Slashdot Log In
eBay Accused of Price Gouging Scheme
Posted by
CowboyNeal
on Thu Feb 24, 2005 06:50 PM
from the bidding-for-a-living dept.
from the bidding-for-a-living dept.
Symbiot writes "eBay is being sued in a Calilfornia court for a practice that the plaintiff, Glenn Block of Pennsylvania, claims artificially raises the amount of a bid. The practice combines the warning emails that eBay sends out when you are the highest bidder and your bid is at your maximum, with the bid increment mechanism. It seems that if your original maximum bid settnig prevents your current bid from falling on an increment then your current bid will be raised to the next increment as soon as you raise your maximum. If the plaintiff wins this class action suit could cost eBay tens or hundreds of millions of dollars."
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Full
Abbreviated
Hidden
Loading... please wait.
Had Similar Experiences (Score:5, Interesting)
Bullshit. This happened to me once.
I had a max of say 100.01 and another bidder had bid 100.00 while the current high was substantially lower, so it showed 'You have been outbid the current high bid is 100.01' Now, they could bid at least 102.51 and take the lead or had figured that was just too much, either way, I see that they have homed in and I raise my cap to 125.00, suddenly my high bid is 102.50 rather than 100.01.
To shed a different light on this, there was another time a similar thing happened, but when I reloaded the page later it would revert back to my prior high bid, which can be handy for disguising what your actual new cap is. I'm sure they know all about it and had fiddled with the way it works.
It happened once to my knowledge, so I'm probably only entitled to a couple bucks, but it will be interesting to see how this plays out.
If the plaintiff wins this class action suit could cost eBay tens or hundreds of millions of dollars."
I think that's a gross exaggeration of the problem, however it could cost eBay a lot in man-hours auditting the results of every auction since the beginning to determine who is entitled to a refund.
Re:Had Similar Experiences (Score:3, Informative)
I've noticed this as well.. but . .
"when I reloaded the page later it would revert back to my prior high bid, which can be handy for disguising what your actual new cap is. I'm sure they know all about it and had fiddled with the way it works."
This is probably your browser caching the old page, which I've also had happen. It's not their fault you need to reload the page.
Re:Had Similar Experiences (Score:4, Insightful)
And please keep note as to whether Ebay stops this practice before the court requires them to as an indication of the confidence in their innocence.
Parent
Re:Had Similar Experiences (Score:5, Informative)
I had a max of say 100.01 and another bidder had bid 100.00 while the current high was substantially lower, so it showed 'You have been outbid the current high bid is 100.01' Now, they could bid at least 102.51 and take the lead or had figured that was just too much, either way, I see that they have homed in and I raise my cap to 125.00, suddenly my high bid is 102.50 rather than 100.01
But for the minor fact that eBay tells you this is how the bidding system works. If you wanted to avoid this then you just should have bid $125.00 to begin with. On eBay if somebody else bids the same amount (within the increment) as you did then you are still the high bidder because you placed that bid earlier. When you decided to up that to $125.00 that bid took over -- hence the later bid was the winning bid and it needed to be higher then not equal to the previous bid. This is all documented on eBay's site.
I think that's a gross exaggeration of the problem, however it could cost eBay a lot in man-hours auditting the results of every auction since the beginning to determine who is entitled to a refund.
I doubt they'd bother with the audit. They'd just put X amount of dollars into a fund and tell everybody who might be eligible that they could collect from it. Better then half won't bother -- is my time to fill out and read that document worth a few bucks?
Parent
Re:Had Similar Experiences (Score:5, Funny)
Parent
URL (Score:5, Informative)
In the bad form of replying to my own post I found the help section [ebay.com] on eBay that explains this policy. To quote:
Parent
Re:URL (Score:3, Insightful)
One problem here is that the bids in question were not tied, unless you accept Ebays twisted definition of tied as "closer than the bidding increment".
Two, defining the raising your maximum proxy bid as a new bid is contrary to any other proxy auction ever held. Even if you accept that it is a new bid of the same amount, isn't your previous bid still the oldest at that price?
IANAL,
Re:URL (Score:5, Informative)
Actually, that is commonly accepted auctioning practice, according to any number of well-known [sothebys.com] and very reputable [christies.com] auction houses [sloansandkenyon.com].
Just because eBay does it online doesn't mean they shouldn't respect the tried and true method of bidding in increments. Otherwise people would get very snarked as someone goes in and outbids them by pennies everytime.
