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eBay's Billion Dollar Scam
We believe eBay make $1 billion a year from misleading, fraudulent, stolen, or counterfeit items offered for sale on eBay. We report some, and eBay do nothing leading us to conclude that eBay are content to makes profits from fakes, fraud, and deception. That's more than the GDP of countries like Monaco.

Scams, Fraud, Lies, Deception
We are convinced that eBay hosts a large number of auctions and other for sale listings, which are lacking in honesty or integrity in some way, and that a significant proportion of its listings are unethical, dishonest, misleading or fraudulent in some way.
Over a period of time, we have noticed listings which would contravene UK Trading Standards laws, or other UK or international laws. We have read most of the eBay publicity and guidelines, and believe there is also a vast gulf between what eBay says and what appears to actually happen. Only major single frauds seem to get media attention, and we believe these are only the tip of a gargantuan iceberg.

Is The Media Blind?
We notice reports in the national media, and online, whenever there is a single large fraud comes to light, but it tends to be only large cases, where somebody has taken a significant amount of money, usually upwards of £100,000; so it presumably make a good headline. Often these cases seem to get reported when the crooks appear in court and get convicted. At the end of the press report, there is usually a statement by an eBay spokesperson saying

  • "the vast majority of eBay members are honest, and eBay is a safe place to shop. Our security and
  • For its part, eBay understands the nature of the problem and says it is taking steps to actively combat it.
  • "It is an incredibly safe place to trade with fewer than 0.01% of transactions resulting in a confirmed case of fraud,"
  • "You have the same inherent problems as offline auctions,"
  • "Fewer than 0.01 percent of all listings on eBay result in a confirmed case of fraud, and when used properly the site is a safe and secure place to buy and sell,"
  • eBay and its customers must accept that fraud goes with the territory of online transactions, a top executive at the auction giant said.
  • "By the time something gets up there, we're usually so quick to get it and pull it down that it is really a moot point. We feel that it is not a huge concern or issue - it is miniscule (sic)."
  • "EBay employs approximately 1,000 people at eBay and PayPal [which is owned by eBay] with backgrounds in law enforcement, customer support, advanced computer engineering and analysis, who are dedicated to making eBay one of the safest places in the world to trade. We encourage all users to report any suspected fraudulent activity to customer services who will investigate," the spokesperson added.
  • 'I'd love to have a chat with Phillip Shortman. Let's talk about it, very happy to have a chat.'
    Detective Constable Steve Thomas, who dealt with Shortman's case, tells the programme that eBay lacked co-operation during the investigation, but that the police's relationship with the auction site had now improved.
    On the issue of security, Mr Griffiths adds: 'I'd say as soon as we were aware we clamped down. We rely to some extent on the people who are being defrauded to leave feedback to let us know, to contact law enforcement so that we can then react and as soon as all of that happened we reacted.
    'I don't know exactly what the channels were the police were trying to use. We don't ignore this kind of information. We work again very closely and pro actively with the police.
    He adds: 'We've come a long way since (the Shortman case). One thing to remember about Phillip Shortman, he was arrested and convicted. This is someone who has actually highlighted the transparency of our website and highlighted the negative effect of bad behaviour on our site.
    'When we are approached by law enforcement or, well, basically, law enforcement bodies and prosecuting authority, we sit up and listen. Number one we have to, number two it's in our best interests and our community's best interest to do that.'
  • �We�re trying to balance the needs of all our users. There�s no way we could be experts in 50,000 categories. We don�t have the knowledge to know if an item is perhaps counterfeit.�
    �Our business model is to create a marketplace where buyers and sellers meet,� he said. �It�s more like a flea market or garage sale. We don�t authenticate them, nor do we see listings before they go live on the site.�
    Mr. Donlay mentioned the efforts undertaken by eBay to police the selling of counterfeit goods on its website, including that of Tiffany�s, through its VeRO (verified rights owner) program, which has more than 14,000 participants.
    �It allows rights owners, manufacturers, or intellectual property owners to work with us to take items down from the site. A company signs up with us, says they�re the rights expert, and if they see items that either violate their rights or are perhaps counterfeits, then we take those items down immediately,� said Donlay.
    �We are disappointed that Tiffany filed the suit, given that we have cooperated with their brand-protection efforts for several years through our Verified Rights Owner (VeRO) program," said another eBay spokesman Hani Durzy.
