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Should Congress Shut Down eBay?

Is this auction site the world’s biggest criminal conspiracy?

February 2008 By Denny Hatch
41
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In the News

EBAY SELLERS TARGETED FOR PROSECUTION
But proposed changes in Pa.’s law have been introduced.
WALNUTPORT, Pa. — Mary Jo Pletz was really, really good at eBay. But now the former stay-at-home mom and gonzo Internet retailer fears a maximum $10 million fine for selling 10,000 toys, antiques, videos, sports memorabilia, books, tools and infant clothes on eBay without an auctioneer’s license. An official from the Department of State knocked on Pletz’s white-brick ranch here north of Allentown in late December 2006 and said her Internet business, D&J Virtual Consignment, was being investigated for violating state laws.
—Bob Fernandez, Philadelphia Inquirer, January 28, 2007
I have a huge file on the European Union and the myriad ways bureaucrats in Brussels insinuate themselves and their personal agendas into every facet of business and life. They dictate what can and cannot be done in terms of work rules, consumer marketing, competition, the media, nannies, light bulbs, data and so much more.

In November, the EU issued a directive on noise abatement that included how loud symphony orchestras are allowed to play.

Last week I read the story of how the state of Pennsylvania wants to shut down the thriving eBay auction business of single mom Mary Jo Pletz, which enables her to stay home with her 6-month-old daughter Julia, who has a brain tumor.

The Pennsylvania Secretary of State’s reason: Mary Jo does not have an auctioneer’s license. Having sold 10,000 items on eBay, she is being threatened with $10 million in fines.

As I was reading the story, I got madder and madder—almost to the point of apoplexy. Suddenly a bunch of officious little power-hungry EU-like shock troops were operating in my own back yard.

According to AC Nielsen International Research, June 2006, eBay is used as a primary or secondary source of income by approximately 1.3 million sellers worldwide.

The state of Pennsylvania has gone nuts!

Or has it?

About eBay
As I pondered the fate of eBay auctioneer Mary Jo Pletz and her daughter with the brain tumor, I ran a search for “eBay” in the computer stories I had noted, downloaded, indexed and archived over the past four years for possible use in this e-zine.

eBay came up 794 times.

eBay is huge. According to one fact sheet:

* It has a presence in 33 markets and has 193 million registered users worldwide.

* $1,608 worth of goods are traded on the site every second.

* It has 50,000 categories, and 6 million listings are added every day.

Snippets from My eBay Archive
One company that makes sunglasses, Oakley Inc., went online and found more than 19,000 auctions on eBay and other Web sites last year that were selling fake Oakley sunglasses. Investigating further, Oakley traced some of the counterfeits to an Oregon man’s house, where they found 33,000 pairs.
—Dean Takahashi, Knight Ridder Newspapers, March 5, 2006

A team of researchers discovered 424 elephant ivory items being auctioned on the British eBay site—only two of which carried the necessary government certification making them legal for sale in the UK.

Takeaway Points to Consider:

* EBay—for all its vast reach and success—is inflicting serious collateral damage on this society and others around the world.

* Have you done a complete inventory of your products, services and people to make sure you are not causing collateral damage?

* One indicator of a company’s poor performance in the marketplace is letters of complaint. Where do your letters of complaint end up and how are they dealt with? Should they not be routed directly to the office of the CEO?

* An old direct marketing rule of thumb stated that a happy customer would tell three people. An unhappy customer would proclaim disgust to 11 others. With the advent of the Internet, a single unhappy customer can tell the world.

* For example, if you Google “hate eBay”, you will get 303,000 entries.

* You may want to go to Network Solutions and buy “[YOUR COMPANY NAME]Sucks.com” (and “.org”), so that you own it rather than an unhappy customer. All queries to either of those URLs would come to your customer service troubleshooter, giving you the opportunity to open a dialog that might enable you to turn a lemon into lemonade.

Web Sites Related to Today's Edition:

eBay
http://www.eBay.com

Mary Jo Pletz, eBay auctioneer in trouble
http://tinyurl.com/39ncfd

eBay Balances of Power
http://tinyurl.com/2vocoe

Tiffany v. eBay—Post-Trial Briefs
http://tinyurl.com/2tl2to

VirtualDali
http://www.virtualdali.com/

The Dali Gallery
http://www.daligallery.com/

Pennsylvania House Bill Requiring Registration of Auctioneers
http://tinyurl.com/yqfq52
 

Companies Mentioned:
41

COMMENTS

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Most Recent Comments:
Heather - Posted on September 07, 2008
Denny,

Just wanted to say thanks for insight to the Dali lithograph. I was at an estate sale yesterday and saw this exact paperwork. I wondered where the authenticity paperwork was and actually a bit confused. After extensive research, I could not find this piece listed as an original Dali. They bought it at an estate sale, not sure what they paid, but had the original receipt for $375 from John Paul Loup. They are now asking $3,000!!! I am thankful I found your bit, because otherwise I may make been the next sucker.
Tiffany - Posted on April 02, 2008
Denny is 100% correct. I don't know numbers.... but that is not the point. The point is this is going on and Ebay is making millions and millions of dollars a year off of these types of auctions and since Ebay began.... billions and billions. If Denny could find fakes in a matter of five minutes and I could compile a list of 50 sellers in 5 minutes who sell reproduction items as antiques, then why is it that ebay is finding it so hard to get rid of the obvious sellers who rip people off week after week.

I have tons of stories ....

but to answer the question whether or not ebay should be shut down... it is a big YES!!!!

They have had the chance to do the right thing and they have not done anything!!!

The Judge deciding the Tiffany case is fully aware of ebay's deceptive ways.... and when Tiffany wins the case.. I will again tell Ebay that KARMA'S A B*TCH!!
theyelladawg - Posted on February 09, 2008
Oh, good grief! The issue is NOT whether Mary Jo should have to buy a license to sell on eBay any more than she should have one if she took her goods to a local auctioneer to be sold. The issue is whether this is an efficient use of police power, and whether state governments have the jurisdiction to police interstate commerce - which they clearly do not.
I've made over 50 purchases on eBay. Some were better than others, and one turned out to be an outright scam. I reported the scam to eBay and local authorities: eBay removed the wrongdoer (ah! banishment IS punishment) but the local authorities NEVER acted against what was clearly interstate, international, and local theft. So much for government intervention in the marketplace.
Instead of worrying about little crooks, why don't you turn your attention to the BIG ones. The credit reporting agencies, banks, insurance companies, finance organizations and other BIG organizations are ripping off consumers for TRILLIONS of dollars EVERY DAY without a word being said by guys like you or a single act of investigation by the government. Why aren't you asking why over 50% if the information released by credit reporting agencies is WRONG? Why aren't you asking why banks and mortgage companies were allowed to conspire with home builders and real estate companies to sell MILLIONS of houses to people who they knew didn't have a chance to pay for them under the terms that were being offered and with the snares that were being build into the ARM's they were being sold? Why aren't you talking about how the price of gasoline has been manipulated for over 40 years by the companies who have just posted the largest profits in world history? Why aren't you questioning the continued depletion of natural resources (manipulated by large corporations) when we should be actively converting to use renewable (and non-polluting) sources of energy and power? Why aren't you asking about daily bogus Pennsylvania retail
Jim - Posted on February 09, 2008
"Counterfeiters, forgers, hooligans, miscreants, petty crooks, pirates, rapscallions, reprobates, rogues, scallywags, scamps, scoundrels, swindlers, thieves, thugs and villains?" I had to laugh--it almost sounded like something out of a old cartoon! Except you forgot "ne'erdowell"!
kristin rohan - Posted on February 08, 2008
Hey Denny - as usual, you stir things up grandly. Thanks for your perspective - whether or not the number are totally correct, you always imspire me think and you DEFINITELY give the underdog a voice - HORRAY for you - by the way, my family loved their HAMMER tshirts!
jehnidiah - Posted on February 08, 2008
Your math is way, way off, and your assumptions mess up any argument you may have had.

