Sunday, January 28, 2007

Revealed: How E-Bay Sellers Fix Auctions

Hot off the Press into cyberspace, I thought readers would like this, it seems E-Bay is not as safe and fraud free as they would like us to believe, I welcome readers comments.

The Sunday Times
January 28, 2007Insight
Revealed: how eBay sellers fix auctions
Recorded excerpts of meetings with Paraskevaides: Clip 1 Clip 2

CUSTOMERS of the internet auction site eBay are being defrauded by unscrupulous dealers who secretly bid up the price of items on sale to boost profits.
An investigation by The Sunday Times has indicated that the practice of artificially driving up prices — known as shill bidding — is widespread across the site.
Last week one of the UK’s biggest eBay sellers admitted in a taped conversation with an undercover reporter that he was prepared to use business associates to bid on his goods for him.
Our inquiries found evidence that a number of businesses — ranging from overseas property agencies to car dealerships — have placed bids on their own items using fake identities.
The cases raise questions about whether eBay, the world’s biggest auction site, is doing enough to protect consumers.

Shill bidding is against eBay rules and is illegal under the 2006 Fraud Act. However, the resulting higher prices on the site boost the value of eBay’s share of the sales.
Last November eBay changed its rules to conceal bidders’ identity — making it even more difficult for customers to see whether sellers are bidding on their own lots. Since its launch seven years ago, eBay’s UK website has attracted more than 15m customers. It sells more than 10m items at any given time.

One of the beneficiaries of the boom is Eftis Paraskevaides, a former gynaecologist, from Cambridgeshire. He has become a “Titanium PowerSeller” — one of eBay’s handful of top earners — selling more than £1.4m worth of antiquities a year on the site.
In a conversation with an undercover reporter last week, Paraskevaides claimed shill bidding was commonplace on eBay.

When the reporter asked whether he arranged for associates to bid on his own items, he replied: “Well, if I put something really expensive (up for sale) and I was concerned that it was going for nothing, I would phone a friend of mine, even a client of mine who buys from me, and say: For Christ’s sake, I sell you 100 quids’ worth of items a week . . . just put two grand on it, will you?” The reporter was posing as a seller of valuable antiquities. He inquired whether Paraskevaides could sell them on eBay and guarantee a minimum price.
He replied: “Leave it to me (laughs). Don’t call it shill bidding. Then I won’t be accused of shill bidding. Yes. I mean — I’ve got people.

“I’ve got some of my big clients who buy big items off me, I look after them. So I can get on the phone to America and say: Mr XXXX . . . you’re a multi- millionaire. You buy a hundred grand’s worth off me a year. Do me a favour would you. Just put — yeah. Exactly.”
He claimed eBay would never follow up a complaint against him for shill bidding because he generated about £15,000 a month in commission for the company. “Are they going to ban somebody who’s making them the best part of 15 grand a month? No,” he said.
After being told that he had been talking to an undercover reporter, Paraskevaides denied that he had ever shill bidded on eBay and claimed he was talking about clients who sometimes bid on expensive items if they wished to protect the price.

However The Sunday Times discovered businesses that have been bidding on their own items. One leading dealer from London admitted last week that that he had shill bidded in the past.
A spokesman for eBay said he expected that the company would now launch an investigation into Paraskevaides. Anyone caught shill bidding risks a permanent ban.
The spokesman added: “The change to the way bidder IDs are shown has already resulted in a safer environment for users.”

E-Bay Class Action Lawsuit

I thought readers might be interested in this if you were not aware of it, or if you wanted to opt out before your deadline expires.