    "Through VeRO, we have worked with Tiffany to develop substantial proactive monitoring efforts and given them the tools to report problem listings, which we promptly remove."
  • "Customer support is aware of this case and is currently liaising with the seller and investigating the case further."
  • �that the eBay site has not been hacked or compromised in any way� and that the accounts �were compromised and edited after seller password details were obtained via spoof/phishing emails.� eBay also point out that they �can provide redress in the rare instance that things go wrong, with the payment protection schemes it offers to both buyers and sellers, but this redress can only be provided if people carry out all transactions on the site.� It�s well known that eBay and PayPal are the target of 75% of all phishing activity on the net, so hacked accounts or in eBay parlance �TKO accounts� (TaKen Over), are nothing new.
  • �We encourage members to report any listing that may be suspicious to us via the "report this item link" located at the bottom of every listing"
  • "It is important to note that these items are not permitted on eBay.co.uk and any of these items that come to our attention will be removed. It is against eBay's policy for any user to purchase items outside of the site or for catalogues to be listed where users can directly order items". The operative phrase here being "any of these items that come to our attention" - eBay appears to have no interest in filtering these auctions out itself, preferring that users do it via their mildly convoluted maximum-10-items-per-submission complaints form.
  • Michael Carr, says in some categories on eBay, 75 percent of the items offered are scams. And even eBay concedes that auction criminals are getting more crafty all the time.
  • �Please send all of these complaints to our webform,� an e-mail reply came. �No further messages will be responded to.�
  • It's "a significant step up in PayPal buyer protection," she said. The online payment service is a favorite target of phishers and others trying to hoax users into revealing access information.
    A call to PayPal seeking additional comment on this program wasn't immediately returned.
  • eBay spokesperson Kevin Pursglove told the E-Commerce Times earlier that the San Jose, California-based Web auction house assisted the investigation by providing federal authorities with access to eBay tools that can help pursue individuals who perpetrate auction fraud. "Anytime we see a series of listings that may be a fraud, we will often contact the authorities and let them know what kinds of information we have available," Pursglove said. "A lot of the information we have is confidential and covered by our privacy policy, but we make it very clear to our users that if they engage in any fraudulent activities, we will cooperate with the authorities to the max." Pursglove said that with approximately 6 million items listed on eBay each day, it would be impossible to catch each and every fraudulent action as it occurs. However, recently introduced software gives eBay a better shot at stopping shill bidding. The software searches the bidding history of individual bidders to look for historical shill patterns, and identifies shill patterns as they are occurring, Pursglove said. Previously, the auction house was only able to detect shill bidding when the auction was over.
  • The eBay spokesperson and scam expert on the show said these scammers keep their eye on these big amount bidding processes. And then, sensing someone is desperate for something they have missed out on, move in for the kill, posing as the real seller. The eBay spokesperson said one should be very suspicious of any 'seller' attempting to sell to you outside of the normal eBay process.
  • �the successful hack that happened ages ago that we were denying completely until now wasn�t that bad really and nobody needs to worry.�
  • PAYPAL refuses to disclose the number of complaints that it receives and the outcomes of these. Geoff Iddison, chief executive officer of PayPal (Europe), says that the company places importance on its customer service levels.
    'It is difficult to answer in a satisfactory way why customers can become upset with a company,' he says. 'Our fraud levels are less than the average in the online industry.'
  • A spokesperson for eBay claimed the auction site simply connected vendors with buyers and could not accept responsibility for any wrongdoing.
  • eBay was criticised by a UK judge late last year for not doing enough to protect its users from the dangers of fraud. Judge Richard Bray said it was "hardly surprising" that eBay was targeted by criminals, given the measures it has put in place to protect users.
    The judge was presiding over the trial of a woman convicted of taking £3,000 from five separate eBay customers for nonexistent tickets to the Glastonbury music festival. On Wednesday, a teenager who used eBay to defraud more than 100 people of a total of £45,000 was sentenced to 12 months detention and training.
    Paul Kilmartin, director of performance engineering and availability at eBay, said the company could introduce security technology such as two-factor authentication, but the sure way to eradicate all fraud from its business would be to stop trading. "The one easy way to stop all the fraud would be to turn off the site tomorrow, and there would be no more illegal activity," he said.

