Interesting Story from SF Chronicle for anyone who didn't see it.
In just three years, online auctioneer eBay has gone
from a seller of Pez dispensers to one of the hottest
spots on the Internet. Its stock has soared, giving
the company a market value yesterday of nearly
12 billion and climbing.
Yet a growing number of critics -- who derisively
call the company ''eBad'' and ''ePay'' -- say what's
keeping eBay aloft is hot air and charge that fraud is
rampant on the popular online auction site. They
accuse the San Jose company of turning a blind eye
to those who put in false bids, sell fake items or fail
to deliver paid-for merchandise.
In addition, critics claim that eBay auctions
sometimes offer illegal items. During the past week,
sellers were offering Cuban cigars, which cannot
legally be imported in the United States, and an
AK-47 assault rifle, which is illegal to sell in
California and several other states. One particularly
brazen seller advertised a ''Banned Covert Auto-
knife'' -- a type of switchblade -- bragging that ''the
Feds have decided that it's in your best interest not
to let anymore of these knives into our country.''
Complaints to eBay often go unheeded, critics say,
and violators are able to easily slip back in using a
new identity.
''I've seen them suspend someone and let them
back on the same night,'' said Sandra List, a
Washington, D.C.-area user. ''They don't have a
central file of suspensions, so the thieves are on an
honor system.''
Executives at eBay emphasize that problems have
arisen in only a small percentage of the 36 million
auctions it has hosted. When an eBay user
complains about an impropriety, the company is
quick to investigate and act, said Brad Handler,
director of public policy. In addition, the auction site
offers a number of protections that include 24-hour
customer support, a feedback forum where bidders
and sellers are rated by users, and access to an
escrow service to secure transactions.
''EBay is a community that is working hard to
create an environment of open, honest trade,'' said
Handler. ''It's incredibly difficult in the online and
offline world to catch the dedicated criminal, but it
doesn't mean we aren't trying.''
However, Handler also said that eBay cannot
proactively monitor the site for illegal activity and
that it relies on users to bring problems to its
attention.
But many users say the system isn't working.
Earlier this month, eBay executives got to see for
themselves. As a publicity stunt, eBay asked
'Today Show'' host Katie Couric and her
co-workers to autograph a show jacket to auction
off for chartity. Bids zoomed to $200,000. But, a
chagrined eBay learned, most of the bids were
pranks. After checking on bidders, eBay found the
real high bid to be a paltry $11,400.
In a more serious case, an Oklahoma City man
pocketed at least $30,000 and up to $100,000 for
baseball cards he didn't deliver, according to postal
authorities.
Sonny Dean Stemple, 27, allegedly bilked eBay
customers by enticing them into sending money
orders for auction items he claimed he had but
never delivered. There is no warrant or indictment
yet for Stemple, who is missing.
Even though the transactions were made over the
Internet, they are being investigated as mail fraud,
said postal inspector Linda Kirksey of Fort Worth,
Texas. ''The people who bid on the products sent
their money through the postal mail,'' she explained.
Officials at eBay have refused to reimburse buyers
who were duped by Stemple. Handler said the
company policy is to urge those who believe they've
been bilked to report problems to eBay and to local
law enforcement authorities.
''We ask law enforcement authorities to contact us,
so we can make sure we give them all the
information we have about this bad actor,'' Handler
said.
These incidents illustrate the pitfalls of performing
anonymous transactions on the wild and wooly
Internet.
''The lines are blurred,'' said List, the
Washington-area user. ''You never know who
you're dealing with.''
The embarrassment over the ''Today Show'' jacket
and the alleged fraud by Stemple came at the same
time eBay was experiencing a series of outages that
angered users. Yet in many ways, eBay is a lot like
President Clinton. The worse things get, the higher
its stock rises.
Yesterday, eBay's shares rocketed to another new
high, climbing $44.13 to $296.38. Its nearly $12
billion market value is more than that of
consumer-products giant Clorox and nearly triple
that of Apple Computer.
One reason is that, whatever its problems, eBay
remains the hottest auction site, with traffic that far
outpaces competitors. So despite their complaints,
users keep coming back.
One practice that riles List and others is ''shill
bidding'' -- when sellers use a different identity to
bid on their own items, or have friends bid on the
item. The purpose: to drive up the price or to reach
the 30-bid level, which puts the auction into eBay's
''hot'' category and earns it a special promotion on
the site.
She and others say eBay is slow to take action on
complaints because the higher the price an item
fetches, the more commission the company collects.
''They don't do checks on people who register, so
the same person can sign up under different names
and bid an item up. It hurts everyone,'' said one
heavy eBay seller who said he grossed tens of
thousands of dollars on eBay last year. The seller,
who lives in Canada, pointed out several auctions in
which bidders appeared to be the same person
registered under different names. In another case,
he pointed out a seller who appeared to have faked
his own feedback to ensure a high rating.
Officials at eBay say they suspend anyone they
catch who registers multiple times under different
user IDs.
The Canadian seller and many other eBay users say
earnings from eBay auctions have become a
significant portion of their incomes. That's why they
say they are so passionate about the service.
''People care about this. It's their livelihood,'' said
List.
''Many of us just want to sell $10 items and not
make trouble,'' said one Bay Area user. ''We are
troubled by the amount of fraudulent goods sold on
the service. It's sad.''
Sergeant Don Brister of the San Jose Police
Department's High Technology Crimes Detail said it
has received a handful of complaints about eBay but
that the company ''has done everything it can to
protect the consumer.''
''Yeah, there are problems,'' he said. ''But the
consumer has to take some personal responsibility
to ensure their own money is safe.''
But Larry Schwartz, president and general manager
of eBay competitor Auction Universe, said
protecting users from fraud is actually quite simple.
Auction Universe, for example, offers a service
known as Bid Safe, which for $19.95 a year
provides $3,000 in insurance for buyers and sellers
against fraud, shipping damage or other losses.
More important, Bid Safe includes an escrow
service in which Auction Universe handles
credit-card payments for buyers and sellers and
holds payments until it is assured the item is
delivered in satisfactory condition.
''If we want this thing to grow, we have to make
people feel safe,'' Schwartz said. ''Right now it's
getting the perception that it can't be trusted.''
|