The fact that you're able to find x numbers of fraud cases when searching for a particular item (which is highly likely to be a fraud piece) does not mean the numbers stated by eBay of .01/100 being fraudulent. It's not as if the only things sold on there are unique things like what you're mentioning -- no one is going to create "fake" Wiis, generic t-shirts, bubble-wrap and the millions of other items that are mass-sold on eBay. These are mostly true, unstolen, and ridiculous to plagiarize or misrepresent as "fraud." This would bring that number you mentioned down to, likely, somewhere between your assumption of 1/100 and eBay's stated numbers.

I'm not sure if you were purposefully misrepresenting and misunderstanding what the guy said, taking it out of context completely, or if you're just thad bad at math and logic, but either way you should remove that part of your argument which, unfortunately for you, is the bulk of it.
Alan Weber - Posted on February 08, 2008
Denny,

I've bought or sold over 80 times on ebay without ever having a serious problem. That includes selling three cars and buying one.

Someone stole my identity, but ebay took care of it quickly, at no loss to me. Any time I get a message I question, I forward to to "Spoof@ebay.com" and they fix the issue. And anyone dumb enough to ship to the Ukraine before payment clears, well, I don't know how you help people like that.

The feedback system is evolving, but it is the future. Somewhere along the line, we'll have to give up being annonymous in order to do business over the 'net.

Feedback is like a credit rating. Get used to it.

As for the women is Pennsylvannia, she is not the auctioneer, ebay is. Placing one's goods for sale at an auction doesn't make one an auctioneer. Government greed and lust for control knows no bounds.

I could take most all of the same arguments people have against ebay and make them against all direct marketers. So be careful what you wish for.
George - Posted on February 08, 2008
Denny: The certificate of authenticity mentions a "European edition of 195 signed and number lithographs" of the Dali print.

I've been an eBay member for more than a decade. I've seen it evolve into something I'm no longer interested in. I rarely look at the site and haven't sold anything in a long time.

The N.C. Auctioneer Licensing Board tried to make eBayers register with it back in 1999. That attempt was quashed. The legislature told the board it was not interpreting its rules correctly.
Jack - Posted on February 08, 2008
I personally believe Rep. Sturla's proposed bill is lunacy. The bureaucracy necessary to implement such background reviews would be overwhelming. (and outrageously expensive)

I generally very much enjoy your articles, but this one seems a bit like a rant. For instance, I am curious about an inconsistency in your reasoning based upon your statistical analysis. You cite a Chicago mail order art dealer with whom your experience demonstrates 100% of his activity is fraudulent, yet you are willingly complicit in his crime, then object to others being complicit in the same crime online as you have enabled via mail. Hmmm... trying to figure that one out.

Being required to register a business license and tax ID with eBay would not be an excessive requirement, but the PA legislation is ridiculous. eBay's online transactions are easier to trace by 1,000 times than the flea market and pawn shop transactions, which is one reason so many cases of fraud are exposed.

Also, it is not quite honest to place under a heading "The Real eBay Numbers" statistics you just conjured out of your prejudice and represent those as true.

Your anecdotal experience with a Dali print, a mail order vendor, and Dali's own practices have NO logical relevance in this article. You have undermined your own argument in my estimation.
Jim Driver - Posted on February 08, 2008
Ebay & PayPal are alone to be blamed for the current mess, not the scamsters on the site. It is the greed of Ebay that actually allows this fraud to happen. There can be enough checks to prevent this but Ebay doesn't care since it would directly affect its earnings.

I have used Ebay in the past and lost a considerable sum of money buying a supposedly brand new mobile phone with a bill from a seemingly honest dealer. Not only was the phone refurbished, the bill was a fake and for all its guarantees, Ebay nor PayPal did nothing about it. After chasing them for 6 months on email cos they would not share their phone numbers, I gave up in frustration.


I agree there are good, honest sellers but they are a minority. Most of them are unethical, spineless cheaters who are being given a free run by the biggest cheat - Ebay & PayPal which acts as a proper Bank but is not actually a bank!

Ebay was a great idea that has gone horribly wrong. Excluding the tax angle, I would be happy to see Ebay being policed by some leagla means so that this fraud does not continue.
JDA - Posted on February 07, 2008
Either you must have done pretty poorly in math or you're just "stacking the numbers" hoping most readers won't pay much attention to them. You are clearly just trying to build a case that will prove a belief you have already bought in to. Blaming ebay for society's woes ... what a goober!
Lawrence Hansen - Posted on February 07, 2008
eBay is no longer a place where ordinary folk pick up a few extra bucks selling off old stuff from their garages and attics. It's big business, and competition is cutthroat. It has also spawned a secondary industry of businesses that service the eBay trade, including consignment sellers who take your stuff, sell it on eBay, and give you the proceeds, minus a percentage for their fee. So the eBay seller you buy the fenced item from may be an honest(ish) businessman who's unwittingly laundering hot goods.

The feedback system should weed out the bad sellers, except that some sellers have mastered barracuda-like tactics for silencing discontented buyers. Not long ago, I found one seller whose feedback score was very high--upper 90%s. As I read his feedback listings I quickly realized the guy was a major shyster; almost every one of his negatives had "Feedback Withdrawn by Mutual Consent," which means they are excluded from his total. Based on his belligerent responses to negs, my guess is he strong-arms unhappy customers to withdraw their initial bad ratings with threats of retaliatory bad feedback. Note that both your eBay purveyors of fake Dalis have 100% positive feedback. Before I buy, I always read the actual feedback comments, specifically the negatives and neutrals to see what the problems were and how the seller handled them.

Of course, it's almost impossible to find real bargains on eBay now because there's invariably one doofus who has no clue as to the actual value of the item and bids the price sky high. Some sellers use "shill buyers" for that very purpose.... Caveat emptor!
Len Jacobs - Posted on February 07, 2008
Denny, you mention Network Solutions for web addresses. I would like to warn that my experience with them was spooky. I searched for and found 6 open addresses that I would have registered. I waited a day to actually do it . The next day all 6 were taken. I was sick. I called Go Daddy on recommendation from a friend to register another name. The phone tech at Go Daddy was great and I told him about losing the 6 names from the day before. He looked them up on WhoIs.com and found that Network Solutions reserved all 6 for 5 days. They do that so you have to register with them for alot more money than Go Daddy registration. Check it out, warn everybody. I'm waiting for 3 more days to register the names I "lost" with Go Daddy, not Network Solutions.
Rebecca - Posted on February 07, 2008
My biggest gripe about ebay is their feedback system. I am more often than not a buyer (not a seller), and have come across many auctions where the seller says they will leave you feedback once they receive positive feedback from you.

This is my biggest pet peeve. The sellers don't leave feedback until they are guaranteed positive feedback, which makes me feel like if I am honest and leave the feedback that says this seller is dishonest and I did not like to deal with him, well, then he can turn around and give me negative feedback, even though I paid on time, and was an ideal buyer.

After years of complaining to ebay about this, I finally found out that in the next month or two, sellers will only have 2 options for feedback - positive or none. I was told this should solve that problem. Now, I don't have to fear my perfect 100% feedback rating and I can actually leave negative feedback if I feel the situation warrants it.

I have been an ebayer since the 1990s, probably one of the few who has their original ebay user ID with 100% feedback ratings.

I normally purchased used items, that I KNOW are used, etc. When I sell things, it is just to clear out the junk from my house. Clothes never worn, an XBOX that has been used only a couple times, CDs, etc.

I dislike sellers who are frauds. They should all go to jail and rot! I like the old ebay - where you could buy and sell used items and sellers and buyers chatted with each other, and it was fun. Where did that ebay go!!!??

-Rebecca
Wash Phillips - Posted on February 07, 2008
Theft, grifting and fencing are illegal wherever they occur.
EBay has no monopoly on that. Your art dealer makes that case, Denny. Still you bought?and love the art.

Despite insidious government desire to tax anything, I?m surprised at the feds? and states? hands-off restraint on taxing eBay, CraigsList and any online transaction across state lines. My state has no income tax, so I understand its need to grab a piece of any and all sales (though I can?t say I like paying a ?tariff? on out of state purchases).