Bidding in increments has been around auctions since the 1700s. Why should eBay do it any differently?
Parent
Re:URL (Score:4, Insightful)
Parent
Re:URL (Score:5, Interesting)
Of course, auction sniping is the real way to go. Prevents all those fickle people upping their bids maximums.
Parent
Re:URL (Score:5, Insightful)
The plaintiff here wants to get out of this one "max/timestamp pair" situation with the best of both worlds -- they want to use the later and larger max, but they also want to keep their earlier timestamp, which allows them a non full increment bid.
Think of it this way: you told it to max you out at 100.09. Somebody else bid it up to 100.00. What makes you think you have the right to increase that by
The kicker here is that the priviledge of winning by less than the bid increment comes with a definite disadvantage -- your auction opponent looks out and sees his bid of 100.00 beat by your bid of 100.09. He should fairly be able to ask "why is that jerk not required to bid up to the increment". The only fair answer is if he can rely on the fact that your 100.09 top bid reveals that you are maxed out and that he surpass your proxy max by bidding 101.09. If you are allowed to raise your proxy max without raising your current bid, he should be able to bid 101.09 and force you to bid 102.09. Instead, your new proxy max and timestamp puts you with the high current bid of 101.00 and forces your opponent to bid 102.00, which gives you an advantage towards winning the item since this is higher than the alternative where they could bid 101.09. This may be enough of an advantage to cause you to win. In short -- there was NO GUARANTEE you would have won with your original 100.09, since you are not able to decide for your opponent what his course of action would have been.
The reason the plaintiff will lose this case is that
1) the rules were clear ahead of time
2) raising your proxy max invalidates your old proxy timestamp which is what permitted the non-increment raise
3) there is no guarantee your original high bid would have won (and thus no proof of harm)
4) You cannot prove that you didn't actually pay LESS because of this system.
A) you were less vulnerable to sniping because your opponents could no longer infer that your current bid was your proxy max, and
B) your opponents would have had to raise two full increments above their previous bid to test you.
Parent
Re:Had Similar Experiences (Score:4, Funny)
More seriously, I didn't understand why this would automatically increase my bid when I was the highest bidder. I assumed it was buried in some terms and conditions, but I didn't think it was fair - because yes, you're actually registering a new bid against yourself.
If this is indeed in their terms somewhere, then I have no issue writing it off as an annoyance.
Parent
Re:Had Similar Experiences (Score:3, Insightful)
Don't worry, they're making money hand over fist and a few hundred million, if it came to that, would be a drop in the bucket. They should probably worry more about class actions suits in regard to PayPal's practices.
Personally I'm not sure I could live in a world without eBay.
Je suis d'accord. But as they keep fscking around with their formula I loathe them more and more each day.
Re:Had Similar Experiences (Score:4, Interesting)
So even if it did cost them "hundreds of millions" - which it won't - they would be okay because their insurance would pick up all/most of that.
If the suit doesn't get dismissed, it will probably settle for significantly less than what the story projects - and probably not even cash but "ebay coupons" or something like that instead, plus cash to the plaintiff's lawyers.
Parent
Re:Had Similar Experiences (Score:3, Interesting)
Everyone will get an email from eBay saying they're eligible for a refund. 95% won't make it past most spam filters.
Re:Had Similar Experiences (Score:5, Funny)
That's awesome! I'll have to try that next time I'm forced to repay people.
"I am Former Ebay President and Nigerian Billionaire. Though this proposal may be very surprise to you as we have not met in any way before.
I got your contact address through your country's judiciary and feel you will serve as a reliable source to be used to achieve this aim, by trusting under the care of you and other people like you (the plaintifs) the total sum of THIRTY MILLION US DOLLARS (US $30M). Does that not make you stand up and take notice? You have not tried Cialls yet?
- The settlement lasts 36 hours!
- you are ready to start within just 10 minutes!
- you can mix it with alcohol!
Choose the time and the place. Our settlement will do the rest. Now 2 - 10 times cheaper than our competitors!
Please include the details of your case information including your Ebay(tm) username, the ten-digit auction number, and the names of the other parties involved. By joining this settlement you agree to indemnify Ebay and all of it's affiliates against all future liability with respect to the action at hand. Include your contact phone number so we can send your case information to law firms that have successfully settled cases in your area.
Friend, you may be a winner! I is being confused. Why have you not claimed your cash? Do you not like cash?
