eBay :Controversy and criticisms

eBay has its share of controversy, ranging from its privacy policy (eBay typically turns over user information to law enforcement without a subpoena)[citation needed] to well-publicized seller fraud. eBay claims that their data show that less than .01% of all transactions result in a confirmed case of fraud.

[edit] Fraud
The major fraud prevention mechanism for eBay users is its feedback system. After every transaction both the buyer and seller have the option of rating each other. They can give a "positive", "negative", or "neutral" rating and leave a short comment. So if a buyer has problems, he or she can rate the seller "negative" and leave a comment such as "never received product". Learning the system and examining a seller's feedback history is a buyer's best protection.
Weaknesses of the feedback system include:
Small and large transactions carry the same weight in the feedback summary.
A user may be reluctant to leave honest feedback out of fear of negative retaliatory feedback (including "negative" in retaliation for "neutral").
Feedback and responses to feedback are allotted only 80 characters each. This can prevent users from being able to fully list valid complaints.
When a user feels that a seller or buyer has been dishonest, a dispute can be filed with eBay. An eBay account (whether seller, buyer or both) may be suspended if there are too many complaints against the account holder.
Many complaints have been made about eBay's system of dealing with fraud, leading to its being featured on the British consumer rights television program Watchdog. It is also regularly featured in The Daily Mirror's Consumer Awareness page. The complaints are generally that eBay sometimes fails to respond when a claim is made, and since eBay makes its money on commissions from listings and sales it is not in eBay's interest to take action against large sellers.
Frauds that can be committed by sellers include:
Receiving payment and not shipping merchandise
Shipping items other than those described
Giving a deliberatly misleading description
Shipping faulty merchandise
Counterfeit or bootleg merchandise
Selling stolen goods
Inflating total bid amounts by bidding on their own auction with a "shill" account, either the seller under an alternate account or another person in collusion with the seller. Shill bidding is strictly prohibited by eBay and, in at least one high-profile case involving Kenneth Walton and two accomplices, has been prosecuted by the federal government as criminal fraud.
Frauds committed by buyers include:
PayPal fraud: Filing false shipping damage claim with the shipping company and with PayPal.
Credit card fraud, in the form of both stolen credit cards and fraudulent chargebacks.
Receiving merchandise and claiming otherwise
Returning items other than received
The buyer sends a forged payment-service E-mail which states that the buyer has made a payment to the seller's account. An unsuspecting seller may ship the item before realizing the E-mail was forged.

[edit] Other controversial practices of users
Sellers of inexpensive items may benefit from inflating the shipping cost while lowering the starting price for their auctions,[7] because some buyers overlook the shipping cost when calculating the amount they are willing to spend. Since eBay charges their fees based on final sales price without including shipping, this allows sellers to reduce the amount they pay eBay in fees (and also allows buyers to reduce or avoid import fees and sales taxes). This is called "fee avoidance", and is prohibited by eBay policy,[8] as are excessive shipping and handling charges.[9] A danger to the buyer in such cases is that in the event of defective merchandise, the seller may claim to have met his refund obligations by returning only the minimal purchase price and not the shipping costs.
Sellers often charge fees for use of PayPal as well. Although this officially banned by eBay and PayPal and is against some local laws as well as violating merchant agreements with Visa, Mastercard and Discover, eBay does not police for this and will only look at it if the auction is reported. Therefore inexperienced users often wind up paying these illegal and unenforceable fees.[citation needed]
Auction sniping is the process of watching a timed online auction, and placing a winning bid at the last possible moment (often literally seconds before the end of the auction), giving the other bidders no time to outbid the sniper. Some bidders do this manually, and others use online services designed for the purpose. While disliked by many eBay users, sniping is not against eBay rules, and is, in many cases, in the best interest of the bidder.

[edit] Other eBay controversies
Other notable controversies involving eBay include:
In May 2000, eBay seller Kenneth Walton auctioned an oil painting on eBay for $135,805, due to speculation that the piece might be the work of California modernist Richard Diebenkorn. Walton pretended to know nothing about art and claimed to be surprised by the price the painting fetched, and the auction attracted international media attention. In several investigative reports by The New York Times, it was revealed that Walton was in fact an experienced eBay art dealer with several unhappy customers, and that Walton and two other eBay sellers had been colluding to bid up each other's auctions. The Times described this as a "shill bidding ring".[10] Walton and his cohorts were banned from eBay and eventually convicted of fraud by the federal government in the first ever prosecution for shill bidding on eBay.
On 28 May 2003, a U.S. District Court jury found eBay guilty of willful patent infringement and ordered the company to pay US$35 million in damages. The jury found for plaintiff MercExchange, which had accused eBay in 2001 of infringing on three patents (two of which are used in eBay's "Buy It Now" feature for fixed-price sales). The decision was appealed to the U.S. Court of Appeals for the Federal Circuit (CAFC). The CAFC not only affirmed the judgment of willful infringement, but they also reversed the lower court and granted a permanent injunction. eBay appealed to the grant of the permanent injunction to the U.S. Supreme Court. On May 15, 2006 the U.S. Supreme Court unanimously reversed the CAFC's grant of an injunction and sent the case back to the district court for further consideration (see EBay v. MercExchange [11]) This case has been particularly controversial since the patents involved are considered to be business method patents. (See also Software patent debate)
On 28 July 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, PayPal between mid-2000 and November 2002 transmitted money in violation of various U.S. federal and state online gambling laws.[12] 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.[13] These offenses occurred prior to eBay's purchase of PayPal.
In June 2004 the jeweler Tiffany & Co. sued eBay claiming that eBay profits from the sale of counterfeit Tiffany products.[14] As of July 2006, a trial date has not been set.[15]
On 17 December 2004, Avnish Bajaj, CEO of eBay's Indian subsidiary Baazee.com, was arrested after a video clip showing oral sex between two Indian students was sold online. The company denied knowing the content of what they were selling (because it is a venue, not a retailer) and removed the offensive material as soon as they became aware of it. The Indian government attempted to make the case that Bajaj violated India's IT Act, which forbids "publishing, transmitting or causing to publish" obscene material, even though the actual material was never published on Baazee's servers.[16] eBay supported Baazee's defense.[17]
On 14 June 2005, eBay removed auction listings for originally free tickets to the Live 8 charity auction amid hundreds of complaints about such auctions.[18] Normally, selling of charity tickets is legal under United Kingdom law.[citation needed]
In 2005, the Australian National Rugby League tried unsuccessfully to persuade eBay to prevent scalpers from selling Grand Final tickets online.[19]
Some manufacturers have abused eBay's VeRo program, through which copyright and trademark owners can quickly protect their rights, by seeking to prevent all sales of their products on eBay.[citation needed]
Some have criticized the emphasis eBay places on its subsidiary PayPal as a method of accepting payments.[citation needed] eBay discourages sellers from using independent money-wiring companies such as Western Union, and MoneyGram (Moneybookers is now allowed instead), stating that it prohibits or discourages certain forms of payment in order to reduce fraud.[20] On the U.S. eBay, while sellers may accept such payments, they are prohibited from advertising them as a payment option. A similar policy applies to mailing cash as a payment option. Certain non-U.S. branches of eBay allow sellers to advertise wire transfers or mailed cash as payment options, provided such methods are not the only payment options the seller accepts.[21][22]
Search results on eBay can often be inaccurate, particularly close to the end of an auction. In particular, the current price of an item listed in search results often lags behind the current high bid on that item.