Not mentioned in the eBay piece is the ?Buy Now? category. To me, auctions are a waste of time. I?ve bought two items, both new and identified by the seller as Chinese non-branded knockoffs. Both arrived in perfect shape in a timely fashion, worked fine and I paid by PayPal. Only hassles: a)signing up, b)eBay demand for a post-sale transaction rating, which I thought relatively unimportant, unless the deal went South (it did not).

In that vein, the Fed TARP Study of retail transactions, sponsored by the Dept. of Commerce, actually reported that most persons who get bad retail service (purchase, treatment, the whole magilla) complain to between 9 and 19 others about their dissatisfaction, but almost never tell the retailer.

For that reason alone, Denny, your idea of buying YOUR COMPANY NAME SUCKS domains is a potentially wonderful way of tracking customer opinion, process failures, buyer expectations, branding success, etc.
Aunt Joy - Posted on February 07, 2008
Denny, Your article was very interesting. I am in my 14th
year in a home-based business. I have been online since 1998 and on eBbay for 3 years. I have been a caregiver for my parents and aunt for 8 years and my home-based business allows me to do this. eBay opens up the entire WORLD to me and I can share my Personalized Christmas Stockings with kids of all ages, ALL AROUND THE WORLD!! Wow! If I call Joe
Auctioneer who lives down
the street and I ask him to auction off my inventory
and business equipment, I would pay him a fee for his services. I do not need an
auctioneer's license for that, so why is selling on Ebay any different? Isn't eBay the AUCTIONEER? I would hope that eBay would come to the defense of the stay-at-home mom. She should be the poster child for all of us who work from home. I think the government sees the money that changes hands on eBay and the fact that we do not have to pay sales tax for out of state transactions and they want a piece of the pie. "
Aunt Joy. Aunt Joy's Personalized Christmas Stockings. Rock Island, IL
Katinka - Posted on February 07, 2008
I'm taking a self defense class for women, and learning all kinds of interesting facts about the minds of criminals and people with violent criminal behaviors. Apart from the two hours of karate chopping and learning how to kick a man in his stomach hard enough to break his ribs...the two police officers running the class often talk about the fact that most crimes are committed because the opportunity is there. I.e. if I swing my purse around and listen to my i-pod walking down a busy street, that behavior is an automatic signal to a luring purse snatcher looking for his next victim. Basically, they keep re-iterating; "Don't be stupid. Use your common sense. And always pay attention to what you and the people around you are doing."

What I'm trying to say is this: each individual is responsible for their own behavior and the repercussions thereof. If you buy a TV off the street, it's definitely stolen. If you buy Gucci glasses on E-Bay they are either fake or stolen. Because any person with common sense knows that Gucci did not authorize their items to be sold in bulk on E-bay.

It's up to us as individuals to police our own behavior and make sure we know what we are doing and why. You can't prevent a criminal from wanting to committ a crime, but you can deprive him/her of the opportunity for YOU to be the next victim. And at the end of the day, if there weren't so many people willing to buy fake or stolen goods, there would be no market for it in the first place.
Mark Riffey - Posted on February 07, 2008
Denny,

Interesting piece. Odd that that PA legislator has nothing better to do than hassle legitimate ebay sellers. I had no idea that PA had solved all of its budget and crime problems.

Regarding one of your takeaways that "You may want to go to Network Solutions and buy ?[YOUR COMPANY NAME]Sucks.com? ..."

PLEASE dont give those criminals any more money, or encourage others to do so.

There are numerous honest domain registration services that do not rip off their customers, steal domain names, reserve domain names for themselves after a search and participate in efforts to create a domain registration monopoly (and I am far from the first to write about it).

Choose another domain registration service.

Thanks Denny, love your column.

Mark
Jim - Posted on February 07, 2008
I interesting that story runs the same week that Fox News runs a similar article regarding a Romanian Village that scams people for thousands if not millions each year through - you guessed it - ebay.
Jim Lammers - Posted on February 07, 2008
This article is a bit uninformed. In most categories, nearly everything is a legitimate sale. For anything that has value based on authenticity, ebay is a mexican flea market. Designer goods such as purses, original art, anything signed by a celebrity, jewelry, and other goods with prices beyond the physical value - these things are nearly all fraudulent on ebay. But the typical garage sale items that make up most of ebay's activity are fine. If the seller has a rating over 98%, it's a fairly safe purchase.

With respect to estimating the volume of fraud - it varies by category. I don't know the percentage of total sold items for each of the various categories. But, if you search completed listings you'll find that, for example, of signed articles, the vast majority remain unsold and are constantly relisted. thus, making a % fraud estimate based on a single category is probably not valid.

Personally, of my 211 ebay transactions, all have been good and straightforward sales or purchases.
Ross Turney - Posted on February 07, 2008
You've stirred up some controversy on this one Denny. Good for you.

Any industry or business which doesn?t sufficiently self regulate is going to eventually get the attention of the regulators. And the regulators tend to err to the cautious, don?t they?

If there is a big fraud problem with e-bay sellers, and there seems to be evidence to suggest there is a considerable amount going on, then e-bay needs to better regulate the sellers, somehow.

Otherwise, beware the ire of someone in government who gets ripped off buying something from e-bay who wishes to make a name for them self cleaning it up.

I seem to recall that our industry didn?t self regulate adequately enough resulting in some very restrictive potential regulations for DM in Canada, as initially tabled in white papers. It took a lot of energy by the industry to eventually get regulations what were more reasonable.

Beware e-bay.

In the meantime, as one of the other people said, ?buyer beware?.
John Bergh - Posted on February 07, 2008
It's interesting! I don't sell anything on E-Bay; never had any interest in doing so. I do sell wedding invitations over the internet (as a dealer for Birchcraft Studios), and always provide my customers with our full business contact info, the fact that we have a real physical address/shop, and my membership in the local Chamber of Commerce. We've had amazing success doing this: only one bad debt. There are a remarkable number of very honest and decent people in the US! I think that having a "real" business first is the critical part; you have a reason to be honest and reliable. E-Bay should be required to verify it's sellers, as suggested in other comments.
Bernie Malonson - Posted on February 07, 2008
I understand that in an effort to spur the growth of online business, government has previously looked the other way.

When you look at the amount of tax revenue lost, it is astounding.

One method of enforcement would be for Ebay to require, or at a minimum as for a business license and tax ID from its sellers (not complicated to get).

This would a) let the buyer know they are dealing with a legitimate business; b) let the tax authorities and federal agencies track things better; and c) separate those engaged in real business from the swap meet teams.

Bernie
speedbal - Posted on February 07, 2008
ebay needs regulation to protect honest buyers and sellers , but the govt should not shut it down.
..
more importantly they need to regulate paypal which enables fraud on ebay and is nothing more than an unchartered bank/cc company without any oversight.
..
pennsylvanias attempt to call sellers auctioners when they are merely using an auction house is unconscionable. they might want to regulate professional/business type sellers who have large volumes andor sell the same items frequently. all PA can do is harm the honest housewives of PA while leaving the scam artists from nigeria and even PA free to continue cheating citizens. scam artists wont be concerned about licenses and bonding no matter where they are.
Andrew - Posted on February 07, 2008
Denny,

I've had terrible luck with ebay, fraud after fraud, poor shipping, etc., but the story I have for you is pure Dali.

In the early eighties, a friend of mine who syndicated products through credit card companies approached Dali about a promotion through American Express. They met in Las Vegas for dinner and as the promotion was explained to him he would mutter about every 5 minutes, "How much for Dali"?, over and over.