Sincerely,
The Law Office of Dewie, Cheatem, and Howe
"
Parent
Re:Had Similar Experiences (Score:4, Informative)
http://pages.ebay.com/help/sell/fees.html [ebay.com]
Parent
Re:Your bid is a contract (Score:5, Insightful)
The reason that this is a dubious lawsuit is that the behavior is already described by eBay's documentation. That doesn't mean it's the right way to do things.
Why shouldn't eBay force people to bid when they raise their maximum? For the same reason that they shouldn't force people to always pay their "maximum bid" amount. There may be reasons why this lawsuit is BS, but yours isn't one of them.
Parent
Plaintiff doesn't understand bidding increments (Score:3, Insightful)
Re:Plaintiff 't understands (Score:5, Insightful)
That is not correct if I understand you right, so your comment should not be moderated Insightful.
The proxy bidding system is what eBay is using to manipulate some buyers, and thus milk higher FVFees from eBay sellers.
A person CAN win an auction if their high bid is not a full official increment above the lower bidder. This happens in the following situation:
I bid $5.02 on an auction first. Then you bid $5 in the final seconds, in an attempt to snipe my bid which is showing as the starting price of $0.99. I win the auction with a winning bid of $5.02, even though the next increment should be $5.25.
My appology if you meant this and I wasn't understanding what you were saying in your post.
Parent
Another article at InternetNews.com (Score:5, Informative)
...with a little more substance than the Reuters.com blurb can be found here [internetnews.com].
Re:Another article at InternetNews.com (Score:5, Funny)
Parent
No sympathy from me. (Score:3, Insightful)
Learn to snipe, cherry boy.
The whole lawsuit is summarised in one line (Score:5, Insightful)
EBay had net revenue of $3.27 billion in 2004.
Riiight... (Score:5, Insightful)
Perhaps I'm missing some nuance of law, but this seems like something that eBay's lawyers [and the judge] will toss into the street with a nice lengthy brief which summarizes to "RTFM!".
Slightly Offtopic - Civic Duty? (Score:5, Insightful)
Something bothers me about the nature of civil suits and monetary awards in this country.
Why is it that we make it a habit of running off with as much money as we possibly can from a lawsuit?
The purpose of suing for this sort of stuff should be twofold: 1) to regulate company action by means of threat and penalty AND 2) reparations. Nowhere in those two clauses do I find any justification for "screwing the other guy over because he did it to me first."
It seems to me that few suits are about that anymore. While its true that you are entitled to sue if a company takes advantage of you, often times the rabidity with which "wronged" plaintiffs style their demands leads me to wonder if they are simply taking advantage of the momentary shift in power.
In that scenario, it's no longer about punishing the one who took advantage of you because he could. It's about turning around and taking full advantage of him, because now you can.
Re:Slightly Offtopic - Civic Duty? (Score:5, Insightful)
Weird? Well, the purpose of punative damages is for the "system" to punish the defendant, so having the system (ie: government) benefit seems reasonable at first glance. Much more reasonable than benefitting the plaintiff, who has already received their damage claim. And it would cut down an awful lot on frivolous lawsuits if people knew that they wouldn't be getting a windfall, just what they (rightly) deserved.
Lawyers might be a little less likely to push some of the more questionable cases also, if they knew that their fees wouldn't include a percentage of the punative amount (usually vastly greater than any actual damages). You could still sue for actual + punative + legal fees, of course.
Parent
It's very well documented on eBay's site (Score:5, Insightful)
I liken this to a physical auction where the auctioneer is saying, "I have $100, do I hear $150, $150?" He's looking for $150, not for some dimwit to yell $110. If he gets no bites at $100, he may sell at $100 or ask for $125. What he doesn't do is throw it open for said dimewit to say, "I'll give you $100.01."
Nobody seems to understand... (Score:5, Informative)
Here's the scenario:
You bid on an item for, say, $80.
Somebody comes along, bids $75.
Your bid is auto-incremented to $76 to beat out this other bidder.
You, getting nervous that somebody might usurp your spot with a max bid of $80, increase your maximum.
When you increase your maximum bid, eBay automatically increments the CURRENT bid value by the increment amount, EVEN THOUGH YOU WERE THE CURRENT HIGH BIDDER TO BEGIN WITH.
This is where the price gouging comes in. You are already the high bidder, you're just increasing your maximum bid. It shouldn't increase the current bid when the current high bidder increases his maximum, though. That is totally nonintuitive. The system interprets your maximum bid increase as a "competing bid" however and checks its max value against the current max bid value, and if greater, it "bids" on the item with the new max value, increasing the cost by the minimum increment, just as if ANOTHER bidder had come along and bid on the item at a higher value.
