Criticism of E Bay - Other EBay Controversies

Other EBay Controversies

Other notable controversies involving eBay include:

• 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, who 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 which accounts for 30% of eBay's business. 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. ). 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. 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. 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.
• An April 2007 lawsuit in California over monopoly practices.
• An August 2007 class-action lawsuit in which an Australian attorney 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 selected auction time even though eBay hasn't posted it yet."
• 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). 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. The policies also give greater benefits to higher volume sellers. eBay now explicitly gives higher volume "Powersellers" a 5% to 20% discount on the final value fees. These sellers can also receive better terms on shipping costs and preferential positioning in search results.
• In April 2008, eBay announced it was suing online classified site Craigslist to "safeguard its four-year financial investment." eBay claimed that in January 2008, Craigslist executives took actions that "unfairly diluted eBay's economic interest by more than 10%". In response, Craigslist filed a countersuit against eBay in May 2008 "to remedy the substantial and ongoing harm to fair competition" that Craigslist claims is constituted by eBay's actions as a Craigslist shareholder.
• In July 2008, eBay started letting web retailer Buy.com list millions of items for sale on eBay without having to pay the listing fees required of other sellers. Its account also highlights eBay's flawed Detailed-Seller-Rating system as Buy.com's eBay account, which was changed in December 2007 to "buy" via a name usurption, always gives free shipping and yet has a 4.8 Rating on "shipping charges," which is below the amount required for the 15% powerseller discount.
• In January 2010, David Davidson from Droitwich, Worcestershire received tabloid attention in the United Kingdom after eBay withdrew his listing of a Dad's Army board game. eBay claimed that, as the box graphics contained images of swastikas, it was Nazi paraphernalia and, as such, breached the firm’s offensive material policy. Members of the tabloid press criticised eBay's decision, claiming that they had divorced the images from its original context of a family friendly prime-time sitcom to pander to political correctness. Davidson was told he would be able to relist the item if he removed any images showing the swastika on the box.
• The Internal Revenue Service and other governmental taxing agencies suspect that on many eBay transactions, the sellers are failing to report income and/or sales tax as required by law. Canada Revenue Agency filed suit against eBay Canada and in 2007, the Federal Court of Canada ruled that eBay Canada must provide the requested information. The Court of Appeal upheld that decision and in 2008, eBay Canada began providing names and sales data for its largest sellers.
• On December 4, 2010, eBay subsidiary PayPal decided to freeze the account of Wikileaks citing terms of use violations over the publication of leaked US diplomatic cables, inviting allegations that PayPal did so in response to US government pressure. In response, a hacker group called Anonymous launched denial-of-service attacks against the main PayPal site.