No one can know for sure if he did sign 350,000 pieces of blank paper but "how much for Dali"? certaintly makes it seem possible.
John Friesen - Posted on February 07, 2008
Lies, damn lies and statistics, Denny. I'm not defending eBay. I've bought only one item off it (very happy with my deal -- an old Tandy 102) and have never sold anything. I think there's lots potentially wrong with eBay. It reminds me, slightly, of the poor wading through the cesspools of Paris in the 19th Century to find discarded objets to clean up and sell... but eBay is a fact of online life, so let's deal with it. To my mind, the 33,000 pairs of sunglasses is part of one crime; selling them part of another: two crimes in all, not 66,000. Otherwise, do we classify a $10,000 cash robbery as 10,000 crimes? Or 1 million crimes (convert each dollar to pennies)? You have a case about eBay, but weaken it with spurious statistics and, compelling as it may seem to you, mere anecdotal evidence.
Simon - Posted on February 07, 2008
Great article as usual, interesting to see Ebay have announced Q1-2 08 changes, including dropping negative feedback on buyers.

http://pages.ebay.com/services/forum/new.html
Dana - Posted on February 07, 2008
A few reasons to not shut down eBay:

1) Small businesses are already hurting in this country. eBay is a fabulous way for people with unique and innovative ideas for products to sell and ways to sell them to start up. Do we really want to put even more barriers in place for the small businessman/woman? I say, no.

2) If you're going to outlaw eBay, what's next? outlawing Craigslist sales, yard sales, informal arrangements between individuals, giving your stuff away? Infringing on the right of individuals to dispose of their belongings in the way they see fit is a scary idea. Sure, bad people misuse eBay. But they misuse every other means of selling goods as well.

Let's not throw out the baby with the bathwater.
Peter Rosenwald - Posted on February 07, 2008
Interesting piece and one of those impossible questions: how far should society (in this case the Pennsylvania Law) go to "protect" citizens from thievery and exploitation and how much should we be left alone?

The idea that each person dealing on e-Bay should have an autioneer's license seems a bit over the top although some form of registration (as you suggest) might be a reasonable solution if: (1) it was a simple registration process with boina fides and (2) it really did help the authorities track frauds and other rip-offs more efficiently.

Shutting e-Bay down because it unwittingly provides a platform for crime is like shutting down the internet (and all publishing) because it is a purveyor of pornography.

I go along with your suggested solution.

Regards, Peter
Justin Seibert - Posted on February 07, 2008
Dennis - I've always enjoyed your articles and often agree with them. You're way off on this one, though. eBay is simply a marketplace; getting ripped off sucks. No matter where - buying guccis off a street vendor in NY or from someway halfway around the globe on eBay.

People need to know the risks of what's being involved whenever they make a transaction and need to take personal responsibility. Use the smell test - if it doesn't seem possible you can get that Van Gogh for $2.95, you probably can't.

One of the biggest ways eBay counteracts problems like the ones you mention is through vendor (and buyer) ratings. People can choose to do business with only vendors that are very highly rated even if that means paying a little bit more.

Also be aware that it's not only buyers that get scammed - sometimes it's the sellers, too.

Last point - like you mentioned in the lead, a LOT of folks make primary or secondary incomes from eBay and are completely legit. You propose shutting it down because a certain number of people scam the system (like any other system)? Sounds like that would hurt the economy - and many, many enterprising individuals - than whatever fraud is out there.
Donna - Posted on February 07, 2008
What a shame that eBay is forcing legislation - rather than protecting the legitimate sellers - oh - and it's very own reputation. I am one of those rare individuals who has never purchased on eBay. However, the non-profit agency I work for had received a donation of a skybox for a major league basketball game. We auctioned it off on eBay to reach the largest audience possible. The buyer backed out after the auction closed and we were left selling the tickets at the last minute for a fraction of the cost. I guess eBay also has less than legitimate buyers. Clearly as sign of a business becoming "too big for its britches". If we can't expect doctors to monitor themselves, why should we expect the lowlifes at eBay to do it.
Tim Sunderland - Posted on February 07, 2008
Last week I sent out a newsletter discussing the recent Second Life episode in which a virtual bank offering 40% ROI on investments (that was the first clue) abscounded with $75,000 of investor's money.
The bank could have been just some ner' do well who could no longer earn an honest living selling counterfeit Oakley sunglasses, but what if it was al Queda testing the waters to see if they could raise funds in the virtual world?
The point of my article was that we as users of the internet need to self-regulate. Just as with e-Bay, if we don't we are just begging Congress to get involved. Once Congress gets involved, nothing is safe, including net neutrality.
Even the newsletters you and I put out (yours is much better, by the way, will be changed forever.
David - Posted on February 07, 2008
Yes, I believe the government should shut down eBay -- right after they outlaw sexual intercourse as a rape preventative.

As an occasional seller and frequent buyer on eBay, I don't want to have to buy a license and jump through more hoops.

Denny, did you report your suspicions about your print to any authority? eBay has no way of knowing whether it was authentic. Don't you, as the buyer, shoulder any responsibility if you don't pursue a fraud claim? You can leave negative feedback to discourage other buyers, report suspicions to eBay and report your suspicions to your local police. It seems that most of the examples you pointed to are places where people were caught.

As for people who use eBay as a business, the problem is one of taxation more than fraud. The government is "losing" tax money through eBay. Many states already have laws regarding this; it's a matter of enforcing the laws.

There is also some question as to what constitutes a business and how much volume in sales is required to be considered a business. I think if a person is buying merchandise, new or used, with the intent of selling it on eBay, that's a business and should be subject to taxation. If she's just cleaning out her closets and getting rid of things, I don't think it should be taxed.
Andy Whitney - Posted on February 07, 2008
I agree that ebay should do a better job policing counterfit and fraud.

Buyers and sellers should also take the opportunity to use ebay's feedback system to flag fraudulent sellers.

I have a policy NEVER to buy software from ebay.

I did use ebay one time a few years back to buy a previous version of a software package I already owned. I needed the previous version for testing purposes on a development project. Once I received the software, it was such an obvious fake I felt I had no other choie but to leave bad feedback for the seller.

Despite the fact that I was able to leave negative feedback, I still maintain that policy to this day.

ebay needs to improve the feedback system and use it to shut down bad sellers and make sure buyers and sellers are not tinkering with the feedback system.
Susan Q - Posted on February 07, 2008
Good food for thought. I just submitted it to bizSugar.com.

I can see both sides, but I don't think that piling on regulations to slow down a small minority of eBay users is the answer. That's as bad as requiring a license just to have a garage sale (a common regulation in many cities). It ends up hurting the general public. They'll stop selling the occasional item and the junk will end up in our landfills instead.
Bill Thompson - Posted on February 07, 2008
Come on Denny! I go along with you on most of your comments, but you evidently ran out of material this week to write about.
Are you saying the same thing can't happen on the streetcorner, back alley, out of the trunk of a car, at an art show, in an antique shop. I think you have forgotten the phrase most of us as consumers are familiar: "Let the buyer beware". Ease off. It does more good than bad. The statististics bear that out also. I love Ebay. It's a great marketplace!!!
Tanya Curtis - Posted on February 07, 2008
I don't think that eBay should be shut down, but I do feel like eBay, as well as eBay sellers, need to be held more accountable. As an example:

I own a home. I allow my teenager to have a party in my home. Underage drinking takes place at that party and the police are called. Under the "eBay theory of operation" I should not be at fault because I merely provided a location for activities and didn't, in fact, provide or even see the alcohol. The reality is that I am totally responsible regardless. I needed to set rules in place and monitor the activities to ensure that the events which took place at my home were above board.

This same scenario works for eBay. They can provide a "location" for these auctions to take place, but they should have restrictions and methods of keeping their sellers "in check". The same goes for their partner PayPal (by the way, a google search for "PayPal sucks brings up 159,000 entries).

While there are a large number of corrupted business operators in the eBay marketplace there are also a vast number of legitimate sellers who I'm sure would be happy to follow any new rules to continue their business, a business that wouldn't have legs without the help of eBay.
Kevin Stecko - Posted on February 07, 2008
Although I don't think Ebay should be shut down, they should be anonymity that they allow. Thieves and to an even greater extent pirates/bootleggers hide behind a screen name. Being in the business of selling licensed t-shirts Ebay has thoroughly hampered my business.
The same goes for companies like Cafepress and Zazzle who essentially benefit by manufacturing bootleg/pirated material on an unbelievable scale.

