBay claims that PayPal is the most secure method of payment.
Under the Australian "Trade Practices Act 1974", it is unlawful for a company to require the use of a third party's products or services in order for a person to deal with the company, known as Third Line Forcing. eBay submitted a notification under the Act, which provides automatic exemption from this provision unless the notification is subsequently revoked by the Australian Competition and Consumer Commission (ACCC).
As part of its assessment of the notification, the ACCC called for submissions from interested parties. This attracted a record number of complaints from eBay members, banks, Google, and members of the business community and the Reserve Bank of Australia. During this period, rival auction site OZtion experienced a record number of new members.
The ACCC completed an initial draft proposal to revoke eBay's notification, stating that it believed consumers were in a better position to judge risk on individual transactions than eBay's management and has ruled the plan anti-competitive. However, before a final decision could be announced on July 3, 2008, eBay announced that it had withdrawn the notification to the ACCC and shelved its "PayPal only" plans.
United Kingdom.
A similar policy requiring sellers to offer PayPal was also introduced in the United Kingdom, though in stages. The first stage, which was adopted on March 25, 2008, was aimed at sellers with feedback scores under 100 and in certain high risk categories. The requirement was extended to all sellers from June 3, 2008.
Other eBay controversies.
Other notable controversies involving eBay include:
eBay Motors class action lawsuit.
On July 27, 2010, the Court allowed the individual plaintiffs Yingling and Scott to represent all persons who paid so-called Final Value Fees in conjunction with a listing of an item within eBay, Inc.'s defined category of "Parts & Accessories" on the eBay Motors website, which listing was placed between April 21, 2005, and August 26, 2009. This ruling allowed the law firm of Figari & Davenport LLP to act as "Class Counsel" and to represent the Class Members as their attorneys. The Court's ruling does not mean that the Court views the claims in this Lawsuit as having merit or not.
The case was settled in 2011. This Settlement applies to the same persons defined above; however, all listings made using eBay's Store Inventory Format are excluded from the Settlement.
"Payment to Settlement Class members will be proportional to the total amount of Final Value Fees (net of any previous refunds) each Class Member paid between April 21, 2005 and August 26, 2009 for selling Parts and Accessories, excluding listings in eBay Store Inventory Format. According to eBay’s calculations, which are subject to finalization and revision, it is estimated that Settlement Class Members will be refunded approximately 6.67% of the Final Value Fees (net of any previous refunds) they paid for these listings."