eBay Australia mandates PayPal as sole payment method

[PhilipCohen]

An email received from eBay Australia 10 April 2008 about another of their un-brilliant strategies to boost their income (undoubtedly coming soon to other eBay sites if they can get away with it in Australia):

"From 17 June you [sellers] will only be able to offer PayPal on your listings and pay on pick up (i.e. paid for when picking up the item).
"Pay on pick up can only be offered in conjunction with PayPal. No other payment methods will be permitted."

I wonder what the "Consumer Affairs" and "Trade Practices" authorities in the various countries will have to say about this outrageous little restriction on trade?

[crymeariver]

they should make sellers treat others in a nice manner. How about 3 weeks for one item to arrive and this guy is allowed to get NPB on other items 3 weeks per package. Some sellers are shipping together but charging seperate shipping.

[lotr]

Forcing sellers and buyer to only accept PayPal is simply the last straw for many long-time eBayers. I guess we all need to rethink - "is eBay worth all the constant hassle with their ever changing requirements and monopolistic practises"? At least we have a website and local auction website [url]TradeMe.co.nz[/url] in NZ to fall back on.

Now if only Amazon would allow non-US based businesses to sell on their website, we would be sitting pretty! FWIT Amazon did allow international sellers on their website 1998-2001, but then required a USA bank account for Amazon payments.
_________________
Free eBay auction & PayPal fee calculators: http://auctionfeecalculator.com

[Auntie M]

In USA it is called Restraint of Trade.

Someone should file a complaint with the proper authorities.

Martha

************
http://www.tias.com/stores/auntiemshop/

[jon79]

they are trying everything they can to generate earnings. it wouldn't surprise me if they extend this rule to eBay US in the near future.
_________________
http://www.rottenbidders.com - share your bidder blacklist

[PhilipCohen]

The Australian federal government "competition watchdog" is examining whether eBay is breaching trade practice laws by forcing users on to PayPal.
See http://www.smh.com.au/news/national/watchdog-to-rule-on-ebay-bid/2008/04/16/1208025283105.html
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[crymeariver]

[PhilipCohen]

For those of you who are interested in eBay’s attempt to introduce compulsory and exclusive PayPal for sellers into eBay Australia the following are links to the various public documents regarding this matter as it stands with the Australian Competition & Consumer Commission. You all should copy the many “submission” documents so that you can be prepared when this disingenuous mob try it on in your own country—as they, in due course, undoubtedly will.

See eBay’s application for mandatory exclusive PayPal:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499
Notifications:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/notification
ACCC correspondence:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/acccCorrespondence
The various submissions from interested parties:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/submission
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

Another newspaper article (in The Australian) about eBay's attempt to introduce mandatory exclusive PayPal to Australia
http://www.australianit.news.com.au/story/0,24897,23613500-15306,00.html
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

----- Original Message -----
From: Philip Cohen
To: adjudication@accc.gov.au
Sent: Wednesday, April 30, 2008 7:28 AM
Subject: Objection to eBay International AG - Notification - N93365

Submission to the Australian Competition & Consumer Commission (ACCC) regarding eBay Australia’s application to mandate exclusive use of PayPay

From a buyer’s perspective I have no objection to the option of using PayPal to pay for a purchase as there is no fee payable by the buyer. But, from a seller’s point of view I can well understand the objection to mandatory and exclusive use of PayPal.

eBay will undoubtedly have put forward all sorts of disingenuous reasons for this action (undoubtedly that of making transactions on eBay “safer” being the principal one—ho, ho, ho!) but in the final analysis the real reason is all about getting a percentage of a much larger slice of eBay’s total domestic turnover. (You will note also that this application does not apply to “motor vehicles, motor cycles,” etc, and that “cash on pick up” on all items is still acceptable.)

I suspect that ninety-nine percent of sellers already offer PayPal for international transactions because PayPal takes care of the currency conversion and international sellers are usually prepared to pay the fee for that “credit card” type of convenience.

However, domestic transactions do not involve foreign currency conversion and therefore traders should have the right to offer or not offer PayPal (or any other credit-card type of facility) and be able to accept payment by direct credit, or whatever, if they so choose. Certainly, as predominantly a buyer, I do not have a problem paying by direct credit those domestic traders I have dealt with previously or those that by their “feedback” appear to be trustworthy.

It appears that eBay’s strategy is to first test such controversial changes in the small market of Australia: we got the outrageous concept of absolute anonymity of bidders first (since applied in the U.K. but not yet in the U.S.). Under no circumstances can we accept any reasons put forward by eBay at face value and I will use as an argument for that premise the reasoning put forward by eBay for the recent introduction of absolute anonymity of bidders.

