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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."
From the article: "EBay automatically increases bids only when the maximum has been hit and when the prior top bid was between bidding increments. For example, bidding increments on items priced between $100 and $249.99 is $2.50. Block, however, raised his bid increment by $1.50." therefore his bid increment would not be enough to secure the item.
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.
No, that's a legit charge for services. You pay a fee to use their service to list your item. They have to make money at it somehow. PayPal is then an optional service, again that you can pay for. You don't have to use PayPal to take money, you could get yourself an account wiht someone like Verifone and take credit cards yourself, but that also costs money.
They provide a service that is valuable to you, I see no problem with them wanting to make money on it.
Just read the article, the last line of it summarises the entire lawsuit:
EBay had net revenue of $3.27 billion in 2004.
Ahh it is whoopty fucking doo though.
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 mind.
WoW: Scheod 70 orc warlock on Shadowmoon
So, eBay is price gouging an -auction- whose parameters [set increments] are defined well before the customer participates?
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!".
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.
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."
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
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.
A feeling of having made the same mistake before: Deja Foobar
"therefore his bid increment would not be enough to secure the item"
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.
Why slashdot? Why not?
Except that that's not what happens. This issue only happens when someone else bids $80.
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.
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.
If you enter a proxy bid of $125, then you are entering into a contract with eBay and the seller to pay up to $125 if yours is the winning bid. If you end up winning at $102.50, then you should be happy for getting the item for $22.50 cheaper than you were willing to spend. It doesn't matter if you were initially willing to spend $100.01 before, your new bid of $125 supercedes this, and by your own free will. If you weren't willing to pay $102.50, then why did you place a bid of $125?
You see? You see? Your stupid minds! Stupid! Stupid!
OK, everyone is complaining that this system doesn't make sense but lets break down what is going on.
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.
I'm sure the claim was noticed under the policy, but it should not be paid. This type of claim is not what D&O policies are designed to cover. Also, D&O policies have what are known as conduct exclusions, which carve out coverage for fraud, among other things. However, if the suit proves legitimate and this causes the stockholders of eBay to sue the D's and O's for failure to supervise or some other such cause of action, the policy might then respond (depending on the specific policy terms, like whether there is severability for the innocent D's & O's).
Secondly, I doubt eBay has "hundreds of millions" of limit in their D&O program. Even if every insurance carrier who cared to was participating on a given program, there's limited capacity. I think the most even an AIG would put up on a risk is $25 million, perhaps up to $50 million if there is reinsurance. Large companies build a program with many layers to a total of maybe $100 million, sometimes (but rarely) more.
Disclaimer: I am an underwriter, but the statements above are not professional advice or opinion. I am not an underwriter on eBay's program.
If you're raising your bid after your initial bid, you deserve an idiot tax. Changing bids reflects a complete misunderstanding of the basic premise of the eBay auction.
my sig's at the bottom of the page.
How does it support the suit? It's documented procedure. When you sign up with ebay, you're expected to read and understand how the process works. Just because you're too lazy too, doesn't make you eligible to sue them for something you should have known before you started bidding.
Ebay tells you it works this way. If you use the system you agree to those terms. The suit is frivilous.
No shit. It's like people can't understand what "maximim bid" means. I mean, decide what the highest amount you're willing to pay for that item is, and set it. If you win you win, if not then you didn't overpay for that item. Obviously, if you need to go back in and raise it later, then you didn't actually put your maximum bid in to start with.
Either that, or they caught the "auction bug" and can't help themselves from trying to outbid someone. It's as bad as gambling "sickness" sometimes.
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.
What nobody is talking about is that there are two aspects to the proxy bidding system: the maximum bid and the timestamp associated with that bid. Each named bidder is only allowed one such pair to control their bidding.
.09 cents, less than the next increment? It is the timestamp of your proxy bid. But when you change the value of your proxy, you changed the timestamp.
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.
I mentioned this in another post, but it bears repeating. eBay is--first and foremost--an auction house.
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 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.
I currently have no clever signature witicism to add here.