HelpingYouSellIt.com

August 22, 2008

Can eBay Be Sued for Libel?

Filed under: What's Up With eBay.com — Tags: Add new tag, eBay, eBay DSR, eBay feedback, lawsuit, sell on eBay — trudey @ 7:16 am

I recently read an article on Auctionbytes.com. A really good site by the way.

In this article “Griff,” one of the most popular eBay gurus, author of many books on eBay, host of eBay Talk Radio and Head of eBay University, stated how he stood behind all the changes in the eBay platform since their beginnings in late last fall. How all these changes are needed to revitalize the eBay’s growth.

I thougt this quite ironic since many of the initiated changes have litereally been recalled. Why? Officially because eBay has heard the community, the same community that was called “noise” back in February by Mr. Donahoe, eBay’s newest man in charge.

Unofficially, I think it was more because these changes are either costing eBay a loss in revenue (less sales=less final value fees) or for other unsubstantiated reasons, such as the world wide eBay boycott and eBay stock value plummeting.

Anyways, one of the changes that has been recanted is the Neutrals = Negatives. The reason this has caught my attention more than the other changes is because of it’s devastating result on many small and mid size sellers. I don’t include PowerSellers because, although many have left eBay, they had the financial means to open their own sites or move to other sites and take their customers with them.

But the small and midsize sellers, the single parent, the handicapped individual, the guy who lost his job and the single income family trying to get ahead, took the brunt of this change. A change that put many of them out of business.

And, the reason it put them out of business - it ruined their feedback standing resulting in less, if any, exposure in the search results.

Let’s break this down because I see two legal areas here. And, by the way, I am no lawyer, I’m just looking at this logically.

The first legal problem I see is libel. Libel is defined as”

“An untruthful statement about a person, published in writing or through broadcast media, that injures the person’s reputation or standing in the community.” Nolo Press

While that is a simplistic explanation, it serves our discussion. By eBay changing the game without warning and due discretion, they took pristine feedback scores of 100% and overnight dropped them several percentiles. Other acceptable scores of 98% and 99% took a nose dive to unacceptable rates of 95-97%.

The bad part is many of the neutrals were by nature, not a negative protrayal of the product or the seller. Many came from novice buyers who did not understand the process, buyers who had a bad day, and honest misunderstandings. But because there was no way to eradicate the nuetral feedback, it stayed on record. This was not a bad thing until eBay changed the rules retroactively.

Now eBay has, as of August 19th, mended the damage by putting the system back the way it had been, but too late for many they have put out of business; and they did so blatantly on a public forum.

eBay ruined their reputation, which ruined their standings in the search results, deminishing their ability to sell. As far as I can see it meets the requirements for libel.

The second area where I see a legal vulnerability is “Non-Performance.”

These small and mid-sized sellers paid eBay to promote their items. In essence, these sellers bought advertising on eBay. That is all a listing is suppose to be, advertising, at least that is all it is suppose to amount be.

When eBay started showing favoritism to some sellers based on their feedback and DSR scores, and began to discount and bury other sellers because of the feedback and DSR score reduction, eBay became in violation of the contract between those sellers and eBay.

At the time, nowhere did it say on the eBay site or in the eBay User Agreement that if your overall feedback score and DSR’s were not up to eBay standards, you would be represented less than other sellers of higher standings.

The minute eBay initiated DSR’s and Negatives as Neutrals; and started affecting search results based on those scores, eBay was in violation of its own User Agreement, a binding contract. As a matter of fact, at the time eBay initiated these changes, the User Agreement stated very clearly that Neutrals did NOT count against overall feedback ratings.

While eBay has made the change back, it still continues to slight sellers is search results based on DSR ratings, a system in and of itself raked with technical glitches, false representations to buyers and anonymity.

Can we all say, “Class Action Lawsuit?”