Is eBay finally getting serious about fraud?
Aethelred
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SAN FRANCISCO (AP) - Executives at eBay Inc. are touting security as their top priority in 2007 after an internal survey showed that online scammers may be denting the company's reputation.
The San Jose, Calif.-based online auction company began a program last year to safeguard members' identities by concealing their user names on expensive listings. That measure could make it harder for con artists to contact losing bidders and goad them into "second-chance offers," where customers wire cash to the scammers' accounts.
Engineers also want to reduce counterfeit items and clamp down on scams between buyers and sellers from different countries, said William Cobb, president of eBay North America.
"It's no secret that online criminals who target sites like eBay and PayPal have grown in number and sophistication over time," Cobb said in comments posted Wednesday to an eBay forum.
"Where we've historically put an emphasis on transparency and free choice, today the security threats are more complex, and we're more actively protecting our buyers from fraud."
Representatives are also sending nasty e-mails to sellers who charge egregious shipping and handling fees. eBay reduced the average shipping cost in the "cellphones" category by 25 per cent since last summer, Cobb said.
The emphasis on security enhancements - billed as the most important initiative in the company's 12-year history - comes as senior eBay executives host the site's top 250 sellers at closed-door meetings this week in Burlingame. Entrepreneurs attending the second annual E- Commerce Forum sold seven million items worth $1.5 billion in 2006.
So-called "power sellers" have expressed concern - and have threatened to go to other sites - over concerns that eBay has been slow to combat fraud.
eBay says less than 100th of one per cent of the listings on its website are fraudulent. But even by that conservative measure, 58,300 auctions may have been fraudulent in one three-month period. More than 583 million items were listed in the third quarter of 2006.
More concerning, fraud disproportionately strikes high-end categories such as automobiles, electronics and jewelry. There's no reliable way to estimate how much is lost to con artists on eBay, where $12.64 billion in merchandise exchanged hands in the third quarter.
Spokesman Hani Durzy said the company is targeting all scammers - from petty thieves to organized crime syndicates.
"We're never going to completely stop the bad guys from using the Internet, but we do know that negative experiences are a major reason people leave eBay - and they pass along word of mouth to other people," Durzy said. "In 2007, you'll see a sea change in our approach to trust and safety."
The San Jose, Calif.-based online auction company began a program last year to safeguard members' identities by concealing their user names on expensive listings. That measure could make it harder for con artists to contact losing bidders and goad them into "second-chance offers," where customers wire cash to the scammers' accounts.
Engineers also want to reduce counterfeit items and clamp down on scams between buyers and sellers from different countries, said William Cobb, president of eBay North America.
"It's no secret that online criminals who target sites like eBay and PayPal have grown in number and sophistication over time," Cobb said in comments posted Wednesday to an eBay forum.
"Where we've historically put an emphasis on transparency and free choice, today the security threats are more complex, and we're more actively protecting our buyers from fraud."
Representatives are also sending nasty e-mails to sellers who charge egregious shipping and handling fees. eBay reduced the average shipping cost in the "cellphones" category by 25 per cent since last summer, Cobb said.
The emphasis on security enhancements - billed as the most important initiative in the company's 12-year history - comes as senior eBay executives host the site's top 250 sellers at closed-door meetings this week in Burlingame. Entrepreneurs attending the second annual E- Commerce Forum sold seven million items worth $1.5 billion in 2006.
So-called "power sellers" have expressed concern - and have threatened to go to other sites - over concerns that eBay has been slow to combat fraud.
eBay says less than 100th of one per cent of the listings on its website are fraudulent. But even by that conservative measure, 58,300 auctions may have been fraudulent in one three-month period. More than 583 million items were listed in the third quarter of 2006.
More concerning, fraud disproportionately strikes high-end categories such as automobiles, electronics and jewelry. There's no reliable way to estimate how much is lost to con artists on eBay, where $12.64 billion in merchandise exchanged hands in the third quarter.
Spokesman Hani Durzy said the company is targeting all scammers - from petty thieves to organized crime syndicates.
