Judge Allows Payment Monopoly Lawsuit Against eBay/PayPal To Proceed

When you go to the eBay Seller Information Center section about how to accept payments, there is no mention of any other payment service than PayPal, which as you likely know, is owned by eBay. This oh-so-close relationship is at the core of a lawsuit against the online auction site.

Plaintiffs in the lawsuit accuse eBay attempting to monopolize the online payment systems used on its site, and that it has “limited and banned competitors in an attempt to maintain its dominance in the online auction market.”

Earlier this week, a federal judge in the Northern California-based U.S. District Court, denied eBay’s request to have the lawsuit dismissed.

Among the evidence cited in the lawsuit is a claim that eBay pulled the plug on sellers’ ability to use Google Checkout — which charged less per transaction than PayPal — only three days after it became available to use on the site.

The plaintiffs also claim that a 2007 change in PayPal Buyer Protection effectively eliminated buyers’ protection for non-PayPal transactions. Thus, sellers were allegedly compelled to accept PayPal.

Back in January, the judge in the case had dismissed a portion of the plaintiffs’ case, saying it was too broad to allege that the eBay/PayPal union had a negative effect on the entire online payment market. However, he did allow the complaint to be amended to narrow that scope to the online auctions market.

By focusing in on this specific market, the judge ruled that the fact presented in the plaintiffs’ complaint “cross the line from possible to plausible.”

Explains the judge:

In light of the significantly narrowed definition of the tied product market, the Court concludes that the facts alleged are sufficient to show that the alleged tying arrangement would affect a non insubstantial amount of commerce in the market for on-line payment services for use in on-line auctions.

The class-action suit now inches toward a possible trial.

EBay Must Defend Claim It Monopolized Payments [CourthouseNews.com]

Comments

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  1. Southern says:

    OoOo.. This outta be good.

    *Starts cooking the popcorn*

    • Kisses4Katie says:

      Yes!!! The only reason I don’t use ebay is because PayPal has ripped me off every time I tried to sell.

  2. ecuador says:

    Very strange it took them so long.
    Now if somebody could realize that a company that holds your deposits, allows you to do financial transactions and extends you credit (bill me later, paypal) should be regulated as a bank, then we could all rejoice…

    • Kimaroo - 100% Pure Natural Kitteh says:

      Not only that, but they offer debit cards so you can use it as you would a bank account!

      Why AREN’T they considered to be a bank and regulated as such? They sure as heck act like one.

    • econobiker says:

      +1

      And that they “outlawed” the sellers ability to say that checks are accepted as payment.

      And ebay somehow can’t understand why most people have fled their grips. Of course they just want to be a sales point for corporations now and not the flea market which brought them to the dance…

    • lakecountrydave says:

      +1

  3. JJJJust says:

    “non insubstantial”

    Oh the day when we resort to double negatives to get our point across.

    • Blueskylaw says:

      I didn’t see nothing wrong with it.

      • justhypatia says:

        Well the biggest problem with it is that “non” should not be used as it’s own word in that context. Unless you are using a foreign language phrase, it shouldn’t stand on it’s own.

        A “more” proper way of saying it would be “not insubstantial.” Which is still language butchery but a common way in which legalese plays with words.

        In English if it’s “not insubstantial” that means it’s “substantial” but in legal-speak there is a difference between proving that something is not insubstantial and proving something is substantial. They are trying to create a legal level between trivial and substantial to say hey, this matters, without having to prove that it’s a big deal for everyone involved.

    • Vox Republica says:

      Double negatives are generally better at expressing de minimis standards. In the instant case, saying something is substantial can suggest a larger amount than non-insubstantial. By sticking to the double negative, the language does not constitute a prejudicial remark regarding degrees or weight.

      I hate my job.

      • Nigerian prince looking for business partner says:

        In my line of work, we often refer to things as being “non insignificant”. The word “significant” has a very precise and well-defined legal standard. Calling something (usually an effect) “non insignificant” is different than referring to it as “significant”.

        It’s pretty much a quick way of saying “potentially significant but not fully evaluated”.

    • PhilipCohen says:

      How about “not insubstantial”

  4. Blueskylaw says:

    I used to pay by check and money order years ago (they were trusted sellers and I had spent
    A LOT of money with them) and then all of a sudden they say we can’t take a check or money order and that they were forced to use PayPal or face the consequences. These are not the actions of a corporation looking out for your best interests but a corporation trying to monopolize a market to the detriment of its buyers, sellers and other businesses.

    SLAP THEM DOWN JUDGE!!!