All the while the companies hide behind some legal loophole that says that they are just a medium and not the criminal. They then do everything they can to hide the identities of the "real" criminal.
Louis Vuitton recently shut down some bootleggers in New York's Chinatown by going after the landlord. http://www.thestandard.com.hk/stdn/std/Focus/GE10Dh01.html
Isn't Ebay just an electronic landlord? Why aren't the companies most affected by this piracy going after Ebay? It takes big money to go after Ebay in court, but someone has to have hte motivation and the means to do it.

As far as Ebay's claims, I have no idea what the total scope of piracy/stolen goods/bootlegging on the entire site is. But I can tell you that at least 50% of the t-shirts that compete against my site are not licensed.
Kelli - Posted on February 07, 2008
Fascinating. I sell a few things, and buy even more, on Ebay and a lot of this stuff never even occurred to me. I was furious when I read the first few paragraphs of the article about prosecuting the auctioneer... but after reading it... I agree 100% that there needs to be governance of ebay auctions... no question! Thanks for a great article.
Ann - Posted on February 07, 2008
Dick Cheney and the IRS are already cracking down, auditing by sellers who have a large amount of feedback. Let the IRS and the Federal Trade Commission police this issue and let us little guys enjoy our hobbies.
Anne C - Posted on February 07, 2008
Shut down? No. Regulate, possibly. The bottom line is that for many people eBay is a lifesaver as it enables them to make money when they can't work in a traditional job. Like the woman in PA, people who are laid off, mom's that need to stay at home but a second income is needed. Anyone who buys from eBay knows there is a TON of forgeries out there (i.e., most of the "genuine" designer label goods coming from Asia). There are also thousands of misrepresentations out there with language a la "Dooney & Burke style" in the description to get ths hits. Ebay itself needs to employ greater strictures for what is, and is not, acceptable in a listing. I like the idea of requiring Power Sellers to get bonded. I would also like eBay to ban any seller with a feedback rating of less than 95% (based on a minimum 100 transactions). There are many many things eBay can do to give its buyers (and sellers) a more secure environment.
Click here to view archived comments...
Archived Comments:
Heather - Posted on September 07, 2008
Denny,

Just wanted to say thanks for insight to the Dali lithograph. I was at an estate sale yesterday and saw this exact paperwork. I wondered where the authenticity paperwork was and actually a bit confused. After extensive research, I could not find this piece listed as an original Dali. They bought it at an estate sale, not sure what they paid, but had the original receipt for $375 from John Paul Loup. They are now asking $3,000!!! I am thankful I found your bit, because otherwise I may make been the next sucker.
Tiffany - Posted on April 02, 2008
Denny is 100% correct. I don't know numbers.... but that is not the point. The point is this is going on and Ebay is making millions and millions of dollars a year off of these types of auctions and since Ebay began.... billions and billions. If Denny could find fakes in a matter of five minutes and I could compile a list of 50 sellers in 5 minutes who sell reproduction items as antiques, then why is it that ebay is finding it so hard to get rid of the obvious sellers who rip people off week after week.

I have tons of stories ....

but to answer the question whether or not ebay should be shut down... it is a big YES!!!!

They have had the chance to do the right thing and they have not done anything!!!

The Judge deciding the Tiffany case is fully aware of ebay's deceptive ways.... and when Tiffany wins the case.. I will again tell Ebay that KARMA'S A B*TCH!!
theyelladawg - Posted on February 09, 2008
Oh, good grief! The issue is NOT whether Mary Jo should have to buy a license to sell on eBay any more than she should have one if she took her goods to a local auctioneer to be sold. The issue is whether this is an efficient use of police power, and whether state governments have the jurisdiction to police interstate commerce - which they clearly do not.
I've made over 50 purchases on eBay. Some were better than others, and one turned out to be an outright scam. I reported the scam to eBay and local authorities: eBay removed the wrongdoer (ah! banishment IS punishment) but the local authorities NEVER acted against what was clearly interstate, international, and local theft. So much for government intervention in the marketplace.
Instead of worrying about little crooks, why don't you turn your attention to the BIG ones. The credit reporting agencies, banks, insurance companies, finance organizations and other BIG organizations are ripping off consumers for TRILLIONS of dollars EVERY DAY without a word being said by guys like you or a single act of investigation by the government. Why aren't you asking why over 50% if the information released by credit reporting agencies is WRONG? Why aren't you asking why banks and mortgage companies were allowed to conspire with home builders and real estate companies to sell MILLIONS of houses to people who they knew didn't have a chance to pay for them under the terms that were being offered and with the snares that were being build into the ARM's they were being sold? Why aren't you talking about how the price of gasoline has been manipulated for over 40 years by the companies who have just posted the largest profits in world history? Why aren't you questioning the continued depletion of natural resources (manipulated by large corporations) when we should be actively converting to use renewable (and non-polluting) sources of energy and power? Why aren't you asking about daily bogus Pennsylvania retail
Jim - Posted on February 09, 2008
"Counterfeiters, forgers, hooligans, miscreants, petty crooks, pirates, rapscallions, reprobates, rogues, scallywags, scamps, scoundrels, swindlers, thieves, thugs and villains?" I had to laugh--it almost sounded like something out of a old cartoon! Except you forgot "ne'erdowell"!
kristin rohan - Posted on February 08, 2008
Hey Denny - as usual, you stir things up grandly. Thanks for your perspective - whether or not the number are totally correct, you always imspire me think and you DEFINITELY give the underdog a voice - HORRAY for you - by the way, my family loved their HAMMER tshirts!
jehnidiah - Posted on February 08, 2008
Your math is way, way off, and your assumptions mess up any argument you may have had.

The fact that you're able to find x numbers of fraud cases when searching for a particular item (which is highly likely to be a fraud piece) does not mean the numbers stated by eBay of .01/100 being fraudulent. It's not as if the only things sold on there are unique things like what you're mentioning -- no one is going to create "fake" Wiis, generic t-shirts, bubble-wrap and the millions of other items that are mass-sold on eBay. These are mostly true, unstolen, and ridiculous to plagiarize or misrepresent as "fraud." This would bring that number you mentioned down to, likely, somewhere between your assumption of 1/100 and eBay's stated numbers.

I'm not sure if you were purposefully misrepresenting and misunderstanding what the guy said, taking it out of context completely, or if you're just thad bad at math and logic, but either way you should remove that part of your argument which, unfortunately for you, is the bulk of it.
Alan Weber - Posted on February 08, 2008
Denny,

I've bought or sold over 80 times on ebay without ever having a serious problem. That includes selling three cars and buying one.

Someone stole my identity, but ebay took care of it quickly, at no loss to me. Any time I get a message I question, I forward to to "Spoof@ebay.com" and they fix the issue. And anyone dumb enough to ship to the Ukraine before payment clears, well, I don't know how you help people like that.

The feedback system is evolving, but it is the future. Somewhere along the line, we'll have to give up being annonymous in order to do business over the 'net.

Feedback is like a credit rating. Get used to it.

As for the women is Pennsylvannia, she is not the auctioneer, ebay is. Placing one's goods for sale at an auction doesn't make one an auctioneer. Government greed and lust for control knows no bounds.

I could take most all of the same arguments people have against ebay and make them against all direct marketers. So be careful what you wish for.
George - Posted on February 08, 2008
Denny: The certificate of authenticity mentions a "European edition of 195 signed and number lithographs" of the Dali print.

I've been an eBay member for more than a decade. I've seen it evolve into something I'm no longer interested in. I rarely look at the site and haven't sold anything in a long time.