"We're never going to completely stop the bad guys from using the Internet, but we do know that negative experiences are a major reason people leave eBay - and they pass along word of mouth to other people," Durzy said. "In 2007, you'll see a sea change in our approach to trust and safety."
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<< <i>Is eBay finally getting serious about fraud? >>
<< <i>The San Jose, Calif.-based online auction company began a program last year to safeguard members' identities by concealing their user names on expensive listings. That measure could make it harder for con artists to contact losing bidders and goad them into "second-chance offers," where customers wire cash to the scammers' accounts. >>
More importantly, it also makes it impossible to warn gullible bidders about fraudulent auctions, eliminating the "problem" of "bid interference".
<< <i>Spokesman Hani Durzy said the company is targeting all scammers - from petty thieves to organized crime syndicates. >>
Yeah, sure. Especially Chinese and other counterfeit coin sellers.
In a recent transaction of mine, I found that Paypal protection is a joke and Ebay naru'd the seller (and 1 of their shill bidders) for 2 weeks and then they are back to the same tricks. While I am still out $150 + $25 Paypal processing fee, since there supposedly wasn't enough money in the sellers account to give me a full refund
<< <i>Is eBay finally getting serious about fraud? >>
Only if it affects their profits.
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Anyway...
<< <i>If they were really serious they would shut down all sales from China. But remember, they want access to the Chinese market, so... >>
Actually, Ebay either is shutting down or has shut down Ebay China. Failed experiment.
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<< <i>Actually, Ebay either is shutting down or has shut down Ebay China. Failed experiment. >>
That would be good news! Of course people in China would still be able to use eBay...and now that there is blood in the water...
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Article from December - eBay is folding its Chinese business into a joint venture with Tom Online, a Beijing based Internet portal and wireless services firm.
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EBay Is Expected to Close Its Auction Site in China
By KATIE HAFNER and BRAD STONE
Published: December 19, 2006
Acknowledging that the online auction market in China is enticingly fast-growing but frustratingly tough to crack, eBay will shut its main Web site in China and enter into a joint venture with a Chinese company instead, a person briefed on the plans of the companies said yesterday.
EBay will take a 49 percent stake in the venture, he said, with Tom Online Inc., an Internet company based in Beijing, taking the majority share and administering the venture, which has yet to be named.
The plans call for eBay to put $40 million into the venture and Tom Online to contribute $20 million. Meg Whitman, eBay’s chief executive, is to make the announcement tomorrow at eBay’s office in Shanghai.
EBay, which has already spent hundreds of millions of dollars trying to establish its presence in China, declined to comment yesterday.
Analysts said the move was not a surprise. “It’s an admission that they failed in China, on their own at least,” said Tim Boyd, an analyst with Caris & Company. “But I think that’s something the market already knew.”
The decision was also seen as a sign of the pressure Chinese government regulations put on foreign companies to set up joint ventures, even when they may be reluctant to do so for fear of helping to turn their Chinese partners into global rivals.
Ina Steiner, the editor of AuctionBytes.com, an online newsletter, said that “a bailout in China would be a huge concession by eBay.” She noted that last year, Ms. Whitman touted China as eBay’s biggest long-term opportunity in local markets.
“The company sold analysts on China as a way to counter slowing growth rates in its more mature markets like the U.S. and Germany,” Ms. Steiner said.
China has not been easy territory for eBay. The company established itself in China as early as 2002, when it pulled out of Japan in a concession to Yahoo’s sizable lead there, and bought a third of Eachnet.com, China’s principal online auction site.
The next year, eBay acquired the rest of Eachnet, bringing the total price to $180 million. In 2005, eBay spent another $100 million on marketing in China. Ms. Whitman predicted in 2002 that within four years, e-commerce revenue from all sources in China would grow nearly twelvefold, to more than $16 billion.
The projections were on the mark, Mr. Boyd said. “But the problem has not been the growth in e-commerce in China. The problem has been that eBay is losing market share.”