    • madanthony says:

      As a seller, I used to accept them up until they banned them. Sure, I’d have maybe 1 out of 50 pay that way, but anything that can encourage a bidder to bid – even if they aren’t the winning bidder – is good for me as a seller. If other sellers don’t want the hassle of taking them, fine, but eBay’s ban of them under the guise of protecting sellers showed that they were not interested in what was good for sellers

      • YouDidWhatNow? says:

        eBay/PayPal hasn’t got the slightest interest in what is or isn’t good for sellers – you need look no further than the policy that prohibits sellers from ever leaving negative feedback for that.

        …besides, how could eBay/PayPal endorse and assist in fraudulent buyers defrauding honest sellers if they let the honest sellers warn others about it?

  5. OMG_BECKY says:

    I’d LOVE to be able to accept some other form of payment other than Paypal…that way I can sell over $20k worth of stuff before I get slapped with a Paypal tax bill! As it stands, I pull all of my eBay ads down once I get to around $19.5k in sales and stay off the site until the next calendar year.

    • The hand that feeds, now with more bacon says:

      What happens at $20k? I’ve never sold more than about $2000 worth of stuff in a given year on ebay.

      • kobresia says:

        I think that’s when Paypal forwards evidence of your revenue to the IRS so the taxman can hit you up for more money or audit you.

        • OMG_BECKY says:

          Yep, starting in 2011 if you receive over $20k in Paypal payments they hit you with a 1099! So I pull all my eBay ads down once I get close. If they think I feel like keeping track of every single one of my eBay expenses and am going to headache with it come tax time, they’re wrong. Now if they are forced to accept Google Checkout or some other method of payment, that would allow me to keep on selling past my Paypal limit!

          • What’s your problem, Kazanski? says:

            So what you’re saying is that tax evasion is a better course of action?

            • Jawaka says:

              That’s what I’m getting from his post.

            • Mark702 says:

              Yes, individuals spend their money better than the government, who wastes it on foreign wars, empire building, enforcing the war on drugs, funding the TSA and Patriot Act related garbage, and all the other government waste that equates to throwing your hard earned money into a black hole. I tell everyone, Fuck the Feds, do anything and everything you can to keep your money out of their hands.

              • OMG_BECKY says:

                Amen, Mark702. I’m just trying to scrape by (I’m disabled) and I’d rather try and make a little money on eBay than have to rely solely on public assistance! But the IRS is making that difficult.

                • Lt. Coke says:

                  Waitwait, so you get money from disability (a GOVERNMENT PROGRAM, by the way), a program I (gladly) help pay for, and you’re going on about how you spend money better than the government does?

                  I think I’m going to go ahead and sue you for causing my brain to melt.

          • econobiker says:

            “If they think I feel like keeping track of every single one of my eBay expenses and am going to headache with it come tax time, they’re wrong. “

            I am sure that ebay would figure out that they could charge sellers for an itemized expense description of sales expenses from the site sort of like some business related credit cards itemize.

  6. KyBash says:

    I really hope this does some good — I’d totally stopped selling on eBay, but I’d like to be able to buy from there once in a while. PayPal changed its policies, requiring information I can’t provide because of my disability, so I lost my account, and because of eBay requiring PayPal, few sellers bother to list alternative methods of payment.

    Now. if only they’d require sellers to mail items instead of being UPS-only . . .

    • A.Mercer says:

      I just bought something on eBay and used Paypal to pay for it and it is being shipped United States Postal Service. Got the tracking number half an hour ago and went to the USPS site and checked and it is on its way. I don’t think there is a rule that sellers have to use UPS. Either that or the seller I bought my stuff thru is breaking the rules.

      • KyBash says:

        They don’t have to use UPS, but many won’t ship any other way. I’d like to see them have more than one shipping option, perhaps even require them to mail items to people who can’t get UPS deliveries.

        • The hand that feeds, now with more bacon says:

          Yes I hate having to drive 40 minutes to the UPS sort facility to pick up packages.

      • Jawaka says:

        eBay is certainly not UPS only. I’ve been shipping via USPS on eBay for years now. I even print out the shipping labels directly on eBay.

  7. malimal99 says:

    let the choir say Amen.

  8. nbs2 says:

    Go-go Class action lawyers. If they can break the unholy eBay/PP union, they will have earned their 99% contingent fee.

    • Jawaka says:

      Ebay/PayPal will just follow suit and add a condition to their services that requires that we use arbitration for any grievances and disallow any class action lawsuits against them in the future.

      • gman863 says:

        They already have a clause that requires any lawsuits or other legal documents to be filed in their home county in California. Unless you live close to eBay headquarters, this makes any type of small clims filing prohibitively expensve.

        • YouDidWhatNow? says:

          …just one more example of why MBA should be illegal, in all cases, everywhere.