The N.C. Auctioneer Licensing Board tried to make eBayers register with it back in 1999. That attempt was quashed. The legislature told the board it was not interpreting its rules correctly.
Jack - Posted on February 08, 2008
I personally believe Rep. Sturla's proposed bill is lunacy. The bureaucracy necessary to implement such background reviews would be overwhelming. (and outrageously expensive)

I generally very much enjoy your articles, but this one seems a bit like a rant. For instance, I am curious about an inconsistency in your reasoning based upon your statistical analysis. You cite a Chicago mail order art dealer with whom your experience demonstrates 100% of his activity is fraudulent, yet you are willingly complicit in his crime, then object to others being complicit in the same crime online as you have enabled via mail. Hmmm... trying to figure that one out.

Being required to register a business license and tax ID with eBay would not be an excessive requirement, but the PA legislation is ridiculous. eBay's online transactions are easier to trace by 1,000 times than the flea market and pawn shop transactions, which is one reason so many cases of fraud are exposed.

Also, it is not quite honest to place under a heading "The Real eBay Numbers" statistics you just conjured out of your prejudice and represent those as true.

Your anecdotal experience with a Dali print, a mail order vendor, and Dali's own practices have NO logical relevance in this article. You have undermined your own argument in my estimation.
Jim Driver - Posted on February 08, 2008
Ebay & PayPal are alone to be blamed for the current mess, not the scamsters on the site. It is the greed of Ebay that actually allows this fraud to happen. There can be enough checks to prevent this but Ebay doesn't care since it would directly affect its earnings.

I have used Ebay in the past and lost a considerable sum of money buying a supposedly brand new mobile phone with a bill from a seemingly honest dealer. Not only was the phone refurbished, the bill was a fake and for all its guarantees, Ebay nor PayPal did nothing about it. After chasing them for 6 months on email cos they would not share their phone numbers, I gave up in frustration.


I agree there are good, honest sellers but they are a minority. Most of them are unethical, spineless cheaters who are being given a free run by the biggest cheat - Ebay & PayPal which acts as a proper Bank but is not actually a bank!

Ebay was a great idea that has gone horribly wrong. Excluding the tax angle, I would be happy to see Ebay being policed by some leagla means so that this fraud does not continue.
JDA - Posted on February 07, 2008
Either you must have done pretty poorly in math or you're just "stacking the numbers" hoping most readers won't pay much attention to them. You are clearly just trying to build a case that will prove a belief you have already bought in to. Blaming ebay for society's woes ... what a goober!
Lawrence Hansen - Posted on February 07, 2008
eBay is no longer a place where ordinary folk pick up a few extra bucks selling off old stuff from their garages and attics. It's big business, and competition is cutthroat. It has also spawned a secondary industry of businesses that service the eBay trade, including consignment sellers who take your stuff, sell it on eBay, and give you the proceeds, minus a percentage for their fee. So the eBay seller you buy the fenced item from may be an honest(ish) businessman who's unwittingly laundering hot goods.

The feedback system should weed out the bad sellers, except that some sellers have mastered barracuda-like tactics for silencing discontented buyers. Not long ago, I found one seller whose feedback score was very high--upper 90%s. As I read his feedback listings I quickly realized the guy was a major shyster; almost every one of his negatives had "Feedback Withdrawn by Mutual Consent," which means they are excluded from his total. Based on his belligerent responses to negs, my guess is he strong-arms unhappy customers to withdraw their initial bad ratings with threats of retaliatory bad feedback. Note that both your eBay purveyors of fake Dalis have 100% positive feedback. Before I buy, I always read the actual feedback comments, specifically the negatives and neutrals to see what the problems were and how the seller handled them.

Of course, it's almost impossible to find real bargains on eBay now because there's invariably one doofus who has no clue as to the actual value of the item and bids the price sky high. Some sellers use "shill buyers" for that very purpose.... Caveat emptor!
Len Jacobs - Posted on February 07, 2008
Denny, you mention Network Solutions for web addresses. I would like to warn that my experience with them was spooky. I searched for and found 6 open addresses that I would have registered. I waited a day to actually do it . The next day all 6 were taken. I was sick. I called Go Daddy on recommendation from a friend to register another name. The phone tech at Go Daddy was great and I told him about losing the 6 names from the day before. He looked them up on WhoIs.com and found that Network Solutions reserved all 6 for 5 days. They do that so you have to register with them for alot more money than Go Daddy registration. Check it out, warn everybody. I'm waiting for 3 more days to register the names I "lost" with Go Daddy, not Network Solutions.
Rebecca - Posted on February 07, 2008
My biggest gripe about ebay is their feedback system. I am more often than not a buyer (not a seller), and have come across many auctions where the seller says they will leave you feedback once they receive positive feedback from you.

This is my biggest pet peeve. The sellers don't leave feedback until they are guaranteed positive feedback, which makes me feel like if I am honest and leave the feedback that says this seller is dishonest and I did not like to deal with him, well, then he can turn around and give me negative feedback, even though I paid on time, and was an ideal buyer.

After years of complaining to ebay about this, I finally found out that in the next month or two, sellers will only have 2 options for feedback - positive or none. I was told this should solve that problem. Now, I don't have to fear my perfect 100% feedback rating and I can actually leave negative feedback if I feel the situation warrants it.

I have been an ebayer since the 1990s, probably one of the few who has their original ebay user ID with 100% feedback ratings.

I normally purchased used items, that I KNOW are used, etc. When I sell things, it is just to clear out the junk from my house. Clothes never worn, an XBOX that has been used only a couple times, CDs, etc.

I dislike sellers who are frauds. They should all go to jail and rot! I like the old ebay - where you could buy and sell used items and sellers and buyers chatted with each other, and it was fun. Where did that ebay go!!!??

-Rebecca
Wash Phillips - Posted on February 07, 2008
Theft, grifting and fencing are illegal wherever they occur.
EBay has no monopoly on that. Your art dealer makes that case, Denny. Still you bought?and love the art.

Despite insidious government desire to tax anything, I?m surprised at the feds? and states? hands-off restraint on taxing eBay, CraigsList and any online transaction across state lines. My state has no income tax, so I understand its need to grab a piece of any and all sales (though I can?t say I like paying a ?tariff? on out of state purchases).

Not mentioned in the eBay piece is the ?Buy Now? category. To me, auctions are a waste of time. I?ve bought two items, both new and identified by the seller as Chinese non-branded knockoffs. Both arrived in perfect shape in a timely fashion, worked fine and I paid by PayPal. Only hassles: a)signing up, b)eBay demand for a post-sale transaction rating, which I thought relatively unimportant, unless the deal went South (it did not).

In that vein, the Fed TARP Study of retail transactions, sponsored by the Dept. of Commerce, actually reported that most persons who get bad retail service (purchase, treatment, the whole magilla) complain to between 9 and 19 others about their dissatisfaction, but almost never tell the retailer.

For that reason alone, Denny, your idea of buying YOUR COMPANY NAME SUCKS domains is a potentially wonderful way of tracking customer opinion, process failures, buyer expectations, branding success, etc.
Aunt Joy - Posted on February 07, 2008
Denny, Your article was very interesting. I am in my 14th
year in a home-based business. I have been online since 1998 and on eBbay for 3 years. I have been a caregiver for my parents and aunt for 8 years and my home-based business allows me to do this. eBay opens up the entire WORLD to me and I can share my Personalized Christmas Stockings with kids of all ages, ALL AROUND THE WORLD!! Wow! If I call Joe
Auctioneer who lives down
the street and I ask him to auction off my inventory
and business equipment, I would pay him a fee for his services. I do not need an
auctioneer's license for that, so why is selling on Ebay any different? Isn't eBay the AUCTIONEER? I would hope that eBay would come to the defense of the stay-at-home mom. She should be the poster child for all of us who work from home. I think the government sees the money that changes hands on eBay and the fact that we do not have to pay sales tax for out of state transactions and they want a piece of the pie. "
Aunt Joy. Aunt Joy's Personalized Christmas Stockings. Rock Island, IL
Katinka - Posted on February 07, 2008
I'm taking a self defense class for women, and learning all kinds of interesting facts about the minds of criminals and people with violent criminal behaviors. Apart from the two hours of karate chopping and learning how to kick a man in his stomach hard enough to break his ribs...the two police officers running the class often talk about the fact that most crimes are committed because the opportunity is there. I.e. if I swing my purse around and listen to my i-pod walking down a busy street, that behavior is an automatic signal to a luring purse snatcher looking for his next victim. Basically, they keep re-iterating; "Don't be stupid. Use your common sense. And always pay attention to what you and the people around you are doing."

