Deceptive Doings Down Under

One of the reasons why I keep going back to this story is that my crystal ball tells me we will be seeing large eBay seller defaults in the USA after Christmas. Learn from history and if you must shop on eBay, always pay with your credit card.

When eBay's seventh largest Australian seller "ebusiness-supplies" (or EBS) went into receivership in July about 4,000 creditors (mostly eBay buyers) were owed about A$1.7 million. In the face of nationwide consumer outrage and considerable negative media publicity PayPal announced the funding of a special fund to compensate all victims who paid and lost using PayPal.

Three months on, it is now clear that PayPal misled the victims and misled the media - its statements and actions since then prove this beyond doubt. It appears the original announcements were little more than a publicity exercise to promote the purported buyer protection benefits of PayPal - at the expense of thousands of defrauded buyers.

Mid July eBay announced second-quarter profit jumped 22 per cent, with strong growth in its e-commerce sites and its PayPal payments service. PayPal, revenue rose 32 percent to $US602 million. CEO John Dohonoe was quoted

"This was a strong quarter and we are very pleased with the performance of the portfolio, particularly with the growth generated by PayPal"

eBay and PayPal have done incalculable harm to the credibility of their business in Australia. Public perception is not that they are simply incompetent, or micro-managed from the USA but that they are dishonest or "twisted." Mid August, less than a month after revealing PayPal revenue rose 32% in the second quarter eBay announced (bolding is mine)

"PayPal has been working through the process of identifying its customers that have recently been affected by the collapse of EBS International (in liquidation), operating on eBay.com.au as eBusiness Supplies and running the website at www.bestbargains.com.au," it said.

"Customers who have been directly impacted by eBusiness collapse have now all been credited by PayPal to either their PayPal account or credit card."

This statement was more than misleading, it was not true.

Australian investigative TV program ABC's 7.30 Report aired October 2nd. eBay's Daniel Feiler was interviewed and filmed. If you have not seen the video go here, Mr Feiler's wide eyed boyish charm rang false. Arrangements had been made to interview and film a spokesperson from PayPal, however PayPal withdrew from this at the last minute. Miraculously several buyers who had been previously denied refunds, received refunds just days before the program aired. The heavy hand of the PR department can clearly be seen at work on the two stories below.

Debbie Robbins of Queensland had filed a claim for $2025 on three items and completed PayPal's statutory declaration. She was fully reimbursed for two items totaling about $700 but PayPal denied her claim for a spa from EBS for $1325 saying she had missed a June deadline. Debbie posted this in the comments section of this story. (bolding is mine)

I am the Debbie Robins mentioned in your online story and I just want to let you know that PayPal did finally refund me the $1325.00 for the sauna that I purchased last week. It took awhile but it happened at last. Kelly Stevens from PayPal read your article and wanted to be sure that I set the record straight with regard to this developement. Feel free to let her know that I have done so. Thanks again Debbie Robins

Paul Foster of New South Wales also received a miraculous reimbursement of $435 after being told he was not eligible for the EBS special fund as his transaction with EBS was "outside its reporting criteria". Mr Foster made lots of 'noise.' Not only did he complain to both eBay and PayPal, he also lodged a complaint with the Banking and Financial Services Ombudsman.

As Auntie May would say "The squeaky wheel gets the grease."




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Related articles and Links:

Australian IT News - PayPal to Refund More EBS Victims
-PayPal Silent on eBay Refunds Dispute

Update EBS Liquidation and Investigation

For victims that have not received the EBS liquidators report, please contact:

SV Partners liquidators
phone: 07 3310 2000
email: ebs@svp.com.au

they will place you on the unsecured creditors list, and at the moment it looks like you may receive around 30% of your money once EBS' assets are sold.

You can also try for a Visa/Mastercard refund. In Australia, as in the USA, MasterCard® and Visa® Card Association rules and regulations govern liability with respect to disputed transactions; which includes a 90 day window of opportunity for chargebacks. In the event that a merchant collapses then the acquirer bank (the bank which issued the credit card) meets its scheme obligations and then gets into line with the rest of the unsecured creditors for whatever it is owed. Contact your bank.


If you paid with PayPal and have been refused a refund, ask again. Ask to speak to a PayPal supervisor, be prepared to argue a lot. You may get a refund, others have! As is usual with eBay a 'wait patiently' announcement was made on the Round Table board on 29th July, and nothing since.