  9. YouDidWhatNow? says:

    What’s funny (well, pathetic) is that Australia took care of this issue right away, when eBay/PayPal first set this policy – Aussie regulators killed that moronic idea right away.

    Of course, it’s all done for the “safety” of the eBay user…because for some reason, using checks or other forms of payment are only unsafe when used for eBay – as opposed to everything else in the world, like sending a check to pay your taxes. Clearly it’s not done so they can double-up on fees…firstly charging you usage fees for having listed something on eBay, then charging you fees for having “chosen” to use PayPal for the payment of your auction.

  10. d0x360 says:

    how can they be used for being a monopoly when they own paypal? thats like someone suing amazon cause they only allow payments through there own payment software.

    If you dont like any of the options presented by ebay there is nothing that says you cant arrange payment another way with the user. I personally refuse to use paypal because they are evil as all hell but this lawsuit seems silly.

    Can someone explain what I might be missing here?

    • Straspey says:

      Some of us can remember when Paypal was a separate company, which offered its payment services through Ebay.

      Ebay saw where this was going and eventually bought Paypal – which is now what you are forced to use for any and all electronic payments, as well as if you wish to receive any buyer-protection services.

      It’s back in the days of “The Phone Company” — when, if you wanted to have telephone service in your home, you had no choice but to buy it from Bell Telephone. You also could not own your equipment and had to *rent* the actual telephone from the company. Bell Telephone set the rates and essentially controlled the telephone service of every home in this country.

      Then one day – somebody whispered the word “Monopoly” — and the federal regulators stepped in and forced the famous break-up of AT&T. As a result, today consumers have a wide range of options from which to choose for that which works best for themselves and their families.

      Lawsuits and court decisions not withstanding – the best solution for this problem would be to force Ebay to divest itself of Paypal — or at least split it off into its own separate company.

      • alexwade says:

        Actually, the best solution would be to force “feeBay” to sell PayPal or make PayPal a separate business and force eBay to allow alternative payment services such as Google Wallet. There must also be a way to integrate with eBay so that such that when a customer pays, eBay can mark the item as paid.

    • A.Mercer says:

      Amazon has a payment software, that is true. However, Amazon’s software allows you to pay thru many different sources and they do not charge you an extra fee to use it. Also, Amazon’s payment software is not treated like a separate company. It would be a part of Amazon.

    • Jawaka says:

      eBay charges its sellers a fee when they sell an item. They then charge these same sellers again for the luxury of being able to receive the money for the item that they sold. eBay used to allow sellers to advertise that they would accept check or money orders as payment options. Once eBay purchased Paypal however they don’t allow sellers to accept these forms of payment any more and will cancel auctions if the words are even listed in the item descriptions. You’re forced to only accept forms of payment that eBay makes ab additional profit for processing.

  11. mcgyver210 says:

    No one wins in a Class Action Suit but the Lawyers. As for eBay & PayPal this is nothing new, eBay couldn’t beat PayPal in the early years even with their eBay payments so they just purchased PayPal & then completed the Monopoly they most likely always wanted IMO.

    • Kate says:

      If the abusive party is forced to change it’s policies, then no, that’s not true.

    • frodolives35 says:

      If it takes lawyers to stop the crap Ebay/Paypal are pulling this is 1 time I might be pro lawyer. (I can’t believe I said that but I and many others have been screwed by Ebay and Paypal.)

      • mcgyver210 says:

        Agreed but I have been on eBay almost since it began (Power seller & Buyer) but have never risked more on anything than I am willing to possibly loose because of it being an auction site. I have always protected my self by being cautious. I can count on one hand how many bad deals I have had on eBay.

        I still say the true winners in Class Action are Lawyers.

  12. CrazyEyed says:

    And this is why we allow free markets to exist, so that competition can give us better products at better prices. Glad the judge didn’t give into Ebay/Paypal.

  13. Hartwig says:

    Next with Ticketmaster/Stub Hub…

    Paypal is one of the major reasons i don’t shop on Ebay, never liked it and many of the stories i have read reinforce my opinion.

  14. PsychoRaven says:

    About damn time. I used to love ebay but then they forced paypal on us and I said hell no. I will not use paypal ever. I tried it one time and learned my lesson.

  15. Rick Sphinx says:

    i hope they win. eBay and paypal suck for small business owners who use it. All they do is sit around a board room table, and think of ways to screw the sellers. I hope they go out of busness one day, and someone else starts one like the way eBay used to be, with freedom to run you business they way you see fit. The latest monopoly is they force sellers to use their shipping service, make it hard for users of Stamps.com etc. Boy eBay SUCKS!

    • OMG_BECKY says:

      I wish I could give you a thumbs up! Indeed, just when you think eBay can’t make it any harder to sell….they go and totally outdo themselves.

