eBay are now worse than whores – ask any business seller

eBay are whores”. That’s was the verdict of an American friend and regular eBay business seller.

“How so?”, I asked. He went on to explain that eBay and PayPal would do anything for money, and everything imaginable had price attached which you had to pay if you sold through them. My friend was a typical right-leaning free market American, and I had to smile at his complaints about big business doing what it does best. If he wanted to sell his collectable items in an on-line auction it had to be  through eBay, because eBay has an effective monopoly on buyers. eBay was simply obeying the laws of supply and demand; charging the customer (that’s the seller) the maximum they were willing and able to pay without scaring too many away. With an effective monopoly it’s hard to scare them that much.

Since then eBay’s use of its monopoly power has taken a very dark turn indeed, in response to one of their biggest problems: Criminals use eBay. Most of us have bought something through eBay and discovered the seller was less than honest, and eBay feels that this situation is going to adversely affect their revenue in to the future. Recently they’ve declared war on rogue traders, but it such a clumsy manner their actions are immoral and possibly bordering on the illegal.

A few years ago I started hearing complaints from eBay sellers who’d given up moaning about high commission rates in favour of how eBay was making it very easy for buyer’s to defraud them. This started with PayPal, the no-longer-so-optional money transfer system now owned by eBay that sellers are pressured in to using. If a criminal orders something, pays using PayPal and once they’ve got the goods decides to complain (or claim the goods never arrived), PayPal takes the money back from the seller, with no effective mechanism for appealing. As I understand it, the seller has to prove that the buyer received the goods before they get their money, and this just isn’t realistically possible in many circumstances.

PayPal and eBay hardly invented mail order fraud, but they’ve made it very easy for the criminals. Banks would investigate in the case of such a dispute, but by all accounts, eBay does not. All the seller could do was leave negative feedback against the buyer, so future sellers were forewarned and could make up their own minds about dealing with someone.

In the latest twist, sellers can no longer leave negative feedback about buyers, effectively allowing buyers to lie and cheat as much as they wish with no risk of exposure or other consequences. Sellers have to quietly absorb the loss while the criminal selects his next victim.

You may think this is as bad as it could get, but now eBay has implemented what it calls “Detailed seller ratings”, aka DSR. Basically buyers can (anonymously) rate sellers out of five for things like accurate description and delivery time. If a seller gets, on average, less that 4.6 out of 5 then they encounter difficulties with eBay. Sellers have told me that they receive letters saying that they “need to improve”, followed shortly afterwards with having their accounts suspended indefinitely “to protect buyers”. Does everyone apart from eBay see the problems here?

Firstly, there are some very strange people out there. If they don’t like what they bought they’re going to give the seller a bad rating for everything.

Please generate and paste your ad code here. If left empty, the ad location will be highlighted on your blog pages with a reminder to enter your code. Mid-Post

Secondly, many people are unlikely to give anyone 5/5. At one time, my job was reviewing things. I did it every day, and I’d never give anything 100% unless it was incapable of improvement. With eBay the next step down is 80%, which by normal standards is very good indeed. However, on eBay’s DSR system, if someone gets to many 80% ratings their account gets suspended!  At one time I didn’t know that, so I’d routinely give everyone a score of 4 unless there was something extra-special about the service. Most people writing a review would do the same.

Finally, this is a recipe for scamming. Supposing you and a competitor were both selling the same thing into a niche market. eBay was excellent at niche market products, once. Unfortunately, in this cut-throat  online market place, if you’re not the cheapest you’ll lose the business, but if you sell at rock bottom you make no profit. So what can you do? eBay has the answer – simply ask a few of your friends to buy items from your competitor and then give them consistently bad DSR scores. eBay will shut them down for you, with no right of appeal, and the way is now clear for you return to your full profitable prices. In the good old days you had to hire a bunch of thugs to beat up your competitors and burn down their premises  now you can get the same effect with a few clicks of a mouse. If someone else appears selling the same thing, they’ll have a “unknown” rating anyway, so a couple of bogus purchases and they’re out of business. This works; I’ve seen the victims and I’ve seen eBay’s attitude to doing anything about it.

Sellers are in a very difficult place. If eBay closes their account, they’re out of business. It’s high time eBay was taken to court over this matter, that of putting British companies out of business for no reason. Unfortunately eBay is hiding behind a flag of convenience. Although it says “ebay.co.uk” on the web site, they’re operating through Luxembourg (and challening the profits through Switzerland to avoid UK corporation tax). Taking them to court isn’t going to be easy.

In the USA, where the jurisdictional is less murky,  there have been several class actions against eBay In response, eBay has altered it’s user terms and conditions such that everyone has to agree not do this any more.

I think it’s high time that eBay developed a sense of responsibility towards the countries that are allowing it to operate. It enjoys a effective monopoly position, yet companies needing to use it are ruined at the whim of a some faceless functionary within eBay, who might be in any part of the world. Power without responsibility is always a bad thing. If that’s not enough to make our government take action, they should consider industrial-scale tax avoidance scheme eBay is employing.