An additional level of anonymity of bidders was introduced supposedly to stop fraudulent “second chance offers” being sent to underbidders. This is a disingenuous reason. The “second chance offer” problem—if there ever really was a serious one—could have been solved in several far less drastic ways, bearing in mind that the situation was always that if the “second chance offer” was not also received via the eBay website then it was not genuine:

— Access to underbidders’ email addresses could have been blocked [and indeed has since been done so]; and let’s not go into the nonsensical eBay claim that fraudsters were “guessing” email addresses from user IDs.

— The system-generated email that advises an underbidder of a (genuine) “second chance offer” could have been re-structured to contain little more information than a hyperlink back to the eBay website.

— If any anonymity was required then the bidder-specific anonymity that was until very recently in use in the U.K. and is still in use in the U.S. was quite sufficient to protect underbidders but still allowed bidders the opportunity to watch for suspicious patterns of (shill) bidding by particular individuals on a seller’s other items.

— The second chance offer could have been done away with—I would not have missed it.

Instead, we in Australia got the outrageous and unnecessary extreme of absolute anonymity; a form of anonymity that serves no other purpose than to obscure shill bidding so that eBay does not have to worry about it. Bidders cannot detect what they cannot see and it follows that you cannot report what you cannot detect, and even if you do report a suspicion you can bet you will now get nowhere. Have no doubt though that, with the introduction of absolute anonymity, the despicable, criminal activity of shill bidding will now run rampant on eBay Australia.

The reason for the application of absolute anonymity given by eBay is disingenuous in the extreme (they have even made the absurd statement: “… this initiative has no impact on shill bidding [and] there is no correlation between hidden IDs and shill bidding.”), and I have no doubt that from the consumers’ point of view this absolute anonymity of bidding that we now suffer in Australia is a much greater threat to “fairness” and the “safety” of buyers on eBay than is this current clumsy attempt to create a PayPal monopoly.

Indeed, whether intentional or not, with the introduction of absolute anonymity eBay is effectively now “aiding and abetting” shill bidding, and this apparently does not concern them. Under whatever licence(s) this organisation operates this should not be allowed. And, it beggars belief that eBay can now (again) suggest “security” as a reason for the mandatory and exclusive use of PayPal after introducing absolute anonymity of bidding, the only effect of which is to allow shill bidders to “rip off” buyers with impunity.

And from another perspective, why would the ACCC even consider approving this exclusing dealing of PayPal before eBay has tried it on in their own home country?

A detailed comment on eBay’s introduction of absolute anonymity attached, and updates on this and other eBay matters at:
http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6497776#6497776

Regards
Philip Cohen

[Many more submissions to the ACCC re this matter at:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/submission]
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

Dear Sir/Madam,

Thank you for your email to the Australian Competition and Consumer Commission (ACCC) concerning the recent exclusive dealing arrangement proposed by eBay International.

The role of the ACCC is to ensure compliance with the Trade Practices Act 1974 (TPA), which is designed to encourage fair trading and discourage anti-competitive conduct through a specific set of competition and consumer protection rules.

As you are aware, on 10 April 2008, eBay announced that:

• as of 21 May 2008, all items listed for sale on eBay.com.au must offer PayPal as one of the payment methods; and
• as of 17 June 2008, all items listed for sale must only offer payment via PayPal (or credit card transactions processed by PayPal) or cash on delivery.

On 11 April 2008, eBay International AG lodged an exclusive dealing notification with the ACCC in relation to the above conduct, which provides eBay with immunity under the TPA from this date.

The ACCC has commenced a consultation process in relation to the notification. People who wish to raise concerns about the notified conduct were asked to lodge a public submission via adjudication@accc.gov.au by 2 May 2008. However, the ACCC has extended this deadline and will be accepting late submissions until Friday, 9 May 2008.

The ACCC can take steps to remove the immunity conferred by the notification if it is satisfied that:

• the proposed conduct will result in a substantial lessening of competition;
• the public benefit that may result from the proposed conduct would not outweigh the detriment to the public caused by the lessening of competition.

Further information, including a copy of eBay’s notification, can be found at the ACCC’s exclusive dealing notifications register, by going to www.accc.gov.au and following the “public registers” and “authorisations and notifications registers” links.

Thank you for contacting the ACCC with your concerns. I trust this information is of assistance.

Yours sincerely

ACCC Infocentre
1300 302 502
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

Currently there are over 400 submissions to the Australian Competition & Consumer Commission (ACCC) regarding eBay’s attempt to introduce compulsory and exclusive PayPal for sellers into eBay Australia.

It is now clear why the ACCC extended the date for submissions: some powerful organisations have put in submissions this week, including: Australian Bankers’ Association, Australian Payments Clearing Association, Commonwealth Bank of Australia, even government bodies: Australian Securities & Investments Commission and the Reserve Bank of Australia.