Detective Senior Constable Michelle Cavanagh, a member of the fraud squad at Queensland Police, said she was waiting for information from the liquidator to determine where all the money has gone, and whether anything illegal has taken place. The Queensland Police fraud department had received 16 complaints so far, she said. An investigation is in process but it could be months until the investigation is complete.

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Distrust All Around on eBay

Once again, a comment posted by eBay Australia seller Kevin to my post on seller confidence is too comprehensive to leave in the comments section. It deserves its own post so I have moved it. Thank you Kevin for taking the time to share your thoughts.

eBay seems to have added a rather odd business tool to their arsenal this year - distrust.

This is totally at odds with the concepts and foundations that Pierre Omidyar built the site on, and is probably the major affront and culture shock to "old school" eBay sellers, who have felt assailed by an apparent campaign against them throughout 2008, but as illogical as it sounds it does seem to be eBay's tool of choice for the financial expansion of eBay this year.

So, how can distrust be used to make a marketplace more profitable, when trust is an essential ingredient for that very marketplace to work in the first place?

If it is true that during times of recession Ebay will stagnate, or if numbers or gross turnover will cease to grow at the rate of unreasonable expectations placed on it by the stock market, then tools on the site need to earn additional income for the perception of growth to remain.

The obvious answer here is PayPal.

In times of recession, sellers will be more alert to how they are spending their money and will stop investing in "bells and whistles" on their listings unless they feel they have a proven track record of increasing sales.

Meanwhile, the buyer is being mercilessly convinced that the only safe way to shop on eBay is to use PayPal. And thus, while I suspect that only a minimal fraction of buyers have actually read the user agreement to see what the extent of their protection really is, most are convinced that they are being protected by the online payments monolith, whatever may happen with their transaction.

Most buyers, even of high value items, will no longer take postal insurance because, it appears, they believe that PayPal is a free insurance policy for their purchase (it isn't).

Several sellers I know here in Australia had not even studied the protection aspects of PayPal until they were facing all of their turnover being forced into the hands of this company through the threatened "PayPal only" policy for the Australian eBay site, and were quite alarmed to see the gaping loopholes in PayPal's protection policies (more fool eBay for drawing user's attention to such things).

What seems to be ignored is that the costs related to PayPal have to be paid by someone, and as is obvious to every seller on eBay, particularly if they are "retailing" new goods on the site, the seller bears all of the fees and creates all of the profits that eBay pulls out of it's payments monopoly subsidiary, and in some countries must also bear the costs of real postal insurance in order to qualify for so-called seller protection, and it eats into their profit margin.

As we have already discussed here, at the same time as having increasingly distrustful buyers channeled through PayPal and adding to the costs of sellers marketing their goods on eBay, the sellers are being "incented" to reduce their selling prices and associated costs, such as shipping, for the benefit of the marketplace. Well, I guess that combination benefits everyone in the marketplace - except those who are selling there.

Using distrust as a business tool has to be a dangerous exercise, but in eBay's eyes it has benefits. As well as forcing the uptake of PayPal, it also discourages buyers from communicating directly with sellers (who they are learning not to trust,) and that in turn reduces "off-site" sales. The danger though, is, of course, if you convince people that eBay really is an unsafe place to shop, they will actually go elsewhere to shop, where they feel safe.

There is also another danger for eBay, the sellers who are no longer trusted in their own marketplace have also lost much trust of eBay itself. While this can be marketed as an effective campaign against dishonest sellers (they protesteth too much), it will also mean that many good sellers are leaving the site because they simply do not trust the business tools that have now turned against them.

The quality, variety and life of the site is being sucked out of the eBay marketplace - and from my perspective at a steadily increasing rate. We were promised that eBay would be unrecognizable by mid next year, but I am not convinced that this is the direction that the site should be taking for it's own long term health, let alone for the health of it's clientele.

Oh well,

Kevin

PayPal The Naked Truth Part II

Protection for Buyers

eBay has been running a series of risque advertisements for PayPal in Australia, one featuring a middle aged woman saying "I've done it with 90 different people, but I used protection". The big push is to promote buyer confidence, and it is hard to find fault with that. As is usual with anything eBay does, which naturally includes all subsidiaries, the baggage which accompanies any policy is to promote the bottom line, profits.

What exactly is PayPal Buyer Protection?

eBay has five separate programs:


1. Item Not Received (INR which is also sometimes referred to as Seller Non-Performance (SNP or NPS)) or Significantly Not As Described (SNAD). eBay says

Note: Your eligibility for reimbursement through our buyer protection programs is determined by the payment method that you’ve used and the eBay country site where you have purchased the item.