What I'm trying to say is this: each individual is responsible for their own behavior and the repercussions thereof. If you buy a TV off the street, it's definitely stolen. If you buy Gucci glasses on E-Bay they are either fake or stolen. Because any person with common sense knows that Gucci did not authorize their items to be sold in bulk on E-bay.

It's up to us as individuals to police our own behavior and make sure we know what we are doing and why. You can't prevent a criminal from wanting to committ a crime, but you can deprive him/her of the opportunity for YOU to be the next victim. And at the end of the day, if there weren't so many people willing to buy fake or stolen goods, there would be no market for it in the first place.
Mark Riffey - Posted on February 07, 2008
Denny,

Interesting piece. Odd that that PA legislator has nothing better to do than hassle legitimate ebay sellers. I had no idea that PA had solved all of its budget and crime problems.

Regarding one of your takeaways that "You may want to go to Network Solutions and buy ?[YOUR COMPANY NAME]Sucks.com? ..."

PLEASE dont give those criminals any more money, or encourage others to do so.

There are numerous honest domain registration services that do not rip off their customers, steal domain names, reserve domain names for themselves after a search and participate in efforts to create a domain registration monopoly (and I am far from the first to write about it).

Choose another domain registration service.

Thanks Denny, love your column.

Mark
Jim - Posted on February 07, 2008
I interesting that story runs the same week that Fox News runs a similar article regarding a Romanian Village that scams people for thousands if not millions each year through - you guessed it - ebay.
Jim Lammers - Posted on February 07, 2008
This article is a bit uninformed. In most categories, nearly everything is a legitimate sale. For anything that has value based on authenticity, ebay is a mexican flea market. Designer goods such as purses, original art, anything signed by a celebrity, jewelry, and other goods with prices beyond the physical value - these things are nearly all fraudulent on ebay. But the typical garage sale items that make up most of ebay's activity are fine. If the seller has a rating over 98%, it's a fairly safe purchase.

With respect to estimating the volume of fraud - it varies by category. I don't know the percentage of total sold items for each of the various categories. But, if you search completed listings you'll find that, for example, of signed articles, the vast majority remain unsold and are constantly relisted. thus, making a % fraud estimate based on a single category is probably not valid.

Personally, of my 211 ebay transactions, all have been good and straightforward sales or purchases.
Ross Turney - Posted on February 07, 2008
You've stirred up some controversy on this one Denny. Good for you.

Any industry or business which doesn?t sufficiently self regulate is going to eventually get the attention of the regulators. And the regulators tend to err to the cautious, don?t they?

If there is a big fraud problem with e-bay sellers, and there seems to be evidence to suggest there is a considerable amount going on, then e-bay needs to better regulate the sellers, somehow.

Otherwise, beware the ire of someone in government who gets ripped off buying something from e-bay who wishes to make a name for them self cleaning it up.

I seem to recall that our industry didn?t self regulate adequately enough resulting in some very restrictive potential regulations for DM in Canada, as initially tabled in white papers. It took a lot of energy by the industry to eventually get regulations what were more reasonable.

Beware e-bay.

In the meantime, as one of the other people said, ?buyer beware?.
John Bergh - Posted on February 07, 2008
It's interesting! I don't sell anything on E-Bay; never had any interest in doing so. I do sell wedding invitations over the internet (as a dealer for Birchcraft Studios), and always provide my customers with our full business contact info, the fact that we have a real physical address/shop, and my membership in the local Chamber of Commerce. We've had amazing success doing this: only one bad debt. There are a remarkable number of very honest and decent people in the US! I think that having a "real" business first is the critical part; you have a reason to be honest and reliable. E-Bay should be required to verify it's sellers, as suggested in other comments.
Bernie Malonson - Posted on February 07, 2008
I understand that in an effort to spur the growth of online business, government has previously looked the other way.

When you look at the amount of tax revenue lost, it is astounding.

One method of enforcement would be for Ebay to require, or at a minimum as for a business license and tax ID from its sellers (not complicated to get).

This would a) let the buyer know they are dealing with a legitimate business; b) let the tax authorities and federal agencies track things better; and c) separate those engaged in real business from the swap meet teams.

Bernie
speedbal - Posted on February 07, 2008
ebay needs regulation to protect honest buyers and sellers , but the govt should not shut it down.
..
more importantly they need to regulate paypal which enables fraud on ebay and is nothing more than an unchartered bank/cc company without any oversight.
..
pennsylvanias attempt to call sellers auctioners when they are merely using an auction house is unconscionable. they might want to regulate professional/business type sellers who have large volumes andor sell the same items frequently. all PA can do is harm the honest housewives of PA while leaving the scam artists from nigeria and even PA free to continue cheating citizens. scam artists wont be concerned about licenses and bonding no matter where they are.
Andrew - Posted on February 07, 2008
Denny,

I've had terrible luck with ebay, fraud after fraud, poor shipping, etc., but the story I have for you is pure Dali.

In the early eighties, a friend of mine who syndicated products through credit card companies approached Dali about a promotion through American Express. They met in Las Vegas for dinner and as the promotion was explained to him he would mutter about every 5 minutes, "How much for Dali"?, over and over.

No one can know for sure if he did sign 350,000 pieces of blank paper but "how much for Dali"? certaintly makes it seem possible.
John Friesen - Posted on February 07, 2008
Lies, damn lies and statistics, Denny. I'm not defending eBay. I've bought only one item off it (very happy with my deal -- an old Tandy 102) and have never sold anything. I think there's lots potentially wrong with eBay. It reminds me, slightly, of the poor wading through the cesspools of Paris in the 19th Century to find discarded objets to clean up and sell... but eBay is a fact of online life, so let's deal with it. To my mind, the 33,000 pairs of sunglasses is part of one crime; selling them part of another: two crimes in all, not 66,000. Otherwise, do we classify a $10,000 cash robbery as 10,000 crimes? Or 1 million crimes (convert each dollar to pennies)? You have a case about eBay, but weaken it with spurious statistics and, compelling as it may seem to you, mere anecdotal evidence.
Simon - Posted on February 07, 2008
Great article as usual, interesting to see Ebay have announced Q1-2 08 changes, including dropping negative feedback on buyers.

http://pages.ebay.com/services/forum/new.html
Dana - Posted on February 07, 2008
A few reasons to not shut down eBay:

1) Small businesses are already hurting in this country. eBay is a fabulous way for people with unique and innovative ideas for products to sell and ways to sell them to start up. Do we really want to put even more barriers in place for the small businessman/woman? I say, no.

2) If you're going to outlaw eBay, what's next? outlawing Craigslist sales, yard sales, informal arrangements between individuals, giving your stuff away? Infringing on the right of individuals to dispose of their belongings in the way they see fit is a scary idea. Sure, bad people misuse eBay. But they misuse every other means of selling goods as well.

Let's not throw out the baby with the bathwater.
Peter Rosenwald - Posted on February 07, 2008
Interesting piece and one of those impossible questions: how far should society (in this case the Pennsylvania Law) go to "protect" citizens from thievery and exploitation and how much should we be left alone?

The idea that each person dealing on e-Bay should have an autioneer's license seems a bit over the top although some form of registration (as you suggest) might be a reasonable solution if: (1) it was a simple registration process with boina fides and (2) it really did help the authorities track frauds and other rip-offs more efficiently.

Shutting e-Bay down because it unwittingly provides a platform for crime is like shutting down the internet (and all publishing) because it is a purveyor of pornography.

I go along with your suggested solution.

Regards, Peter
Justin Seibert - Posted on February 07, 2008
Dennis - I've always enjoyed your articles and often agree with them. You're way off on this one, though. eBay is simply a marketplace; getting ripped off sucks. No matter where - buying guccis off a street vendor in NY or from someway halfway around the globe on eBay.