It's like you're bidding against yourself whenever you increase your maximum bid, and THIS is the price gouge that is to be disliked.
Re:Nobody seems to understand... (Score:5, Insightful)
Your bid is now $80, but you still win because you were there first.
However, if you *then* bump your max bid higher, it'll bump your current bid up an increment.
Know how you solve this problem? Actually make your max bid the maximum amount you're willing to pay for the item to start with, like you're supposed to.
Parent
Re:Nobody seems to understand... (Score:4, Insightful)
However, your solution misses the same scenario that eBay's cut 'n paste response does: What if I'm bidding on multiple items within a single budget. In those cases, I bid less that I'm willing to pay for each individual item to keep my commitment below a certain level. Each time I'm outbid on something, my total commitment goes down, then I can increase my bids on one or more remaining items.
Parent
That ain't all (Score:5, Interesting)
Dont get suckered by ebay tactics. (Score:3, Insightful)
Another option is to use a sniping site (I used to use esnipe, which worked great. Havent tried it in a while). It would automatically place your bid for you a few seconds before the end of the auction, so you have no chance to re-raise your bid should it fall short. It encourages you to determine how much that item is worth to you first and bid your max.
Automatically increasing the leading bid to the next increment does sound shady, but by allowing himself to be influenced by ebay's "OMFG YOU MIGHT BE OUTBID!!!11" email, he's falling right in thier trap. Ebay takes a percentage of the final sale value, so anything they do to increase the sale price just puts more money in thier pocket.
eBays' system makes sense. (Score:4, Insightful)
Say I am bidding on an item and my maximum bid is £101.
The auction is currently at $90.
The auction has increments of £5.
Someone makes a bid of £100, my maximum bid is greater, but less than the increment so it is used.
The auction now stands at £101.
I'm getting worried that I might loose the auction as its right on the max, so I increase my bid to £120.
Ebay then increases the current bidding to £105.
This seems to be what the lawsuit is about, ebay raising the current bidding, when you increase your maximum bid just because your original maximum bid fell between increment levels. In this case it fell between £100 and £105.
If I originally had bid £120, instead of £101 then when the other bidder placed a bid of £100, my bid would not have incremented to £101, but instead to £105 as that is the next incremental level.
If ebay is found to be at fault then they may have to set it so that you can only bid on the increment levels.
If ebay just change the system so that the current bidding price increases when you increase your bid then bots will probably be written to take advantage. They will just place a bid 1p above the next incremental level, if it fails then 1p above the next level. Keep going until you reach your maximum bid. In the case of the example auction that I highlited above the bid could save £4.99, so it would seem like a way of saving money.
Shitty article summaries unnecessary (Score:5, Insightful)
Not only is this summary 1/4 as long as the article summary published by Slashdot, it displays a superior level of understanding by its author. More importantly, it encourages readers to read the entire article, rather than pissing them off with typos or stupid statements like this
and this
This is a case where, if I were a schoolteacher and "symbiot" was my student, I would encourage plagiarism.
A Lawsuit of Ignorance (Score:4, Insightful)
They behave like other auction houses do, and increase bids in an incremental fashion. This prevents ninja-bidders at the last second from bidding pennies more then someone else and winning the auction. (Imagine that you're bidding on a 4.1M dollar house, and someone comes in with 0.01 seconds to go and bids $4,100,000.01).
This practice is NOTHING NEW. Where eBay had to modernize the concept was the fact that everyone is a proxy bidder on their site, no one is bidding in person. This means that they follow the other rules that auction houses follow, which is that when two proxy bids are registered for the same amount, the first person whose proxy bid arrives gets the bid, and the other person has already been outbid.
This is effectively the same thing that would happen were one to visit an actual, honest-to-God auction house. Two people would raise their paddles at the same time. The auctioneer would pick one of them (probably the one whom he sees first), and would accept a bid from them. The other person would either then keep their paddle up for the next bid increment, or they would put it down because that really was the highest dollar amount they were willing to pay.
Ignorance of how auctions work [howstuffworks.com] shouldn't entitle one to any amount of payout in a lawsuit. It should entitle one to a swift "ha ha" and a kick in the pants for wasting the rest of our time.
