eBay Policy Shift Angers Users

This week's decision by eBay (Nasdaq: EBAY) to enforce a prohibition on offline deals between members has angered many users, sparking allegations that the Internet auction giant's stated goal of protecting its customers is disingenuous.

It has long been the official policy of eBay to prohibit members from arranging deals outside the confines of cyberspace, but company spokesman Henry Gomez told the E-Commerce Times that eBay announced its intention to enforce the policy after receiving complaints from members.

However, at least one auction insider believes eBay's priority is profit, and that the move will lead to "further alienation of sellers." Rosalinda Baldwin, editor of the online newsletter The Auction Guild, told the E-Commerce Times that the enforcement will "increase mistrust between sellers and buyers" and lead to "further degradation of the weak and dying 'community.'"

Fraud Protection

Gomez said that eBay decided to enforce the policy in order to protect its users, because buyers who choose to conduct business outside of eBay are not protected by the company's insurance program or feedback system.

Some of the users who had purchased items in so-called offline transactions were not even aware that they were doing so, according to Gomez. He said the company has had "lots of complaints" over the past several months by people who thought they were protected by eBay but actually were not.

"They come back to us when they've been wronged and we have no way to help," Gomez said.

Under the new policy, sellers who use their eBay connections to conduct business offline will first be warned and then suspended from the site. Prohibited conduct includes offering to sell a listed item outside of eBay to avoid paying a listing fee, as well as offering to sell users merchandise similar to what they are bidding on at eBay.

Also prohibited is sending unsolicited e-mail, or spam, to people met through eBay.

Protecting Profits

Despite eBay's contention that the rule change is designed to protect its community, some users believe the adjustment was made to protect eBay's profit margin. Baldwin claims that eBay needs "to do something to attempt to boost their revenue for the fourth quarter."

Added Baldwin, "Depending on what else they do, [eBay] might give us a better idea of which financial reason they are doing this for -- such as another insider stock sale, or possibly a sale of eBay to a company like GM, or an attempt on eBay's part to buy some of the other dot-com companies."

Baldwin is not the only observer questioning eBay's motives. Frustrated sellers have filled message boards across the Web with complaints about the policy change.

Even eBay's Gomez conceded that the move was at least partially profit driven. He said that if sellers are using eBay to advertise their products, then the company "should collect those fees."

eBay Bounty Hunters?

Some eBay users also believe that the San Jose, California-based auction house will have a hard time enforcing the rule without turning members into tattletales.

"Whatever goes on between people (buyers, sellers, other sundry capitalists) outside of eBay is none of eBay's business," one poster at eBay's message board wrote. "And how the devil is eBay going to know what is in the correspondence (e-mail, phone calls, etc.) between potential buyers and sellers?"

Noted Baldwin: "In truth, eBay cannot enforce these policies unless sellers and buyers snitch on each other, and unless they start offering a bounty, there is little reason for folks to do this."