Survey & Arithmetic
We do not know, and do not have the resources to conduct a large scale or exhaustive survey into eBay listings, but our best estimate, call it a guess if you like, is that 10% of all eBay listings or sales include at least one element tinted by illegality or deception of some kind.
From eBay's 2007 third Quarter Financial Statement, we note that their total net revenues are approximately 1.9 billion dollars, growing at 30% per annum. That makes almost 8 billion dollars per year, and over $10 billion forecast for 2008.
10% of 10 billion dollars equals 1 billion dollars.
If our assumptions and calculations are correct, and they may even be somewhat conservative, then eBay are making ONE BILLION US DOLLARS each year from hosting, permitting, and facilitating fraud and deception!
No wonder they are happy to take no action against the perpetrators.
We find it difficult to imagine any other explanation for eBay's behaviour, and would welcome a full explanation from them.
If or when, eBay see this, they will probably not be happy with it, and we may receive legal threats for defamation. We publish the results of our limited research, along with our opinions in the public interest.
If our 10% figure is too high, any exaggerative effect would be insignificant compared with the amount of hyperbole by many eBay sellers, and also of eBay's claimed activity level when receiving fraud reports compared with the actual figure.
In fact, it is entirely possible and quite probable, that our 10% estimate is far too conservative. We do not know what proportion of goods offered on eBay are stolen, and probably have no way of finding this out. Bearing this in mind, perhaps the real figure is double our estimate.

Ignorance and Anonymity
eBay seems to work by keeping its buyers and sellers from getting to know much about each other. Anonymity for both sellers and buyers is easy on eBay, in fact it is the norm. Although this probably helps keep eBay fees rolling in, it does not do much to promote openness, and healthy access to information. eBay claim that their feedback system helps buyers and to sellers to judge who they are dealing with. We think it is deeply flawed, there are many obviously unethical traders with huge feedbacks, and near 100% positives, and numerous very respectable buyers and sellers who suffer from unfair, sometimes retaliatory negatives.
In the traditional business world, traders build up a reputation over a long period, often by word of mouth. In the somewhat egalitarian world of eBay, much of this counts for nothing. For example, when we submit a suspected fraud warning to eBay, there is no provision on their online forms for us to state who we are, and what expertise we have. It looks to us as if eBay do not care who makes fraud report, and ignoramus or an expert, and we think this is wrong. The fact that we have over 40 years of experience and expertise counts for nothing when we submit a fraud report, it would seem.

Doubtful
When we think hard and look at the level of deception and dishonesty on eBay, we often wonder whether we are risking our own hard-earned reputation by using it ourselves. Mind you, boycotting eBay would be like ordinary decent citizens surrendering the streets to gangs of yobs, so perhaps we should continue to use it with reservations.

Beware Gold Sovereigns on eBay
Contains more details about our experiences with eBay.

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Obverse of Genuine 1912 London Mint Sovereign - But Used Without our Permission
Obverse of Genuine 1912 London Mint Sovereign - But Used Without our Permission

Reverse of Genuine 1919 Canada Mint Sovereign - But Used Without our Permission
Obverse of Genuine 1919 Canada Mint Sovereign - But Used Without our Permission

Obverse of 1936 Edward VIII Unofficial Pattern Sovereign
Obverse of 1936 Edward VIII Unofficial "Pattern" Sovereign
Offered on eBay Without any Warning That it is Not the Real Thing

Reverse of 1936 Edward VIII Unofficial Pattern Sovereign
Reverse of 1936 Edward VIII Unofficial "Pattern" Sovereign


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