SUPERIOR COURT OF THE STATE OF CALIFORNIACOUNTY OF SANTA CLARA JOHN ROCKERS, MARK RAWLING and BRIAN MORK , On Behalf of Themselves and for the Benefit of All with the Common or General Interest, Any Persons Injured, and All Others Similarly Situated, Plaintiff, vs. EBAY, INC., et al.,

Defendants. ) ) ) ) ) ) ) ) ) )


To: All eBay users from February 16, 2001 to the present. If youclaimto have been harmed by eBay raising the eBay bidder's existing bidwhere nohigher competing bid had been made and where raising the bid was notnecessary to meet a reserve minimum you are a Member of the "Class" and your rights may be affected by the proposed class action settlement of a law suit alleging that eBay would automatically increase in certain circumstances an existing bid where no competing bid had been made and where it was not necessary to meet a reserve minimum. eBay denies any and all of the contentions and allegations of wrong doing relating to eBay's in creasing an existing bid where no competing bid had been made and where it was not necessary to meet a reserve minimum, and denies that the Members of the Class have suffered any damage. This Notice summarizes the terms of the settlement, and explains your rights and options under the settlement.


On February 17, 2005, a complaint was filed by plaintiff Glenn Block in the Superior Court of the State of California County of Santa Clara( the"Court") as a class action alleging that eBay's automatic increase in certain circumstances of an existing bid where no competing bid had been made and increasing the bid was not necessary to meet a minimum reserve was improper and artificially inflated the bids of eBay buyers, thus causing damage to eBay buyers (the "Action"). On April 17, 2006, an AmendedComplaint which, among other things, substituted Plaintiffs John Rockers,Mark Rawling and Brian Mork for the original plaintiff was filed in theCourt. The caption of the Action is Rockers v. eBay, Inc., et al., CaseNo.1:05-CV-035930.

II. THE SETTLEMENT TERMS The parties participated in mediation with the Honorable Read Ambler(Ret.) in an effort to resolve the Action. As a result of the mediation and in order to settle the allegations in the Action, eBay has agreed to cease the conduct alleged by making the following "curative disclosure" that is relative to the misrepresentations claimed by
Plaintiffs: In response to a system prompt, if a high bidder attempts to raise his maximum bid when such bidder is then between bid increments, eBay shall first disclose to such bidder the exact amount of any resulting bid increase that would otherwise occur by virtue of the bidder raising the maximum bid.By way of illustration only and using the facts set forth in paragraph 23 of the Complaint, upon raising the maximum bid once plaintiff had reached his existing bid maximum of $111.00, eBay would disclose whether raising the maximum bid level would result in the $111.00 bid being raised to the next bid increment over the last competitive bid of $110.00 and, if so,specify the exact amount to which the bid would be raised - that is, $112.50.

In addition, eBay has agreed to pay the sum of $2.1 million("Settlement Fund"). The Settlement Fund will be distributed to one or more federally tax exempt charities chosen by Plaintiffs' Counsel and approved by the Court. None of the charities selected by Plaintiffs' Counsel and approved by the Court shall be directly or indirectly affiliated or associated with Plaintiffs or their counsel. Based on information provided by eBay to Plaintiffs' Counsel, the $2.1 million is estimated to be approximately 50% of the claimed damages and all other economic harm allegedly incurred by Members of the Class. Distribution of the Settlement Fund to charitable organizations is appropriate because any attempt to distribute the Settlement Fund to individual Members of the Class -whos eaverage recovery would be less than $1.00 - would result in administrative costs that would consume any settlement proceeds. eBay has also agreed to separately pay Plaintiffs' Counsel$800,000for past and anticipated future attorneys' fees and expenses regarding the Action, subject to Court approval ("Attorney Fees"). This amount was negotiated and agreed to after the substantive provisions of the settlement were reached and after the memorandum setting forth the material terms of the settlement was executed. Plaintiffs' Counsel, subject to Court approval,intend to pay up to $104,300.00 and $150,000.00 to Glenn Block (orGlennBlock, P.C.) and Daniel Block (or DSB Consulting, Inc.), respectively,for their expert services in this Action from the Attorney Fees. Glenn Block was the original plaintiff in the Action and provided technical assistance to Plaintiffs' Counsel regarding eBay's auction practices, the allegations in the Action, the calculation of damages and economic harm, and due diligence.Daniel Block is Glenn Block's son and provided computer, programming and data mining expertise that was otherwise unavailable to Plaintiffs in a timely and efficient manner. Their expertise was unique and necessary for the successful prosecution of the Action.