People need to know the risks of what's being involved whenever they make a transaction and need to take personal responsibility. Use the smell test - if it doesn't seem possible you can get that Van Gogh for $2.95, you probably can't.

One of the biggest ways eBay counteracts problems like the ones you mention is through vendor (and buyer) ratings. People can choose to do business with only vendors that are very highly rated even if that means paying a little bit more.

Also be aware that it's not only buyers that get scammed - sometimes it's the sellers, too.

Last point - like you mentioned in the lead, a LOT of folks make primary or secondary incomes from eBay and are completely legit. You propose shutting it down because a certain number of people scam the system (like any other system)? Sounds like that would hurt the economy - and many, many enterprising individuals - than whatever fraud is out there.
Donna - Posted on February 07, 2008
What a shame that eBay is forcing legislation - rather than protecting the legitimate sellers - oh - and it's very own reputation. I am one of those rare individuals who has never purchased on eBay. However, the non-profit agency I work for had received a donation of a skybox for a major league basketball game. We auctioned it off on eBay to reach the largest audience possible. The buyer backed out after the auction closed and we were left selling the tickets at the last minute for a fraction of the cost. I guess eBay also has less than legitimate buyers. Clearly as sign of a business becoming "too big for its britches". If we can't expect doctors to monitor themselves, why should we expect the lowlifes at eBay to do it.
Tim Sunderland - Posted on February 07, 2008
Last week I sent out a newsletter discussing the recent Second Life episode in which a virtual bank offering 40% ROI on investments (that was the first clue) abscounded with $75,000 of investor's money.
The bank could have been just some ner' do well who could no longer earn an honest living selling counterfeit Oakley sunglasses, but what if it was al Queda testing the waters to see if they could raise funds in the virtual world?
The point of my article was that we as users of the internet need to self-regulate. Just as with e-Bay, if we don't we are just begging Congress to get involved. Once Congress gets involved, nothing is safe, including net neutrality.
Even the newsletters you and I put out (yours is much better, by the way, will be changed forever.
David - Posted on February 07, 2008
Yes, I believe the government should shut down eBay -- right after they outlaw sexual intercourse as a rape preventative.

As an occasional seller and frequent buyer on eBay, I don't want to have to buy a license and jump through more hoops.

Denny, did you report your suspicions about your print to any authority? eBay has no way of knowing whether it was authentic. Don't you, as the buyer, shoulder any responsibility if you don't pursue a fraud claim? You can leave negative feedback to discourage other buyers, report suspicions to eBay and report your suspicions to your local police. It seems that most of the examples you pointed to are places where people were caught.

As for people who use eBay as a business, the problem is one of taxation more than fraud. The government is "losing" tax money through eBay. Many states already have laws regarding this; it's a matter of enforcing the laws.

There is also some question as to what constitutes a business and how much volume in sales is required to be considered a business. I think if a person is buying merchandise, new or used, with the intent of selling it on eBay, that's a business and should be subject to taxation. If she's just cleaning out her closets and getting rid of things, I don't think it should be taxed.
Andy Whitney - Posted on February 07, 2008
I agree that ebay should do a better job policing counterfit and fraud.

Buyers and sellers should also take the opportunity to use ebay's feedback system to flag fraudulent sellers.

I have a policy NEVER to buy software from ebay.

I did use ebay one time a few years back to buy a previous version of a software package I already owned. I needed the previous version for testing purposes on a development project. Once I received the software, it was such an obvious fake I felt I had no other choie but to leave bad feedback for the seller.

Despite the fact that I was able to leave negative feedback, I still maintain that policy to this day.

ebay needs to improve the feedback system and use it to shut down bad sellers and make sure buyers and sellers are not tinkering with the feedback system.
Susan Q - Posted on February 07, 2008
Good food for thought. I just submitted it to bizSugar.com.

I can see both sides, but I don't think that piling on regulations to slow down a small minority of eBay users is the answer. That's as bad as requiring a license just to have a garage sale (a common regulation in many cities). It ends up hurting the general public. They'll stop selling the occasional item and the junk will end up in our landfills instead.
Bill Thompson - Posted on February 07, 2008
Come on Denny! I go along with you on most of your comments, but you evidently ran out of material this week to write about.
Are you saying the same thing can't happen on the streetcorner, back alley, out of the trunk of a car, at an art show, in an antique shop. I think you have forgotten the phrase most of us as consumers are familiar: "Let the buyer beware". Ease off. It does more good than bad. The statististics bear that out also. I love Ebay. It's a great marketplace!!!
Tanya Curtis - Posted on February 07, 2008
I don't think that eBay should be shut down, but I do feel like eBay, as well as eBay sellers, need to be held more accountable. As an example:

I own a home. I allow my teenager to have a party in my home. Underage drinking takes place at that party and the police are called. Under the "eBay theory of operation" I should not be at fault because I merely provided a location for activities and didn't, in fact, provide or even see the alcohol. The reality is that I am totally responsible regardless. I needed to set rules in place and monitor the activities to ensure that the events which took place at my home were above board.

This same scenario works for eBay. They can provide a "location" for these auctions to take place, but they should have restrictions and methods of keeping their sellers "in check". The same goes for their partner PayPal (by the way, a google search for "PayPal sucks brings up 159,000 entries).

While there are a large number of corrupted business operators in the eBay marketplace there are also a vast number of legitimate sellers who I'm sure would be happy to follow any new rules to continue their business, a business that wouldn't have legs without the help of eBay.
Kevin Stecko - Posted on February 07, 2008
Although I don't think Ebay should be shut down, they should be anonymity that they allow. Thieves and to an even greater extent pirates/bootleggers hide behind a screen name. Being in the business of selling licensed t-shirts Ebay has thoroughly hampered my business.
The same goes for companies like Cafepress and Zazzle who essentially benefit by manufacturing bootleg/pirated material on an unbelievable scale.

All the while the companies hide behind some legal loophole that says that they are just a medium and not the criminal. They then do everything they can to hide the identities of the "real" criminal.
Louis Vuitton recently shut down some bootleggers in New York's Chinatown by going after the landlord. http://www.thestandard.com.hk/stdn/std/Focus/GE10Dh01.html
Isn't Ebay just an electronic landlord? Why aren't the companies most affected by this piracy going after Ebay? It takes big money to go after Ebay in court, but someone has to have hte motivation and the means to do it.

As far as Ebay's claims, I have no idea what the total scope of piracy/stolen goods/bootlegging on the entire site is. But I can tell you that at least 50% of the t-shirts that compete against my site are not licensed.
Kelli - Posted on February 07, 2008
Fascinating. I sell a few things, and buy even more, on Ebay and a lot of this stuff never even occurred to me. I was furious when I read the first few paragraphs of the article about prosecuting the auctioneer... but after reading it... I agree 100% that there needs to be governance of ebay auctions... no question! Thanks for a great article.
Ann - Posted on February 07, 2008
Dick Cheney and the IRS are already cracking down, auditing by sellers who have a large amount of feedback. Let the IRS and the Federal Trade Commission police this issue and let us little guys enjoy our hobbies.
Anne C - Posted on February 07, 2008
Shut down? No. Regulate, possibly. The bottom line is that for many people eBay is a lifesaver as it enables them to make money when they can't work in a traditional job. Like the woman in PA, people who are laid off, mom's that need to stay at home but a second income is needed. Anyone who buys from eBay knows there is a TON of forgeries out there (i.e., most of the "genuine" designer label goods coming from Asia). There are also thousands of misrepresentations out there with language a la "Dooney & Burke style" in the description to get ths hits. Ebay itself needs to employ greater strictures for what is, and is not, acceptable in a listing. I like the idea of requiring Power Sellers to get bonded. I would also like eBay to ban any seller with a feedback rating of less than 95% (based on a minimum 100 transactions). There are many many things eBay can do to give its buyers (and sellers) a more secure environment.