Problem is the people eBay attracts (Score:5, Funny)
Remember folks, this is the site that gave us the virgin mary grilled cheese sandwich. Of course it's populated by a bunch of loonies who are desperately looking to get their 15 minutes of fame and move out of their trailers. Why is Slashdot giving these people any publicity? Every other day someone is threatening a class action against eBay because they got negative feedback over the 18-century electric can opener they sold being claimed as bogus.
Re:zerg (Score:4, Insightful)
They provide a service that is valuable to you, I see no problem with them wanting to make money on it.
Parent
Re:zerg (Score:3, Insightful)
The only thing I can think of is that buyers outnumber sellers, and they need to maintain those high # of bidders in order to stay attractive to sellers... So they try their damndest not to scare them away.
Or something. I've never tried other auction places. ^^;;
Re:zerg (Score:4, Interesting)
Don't bother. I collect old watches and one day I saw a watch I wanted. At $50, no reserve. I emailed the guy to see if he'd take $250 (about a quarter of what it's worth, hey, it's worked in the past) and he said he'd just sold it for $200 and can't understand why it didn't sell in a month on Yahoo auctions with a buy it now price of $100.
ebay has no competition. That's bad in a way, but it's also good in that you only have to look in one place.
I don't sell on ebay, only buy and its saved me tons of money. Actually it's cost me tons of money, but I got way more for the money than I'd get paying retail.
In fact, I just noticed I don't really buy much on stores at all any more.
Parent
Re:zerg (Score:3, Informative)
Maybe I'm missing something here, but ... ... How can there be more buyers than sellers?
There's more potential buyers then actual sellers. Not every bid for an item wins after all....
EBay "is not an auctioneer" (Score:5, Informative)
Yeah, but acccording to themselves (IIRC) EBay are not auctioneers:-
From Ebay.com [ebay.com] and also at Ebay.co.uk [ebay.co.uk], they say that:-
3. eBay is Only a Venue.
3.1 eBay is not an auctioneer. Although we are commonly referred to as an online auction web site it is important to realise that we are not a traditional auctioneer. Instead, the Site acts as a venue which allows registered users to offer, sell, and buy just about anything which is legal, at any time, from anywhere, in a variety of price formats. We do not review listings provided by users, we never possess the items offered through the Site and we are not involved in transactions between buyers and sellers.
In short, they do a lot less than Sothebys and friends, so I don't consider this largesse in any way.
Parent
Re:zerg (Score:3, Insightful)
Paycheck Shavings (Score:3, Insightful)
And a dollar is actually a lot for such schemes. For example it is illegal for a boss to shave a minute off of your clock time even though it may only be worth a few cents extra. Doing that could save a large company hundreds if not thousands of dollars per pay period. The people recieving the checks probably wouldnt notice either, but it is still cheating people of money and illegal.
The same reason the "money shaving" scheme in office space was wrong comes to
Re:Paycheck Shavings (Score:3, Funny)
But it wasn't wrong. Initech was wrong!
Re:Well... (Score:3, Informative)
Ebay is a beneficiary.
Ebay takes a percentage of the earnings. If the final bid is inflated, then Ebay makes more money.
Re:This is the kind of thing... (Score:5, Interesting)
Maybe the 'little guy' needs to be a little more careful with the pointy end of the stick, if he doesn't want the big guys to come and take the stick away.
This is a perfect example of a frivolous lawsuit. Some functional illiterate from the Land of Fruits and Nuts logged onto eBay and placed a couple of bids without having his mommy read him the eBay terms of service first. It's amazing (and frightening) how few eBay users actually understand how eBay auctions work.
Parent
Re:To be fair... (credit card fees)... (Score:5, Informative)
I've been with Paypal since near its beginning and I've always been surprised that its made it since its margins are actually very low. So yeah, Paypal isn't doing that much gouging, at least on this issue... (it has other problems...)
Parent
Re:To be fair... (credit card fees)... (Score:5, Interesting)
Somehow PayPal manageges not to be classified as a bank either, which has been a hot topic in the past. They get to skirt much of the federal regulations.
I don't know if this is still their business model, but if so, i think it's great. Customers get a cool service and they make money as a byproduct of the service. It's a win-win situation when it works.
Parent
Re:A better buyer's market? (Score:3, Informative)
Absolutely! In several ways:
The seller places the item for auction, waits a fixed amount of time, then gets money. At no time does he face any risk.
The buyer, on the other hand, has to sift through the items (and sellers DO spam keywords), place a bid, then wait around for days. He may likely be outbid, in which case the whole process starts over. If the buyer "wins", he then sends off his money in *hopes* that t