eBay shall also separately pay, subject to Court approval, the three Plaintiffs named in the Amended Complaint, $1,000 to reimburse them fortheir time, costs and efforts in representing the Class. III. CONSEQUENCES OF THE SETTLEMENT If the Court approves the settlement, a judgment will be entered dismissing the lawsuit with prejudice against eBay and all of its past and present officers, directors, shareholders, employees, insures, agents,representatives, partners, joint-ventures, parents, subsidiaries,affiliates, and attorneys (the "Released Persons"). This means that Members of the Class will be barred from bringing their own lawsuit against any of the Released Persons relating to eBay's alleged practice of raising an eBay bidder's existing bid where no higher competing bid had been made, and where raising the bid was not necessary to meet a reserve minimum. If you do not want to be barred from bring your own lawsuit on such claims, you must validly and timely request exclusion from the Class, as set forth below.

IV. YOUR OPTIONS If you are a Class Member, you have the following options: (A) Participate in the settlement. To participate in the settlement, you do not need to do anything. If the Court approves the settlement and the judgment is not successfully appealed, the terms of the settlement will be implemented. (B) Request exclusion from the Class and settlement. If you wish to be excluded from the Class and the settlement, you must send a written request for exclusion by regular or express mail, so that it is postmarked no later than January 30, 2007. Your exclusion request must include (1)yourname, address, and telephone number; and (2) a statement that you wishto be excluded from the Class and settlement in Rockers v. eBay, Inc., etal.,Case No. 1:05-CV-035930. If you submit a valid and timely exclusion request,you will not participate in the settlement. You will not be bound by the judgment dismissing the lawsuit with prejudice as to Released Persons,and your claims will not be released. (C) Comment on the settlement. If you remain in the Class,you may comment in support of or in opposition to the settlement. To do so,you must, no later than January 30, 2007, file your comment or objectionwiththe Court and send copies by regular or express mail to Plaintiffs'Counselat the addresses below: The Court: Clerk of the Court SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA Civil Division 191 North First Street San Jose, CA 95113 Plaintiffs' Counsel: Jeffrey D. Light LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 655 West Broadway, Suite 1900 San Diego, CA 92101-3301 Your written comment or objection must include (1) your name,address,and telephone number; (2) information sufficient to establish your membership in the Class; (3) a statement of your views; (4) any supporting documentation you wish to submit; and (5) a reference to Rockers v.eBay,Inc., et al., Case No. 1:05-CV-035930. If you wish to appear and present your objection orally at the fairness hearing described in Part V below,your written objection must contain a notice that you intend to appear and be heard, a statement of the positions you intend to present at the hearing,and any supporting arguments. You may, but need not, appear in the lawsuit through your own attorney. If you do so, you will be responsible for your own attorney's fees and expenses.

V. FAIRNESS HEARING A hearing will be held on February 13, 2007, at 9:00 a.m. before the Honorable Jack Komar, Superior Court Judge, in Department 17C at theSanta Clara Superior Old Courthouse, 161 North First Street, San Jose, California 95113. The purpose of the hearing will be to determine (a) whether the proposed settlement including the attorneys' fees and expenses and service awards that eBay has separately agreed to pay should be approved as fair,reasonable and adequate and should be granted; and (b) whether the Action and the claims of the Members of the Class should be dismissed with prejudice pursuant to the settlement. This hearing may be rescheduled without further notice to the Class. You may attend the hearing if you wish,but are not required to do so to participate in the settlement.

VI. HOW TO GET MORE INFORMATION You can get more information by contacting Plaintiffs' Counsel at the address listed in Part IV (C). Complete copies of the settlement agreement and all other pleadings and papers filed in the lawsuit are available for inspection and copying, during regular business hours, at the Office oftheClerk of the Court, Superior Court of the State of California, County of Santa Clara, Civil Division, 161 North First Street, San Jose, CA 95113.