EBay has steadily been lagging behind Taobao, the consumer auction arm of Alibaba.com, China’s largest e-commerce company. The research firm Analysys International said that in 2005, Taobao’s share of the Chinese online auction market was 57.7 percent, compared with 31.5 percent for eBay Eachnet.
EBay’s move is similar to a partnership Yahoo struck last year with Alibaba. With its own Chinese operations failing to gain traction, Yahoo paid $1 billion to hand over operations to Alibaba in exchange for a 40 percent stake in the company.
Both deals represent new thinking among Internet companies that what works in other countries does not necessarily work in China, where strong local managers are needed.
Last September, Martin Wu, the chief executive of eBay Eachnet, resigned after just a year, and since then rumors have swirled that the company would quit the market.
Ms. Steiner also said eBay failed to understand the Chinese marketplace and culture. For example, she said, in contrast to Taobao, eBay Eachnet provided no phone support and discouraged buyer-seller contact that could lead to haggling.
Also, she said, eBay failed to react quickly enough when Taobao entered the market with no user fees. In January, eBay Eachnet stopped charging transaction fees.
“It has lost market share in China to Taobao and continues to face regulatory and other challenges,” said Ms. Steiner said. “A partnership with Tom Online would be an effort to salvage its Chinese investment.”
A senior executive at Alibaba, Porter Erisman, said, that “ any new deal where eBay changes its model in China would be great for both companies because now we can work out ways to cooperate.”
EBay has played down its troubles in China. As recently as October, in a conference call with analysts and the media, Ms. Whitman sought to dispel speculation that the company might reverse course in China. “We are committed to China for the long term,” she said on the call.
EBay’s stock has been climbing back after hitting a 52-week low of $22.83 in August. Shares closed yesterday at $32.42, down 1.5 percent.
Tom Online, with 75 million subscribers, allows users access to television, music stations and online stores through its Web portal and over wireless networks. In September 2005, it formed a joint venture with eBay in China to distribute the popular Internet telephone service Skype, which eBay owns.
Over all, Mr. Boyd said he was encouraged by the news of eBay’s new alliance. “Now they’re partnering with a strong Chinese presence on the Internet,” he said, referring to Tom Online. “In hindsight, I think they’d say this is the way we should have gone about it at the beginning.”
The person briefed on the plan said that eBay was also considering partnerships and other options for its electronic payments site, PayPal China.
Although eBay’s current site will be shut, he said, a separate site will be maintained to give Chinese users access to international auctions. And eBay’s Kijiji China, a Chinese classified ad site similar to Craigslist in the United States, will continue operations unchanged.
Duncan Clark, the chairman of BDA China Ltd., a technology and media consulting firm in Beijing, said Chinese regulations requiring domestic control over companies engaged in many kinds of financial transactions had limited the ability of eBay’s payment mechanism.
“The end game is who can control online payment,” he said. “They’ve had their hands tied on that.”
The Chinese authorities are preparing to issue 10 licenses for online payment systems, and eBay will have a much better chance of winning one, Mr. Clark said, if its operations are in a joint venture controlled by a Chinese partner.
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Seeing is believing.
I wonder how many legit sellers will be taken down by any type of "crackdown."
Uh huh. Likely story
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<< <i><<So-called "power sellers" have expressed concern - and have threatened to go to other sites - over concerns that eBay has been slow to combat fraud.>>
Uh huh. Likely story
And how. Ebay has a great PR group. They don't want to scare those who haven't yet been scared. Also I truly doubt Ebays figures on fraud. Take for instances this past quarter where they get their figures from. The PS3 debut and Christmas to boot. I've read and heard of more fraudlent cases involving PS3 than I've heard of successful auctions. In fact Pay Pal was locking the accounts of PS3 sellers immediately after auction to try and protect themselves from fraudulent buyers. I don't know a day that goes by where I don't see a post or two about fraudulent coin auctions. And those are just the ones being noticed by our board members. How many would we find if we took 20 saavy board members and scoured Ebay?
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