eBay Accused of Price Gouging Scheme

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."

Comments

Another article at InternetNews.com

[3nuff]

...with a little more substance than the Reuters.com blurb can be found here.

Re:Had Similar Experiences

[Shakrai]

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?

URL

[Shakrai]

In the bad form of replying to my own post I found the help section on eBay that explains this policy. To quote:

Let's say you are tied with another bidder and you hold the official high bid because you placed that bid amount first. If you place another bid, you will lose your favored "early bird" status. As a result of putting in another bid (causing you to become a later bidder), the system will increase your bid to one bid increment more than the previous bid just so that you can keep the position of high bidder.

Another instance where it would appear that you are bidding against yourself would be if your current high bid is between bid increments. If you were to place another bid, your bid will increase to the next round bid increment.

The high bid will always try to be a full bid increment over the next highest bid. If you are currently less than one bid increment over the next highest bid, then raising your maximum bid will increase the current high bid to a full bid increment above the next highest bid.

Nobody seems to understand...

[syukton]

Nobody seems to understand the problem here. It isn't about winning auctions. It's about eBay automatically increasing your bid for no real reason.

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.