If you have paid for an item, but didn’t receive it, or you paid for and received an item, but it was significantly different from the item description. Note: If you paid for your item with PayPal, you'll be taken automatically to PayPal to file a PayPal Buyer Protection claim.eBay facilitates communication between the buyer and the seller through the dispute console, an online communication tool. All information posted in this tool will be accessible anytime by you, the seller, and eBay Customer Support.

Here is the link to the eBay policy page.

What is it in reality?

An automated (bot driven) venting space which is not seen by a human unless and until it is escalated to a claim. Then "Our Trust and Safety team may take appropriate actions if they find the seller has violated our Seller Non-Performance policy."
Red INK Rating



2. PayPal Buyer Protection eBay says

PayPal Buyer Protection Policy only applies to items purchased on eBay or to payments funded through your debit card and processed through the ATM debit network. If you have paid for the item through PayPal, up to $200 (Basic Tier)or $2000 (Top Tier Coverage Amount) at no additional cost. See eligibility.

Henrietta says the fine print is too voluminous to put here!

What is it in reality?

Basically if you meet all eight eligibility requirements specified in Section 13.8 of the PayPal User Agreement; and follow exactly the seven steps of the Claims Procedure specified in Section 13.7 of the PayPal User Agreement; PayPal will cover you up to $200 if the seller does not. Need more? Pick your seller very carefully and meet all six eligibility requirements specified in Section 13.9 of the PayPal User Agreement. Risk to PayPal, very very low.
Red INK Rating



3. PayPal Buyer Complaint Policy PayPal says

PayPal Buyer Complaint Policy - Our best efforts program to reimburse Users for losses only to the extent we are able to recover the funds from sellers.

The PayPal Buyer Complaint Policy only applies to items purchased outside of eBay or eBay Express. If we grant a Claim under our Buyer Complaint Policy, PayPal will seek to collect from the seller by debiting the seller's PayPal Account up to the amount of your loss, and you will receive a recovery to the extent that the seller has funds available in the Account at the time we debit the seller's Account. If there is more than one Claim against the same Account, we will process the Claims in the order they are filed, and will pay out on each granted Claim up to the amount of funds in the seller's Account at the time the Claim is awarded, but not more than the amount of the Claim.

What is it in reality?

Worthless! A crooked scamming seller will have very little in the way of funds in their PayPal account. Buyer will be SOL. An honest seller will bend over backwards to settle any transactional problems with a buyer.

Risk to PayPal, zero.
Red INK Rating, I am looking for another bomb.



4. eBay Standard Purchase Protection Program eBay says

If you make a purchase from one of the eBay websites listed below,(Hong Kong, New Zealand, Poland, Singapore, Sweden) you may be eligible for the eBay Standard Purchase Protection Program (eBay SPPP) instead of the PayPal Buyer Protection Policy. The eligibility requirements for eBay SPPP are the same eligibility requirements for PayPal Buyer Complaint Policy as listed above. eBay Standard Purchase Protection Program is our program to reimburse buyers for losses up to the applicable coverage amount minus the processing cost for purchases made on the eBay SPPP websites.

What is it in reality?

Worthless and expensive! Processing fees appear to be 12% or greater. A crooked scamming seller will have very little in the way of funds in their PayPal account. Buyer will be SOL.

Risk to PayPal, zero.
Red INK Rating, I am looking for another bomb.



5. eBay Motors Buyer Services & Protection eBay says

The eBay Motors Vehicle Purchase Protection (VPP) program provides protection of up to $50,000 against certain losses associated with some types of fraud. You are automatically enrolled in the program at no charge when you complete the purchase of an eligible vehicle on the eBay Motors site

This program is administered and managed by an independent service provider that is not affiliated with eBay Inc.

Overall Impression

The whole thing is so lawyered up that most claimants will give up. This may be the intended effect. The differences between Standard Purchase Protection, Basic Purchase Protection and the Buyer Complaint Policy are so 'fine print' that I doubt any eBay Live Help Customer Service Representative can give correct advice. Lotta smoke and plenty of mirrors here. No real protection. I will not purchase anything online without using my Credit Card, that is simple to do and easy to claim on should the necessity arise. Best advice to buyers? Do your homework, study your sellers 'feedback left for others' and read the listing.

Next PayPal post will cover seller protection, it will be much shorter.



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