eBay's Dispute Process

Recently, eBay unveiled its new dispute process. According to the new policy, buyers can file a dispute with eBay/PayPal and state that a seller has sold a fake item. Once the buyer confirms that the item has been destroyed, PayPal refunds the buyer's money and puts a strike against the seller's account. Apparently, under the new policy, a buyer's word is golden and no buyers would ever try to cheat a seller.

Many people quickly pointed out that the policy has no safeguards against a buyer claiming that a real item was fake. On May 13, Ina Steiner wrote about this new policy in her blog at AuctionBytes. Steiner raised the following points of concern:

For instance, under what circumstances would eBay instruct a buyer to destroy an item? (and how would eBay know if the item was authentic or not?)

Are there cases where eBay would instruct a buyer to destroy an item without having it authenticated?

Does this provision apply to all sellers? Or will eBay have agreements with certain trusted sellers so it is understood those sellers would not be subjected to this particular provision?

Incredibly, eBay revised the policy the very next day after Steiner's article. The user agreement now states that eBay will require the buyer return the item to the seller instead of destroying the item. In a followup article, Steiner wrote:

This evening, after eBay announced the revisions on the Announcement Board, eBay spokesperson John Pluhowski told me, "Ina, you raised questions, and we looked at them very seriously, and realized, I think, after examining the policy very closely, that revisions were in order to ensure that the policy was, in effect, providing an equitable solution to protecting our sellers - to protecting sellers and buyers."

In the comments section of Steiner's blog, someone named Daisy wrote, "When Ina has the power to point out the obvious implications of their poorly thought out policy and they back down immediately admitting stupidity, there's something very wrong."

A person going by the name "unaware" wrote, "I have always been amazed at how slip-shod eBay appears to be run AND amazed at the inability of the investment community to see how slip-shod eBay is run."

This is a good time to bring up an interesting blog I read this week. Two investors had a private discussion about eBay, which one of them posted to the blog after the discussion ended. At least one of these two people invests in eBay but does not appear to use eBay. They have no firsthand experience of what the users have gone through in the last couple of years.

Questions for eBay

It is worth reading just to get an idea of what some people not connected to eBay are beginning to notice. Here are a few comments.

EBORO: “Recently, I started going over [eBay's] annual reports as well as well as using various models...to value the business...I spend even more time “scuttle-buttin” to discover what the users (buyers, sellers etc…) think about the company. Although I only started my examination a month ago, I’ve spent hours on the eBay forums reading over thoughts and comments, as well as asking questions. Out of interest, have you done this?”

WIDE MOAT: Yes, I’ve done this and have been impressed by the indiscriminate vitriol toward eBay.....My impression is that there is a significant group of former sellers that are very upset with recent changes. It’s almost as if they feel personally violated in some way. Rather than quietly take their business elsewhere, they want others to know that they have been (morally?) wronged, and eBay’s management are fools. Really, very odd…

EBORO: “I only ask because it was during this process that I realized something was not quite right at eBay: buyers and sellers were complaining, in huge numbers, about the business; literally thousands of sellers are leaving the site. It seems as though this could have a negative effect on one of the key elements of eBay’s moat: its network. In my opinion, eBay’s growth potential relies heavily on the following: buyers come to eBay because they know that there are an abundance of sellers; sellers come to eBay because they know there are an abundance of buyers. Buyers don’t find the selection they used to, they don’t find the low prices they used to, and eventually, they start leaving. What happens when there is a reduction in the number and type of sellers?

There is a lot more, but the above part is important. Some investors are beginning to notice that something is not quite right at eBay.

This company is apparently run by people who make decisions without carefully thinking them through. It is just amazing. EBay is not run well, and its future is uncertain. I want eBay to remain viable, since it is the very best place to find a wide selection of vintage series books. The selection has deteriorated, but eBay still has the best selection.

It is vitally important that anyone who sells does keep an eye on the alternative sites such as Bonanzle. I feel that I already need Bonanzle because I was jerked around too much in the fall by eBay's DSRs and lowered search standing. We need for eBay to have at least one competitor that is viable and that can give collectors a place to continue to sell their items, regardless of eBay's future course.