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

Had Similar Experiences

[ackthpt]

"Based on what we know about what's being alleged, it appears the plaintiff completely misunderstands the functionality of the eBay bidding system," eBay spokesman Hani Durzy said. He said the company had not yet seen the lawsuit.

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

[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?

Re:Had Similar Experiences

[orkysoft]

Marked as: WONTFIX

Another article at InternetNews.com

[3nuff]

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

Re:Another article at InternetNews.com

[LiquidCoooled]

+++++++++++++Very good information, Quick to load, trustworthy poster, would click again.

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.

Riiight...

[Telastyn]

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!".

Slightly Offtopic - Civic Duty?

[ParadoxicalPostulate]

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?

[rjstanford]

There's one easy fix to that. Keep actual damages the same that they are now, awarded to the plantiff (or "damaged party"). Allow punative damages? Sure, but they go straight to pay of the national debt (or whatever).

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.

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.

Re:Nobody seems to understand...

[allanc]

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.

That ain't all

[Stumbles]

Yeah I've noticed that. Another thing I have noticed when "shopping" around there. There will be an item with say a 7 day auction and it's on day 4 and there were 6 bidders. I see a number of instances where some are all of them bidders have been signed up as a buyer for 2+ years and bought nothing in all that time. But all of a sudden they decide they want the item I want. Hmmmmm.

Shitty article summaries unnecessary

[Slashdot is dead]

The following was written by a real journalist who is paid to write and report about current events for a living. They are in no way affiliated with Slashdot. (Slashdot is a joint venture between computer programmers and morons.)

SAN FRANCISCO (Reuters) - EBay Inc. is being sued by a Pennsylvania man who charges that it illegally forces up prices when certain high bidders raise their maximum bid to guard against last-minute offers, an attorney for the plaintiffs said on Wednesday.

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

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.

and this

If the plaintiff wins this class action suit could cost eBay tens or hundreds of millions of dollars.

This is a case where, if I were a schoolteacher and "symbiot" was my student, I would encourage plagiarism.