  16. Ayla says:

    As someone who was royally screwed over by Pay Pal I can’t wait to see how this turns out. I pray they get their just desserts.

  17. PhilipCohen says:

    Even better …

    Rampant Shill Bidding Wire Fraud on eBay Auctions

    Who would have believed it?

    “Reality TV Star Accused of eBay Shill Bidding Sues Her Accuser”
    http://www.auctionbytes.com/cab/abn/y12/m05/i18/s01

    “eBay Account Rep Defends Reality TV Star Accused of Shill Bidding”
    http://blog.ecommercebytes.com/cgi-bin/blog/blog.pl?/comments/2012/5/1337308248.html

    Where it all started on the Purse Forum at thread
    http://forum.purseblog.com/ebay-forum/edropoff-consignment-731216.html

    eBay is supposed to be a technology company. If I can manually produce a report (spreadsheet/notes at link below) that demonstrates—beyond any doubt to a reasonable person—that a seller is shill bidding, then eBay could quite easily do the same, programmatically. eBay deliberately chooses not to do so because to be “finding” the rampant shill bidding “wire fraud” that exists on probably the majority of eBay “professional” nominal-start auctions and then actually doing something about it, would negatively affect eBay’s bottom line—it could well halve their FVF revenue from such auctions—if there were indeed any scrupulous professional auction sellers at all left standing.

    eBay claims to have “sophisticated” and “proactive” systems in place to control shill bidding. Of course, that claim is either a lie or they ignore what they find. To all intents and purposes, they have no such systems in place, and such a claim is therefore a “false representation” and that is, effectively, a criminal fraud on eBay users, a deliberate and outrageous deception on the great many naïve eBay users, leading those users to believe that their warm woolly coats are safe on their backs when, in fact, they are being led, by eBay, to the shearers.

    Regardless, eBay’s Van Wagoner’s contribution of a patently false certificate in the current eDropOff matter makes it clear that eBay is apparently prepared to perjure itself in an attempt to protect its valuable sources of revenue; although I would wonder if Von Wagoner ever expected that his faux certificate would be presented to a court of law.

    The unprincipled will say, oh well, the buyer has paid no more than they were prepared to pay. Well, try yourself reselling at auction that item you bought (without the aid of shill bidding) and see what it its “market value” really is.

    The fact is, auction shill bidding is a deception for the purpose of obtaining a gain and that is fraud, criminal fraud; on eBay it is “wire fraud”, a US Federal crime punishable by large compensatory fines and up to twenty yeas in prison. eBay’s patently obvious and knowing facilitation of such “wire fraud” activity is likewise a Federal crime.

    In the final analysis, this current eDropOff matter should not be simply about this one particular rampant shill bidding eBay seller—eBay is literally awash with them. This matter should now be about eBay (aka “the eBafia”), the greatest and most outrageous criminal “wire fraud” facilitator on the planet. The Mafia of old would be proud of eBay’s business model …

    The facts of the matter are in the latest Excel spreadsheet at: http://bit.ly/MJlM6b

    eBay / PayPal / Donahoe: Dead Men Walking

  18. Peter V says:

    This is all good but I’ve come to the conclusion that eBid.net is a much more viable option for smaller eBay sellers and best of all NO PAYPAL. Or Yardsellr (Facebook required) or Bonanza (Niche-style like Etsy). There’s only one thing missing: The Majority of buyers. But it’s definitely worth a shot.

  19. PLATTWORX says:

    ” “limited and banned competitors in an attempt to maintain its dominance in the online auction market.”

    While I have done tons of business with Paypal by force as a major seller on eBay, Paypal had a “cloud of evil” over it even before eBay bought it. Not allowing any other payment service on Paypal and putting on Paypal’s site “The world’s most loved way to pay and get paid.” as their slogan (REALLY? The WORLD voted and said above cash, check, etc. they MOST LOVE to be paid via Paypal? Ya. Right.)

    eBay loves life right now. They hit you with listing and transaction fees on selling and then whack you on accepting payments. Sure, you can say “I don’t take Paypal. I refuse!” but it’s the fastest way to get your money and trying to work around it is too much hassle. Wait for checks to arrive and clear in 2012? Can’t run a business that way.

    Recently, Paypal announced it had signed agreements with retailers to be a payment method like bank issued credit card, which are governed by the FDIC. Why the heck the FDIC (many years ago) ruled Paypal was not a “bank” and did not have to following banking laws escapes all logic. They clearly at the time didn’t understand what Paypal was as such things were somewhat new.

    I would love nothing more than eBay be forced to take all major online payment methods and be forced to spin Paypal into a bank holding company that had to report to the FDIC and follow banking laws.