I would like to think that eBay has got “Buckley’s chance” of getting ongoing approval for this “exclusive dealing”, but you can never be sure of anything: there are turkeys everywhere.

Once again, the following are links to the various public documents regarding this matter as it currently stands.

eBay’s application for mandatory exclusive PayPal:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499
Notifications:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/notification
ACCC correspondence:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/acccCorrespondence

In particular, the various submissions from interested parties:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/submission
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

Some more links on eBay’s megalomaniacal dream of world domination:
http://www.australianit.news.com.au/story/0,25197,23670527-15306,00.html
http://www.rba.gov.au/PaymentsSystem/Submissions/ebay_paypal_02052008.html
http://www.zdnet.com.au/news/business/soa/Watchdog-awaits-eBay-s-response-over-PayPal-deal/0,139023166,339288822,00.htm
Once again, all the submissions to the ACCC are at:
http://www.accc.gov.au/content/index.phtml/itemId/823668/fromItemId/776499/display/submission
There are far too many links to list: if interested further, Google search “paypal rba”.
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

Following is just one of the over 500 submissions to the Australian Competition & Consumer Commission regarding the attempt by the cowboys at eBay to trial in Australia their attempt to reorganize the financial systems of the world in their favour:

9 May 2008

Australian Competition & Consumer Commission
Adjudication Branch

Re: eBay lnternational AG—N93365—eBay Australia

Thank you for providing the opportunity for interested parties to comment on the proposal by eBay lnternational AG to mandate the use of Paypal (which is wholly owned by eBay) as the only payment method for transactions effected on eBay Australia, with some specific exceptions (the Proposal).

I note that the request for authorisation of exclusive dealing has been lodged by eBay lnternational AG which is a Swiss incorporated entity. Any references to eBay include eBay lnternational AG, eBay Australia and eBay US.

I submit that the Proposal is not in the public interest and as a secondary issue, to authorise the relevant conduct would have the effect of substantially lessening competition. I also submit that the ACCC should not grant interim authorisation in relation to the notification. I agree to this submission being made public but I ask that you remove any identifying details.

General

I have been a member of eBay for just over two years and have effected approximately 400 transactions in that period, as both a buyer and a seller. To date I have a 100% rating. There are many good things about eBay. It provides a platform on which a person can offer an item for sale on a worldwide basis at a relatively low cost. Users of eBay are also able to find items that might not ordinarily be available or are hard to find—from a buyer’s perspective this is what I ordinarily use eBay for, I only buy second-hand items of a particular kind. I have “met” people from all over the world in the course of my transactions and it has largely been a very enjoyable experience.

I have sold over 200 items to people in countries including Spain, France, Cyprus, Japan, the US, UK and Austria. The amount of these transactions has ranged from 99c to approximately $1,000. 1 have also bought a large number of items from sellers primarily in the US, UK and Japan. For those transactions where the other party has been offshore I have used Paypal as it provides a relatively seamless method of payment. In the case of domestic transactions I ordinarily choose to use payment by bank deposit/transfer because it is quick and generally cost-free. Perhaps most importantly it provides me with cleared funds which I can access immediately.

I have never had an issue with a transaction (purchase or sale) associated with payment by bank deposit or transfer, other than a buyer failing to make payment. If a buyer chooses not to proceed with a transaction, this will happen regardless of the payment method/s offered. I have been fortunate in that I have never had an issue with non-delivery where I have paid by bank transfer.

I check a seller’s record carefully before I decide to transact with them, as this is generally a good indication of their trustworthiness. I believe that the difficulties encountered by eBay buyers are in large part due to failure by the buyer to do some basic research. If you choose to buy an iPod or mobile phone from a seller with over thirty negative and 28 neutral feedbacks for non-delivery or faulty product in the past 12 months (from one example I have just looked up on current items available) you are taking the risk that you will be disappointed—a bad buyer experience.

Conversely, I have had difficulties with several transactions effected with offshore sellers where the payment method was Paypal, all of them being non-delivery. In all of those cases there was a resolution of sorts in that the items either turned up or a refund was given by the seller (not Paypal), and I don’t believe the issues were due to a bad seller. However where I have received the refund through Paypal it has not been the full amount I initially paid. So in other words, I have not been put back into the position I was in before entering the contract, I have suffered a loss because of the interposition of Paypal, and its “clipping of the ticket” on both sides of the transaction.

Paypal in practice

Paypal promotes itself as a facility whereby you don’t have to disclose your details to a third party. As a buyer, you don’t have to disclose your details if you are paying by cheque, money order or even bank deposit. In the latter case the only details being disclosed are those of the bank account details of the seller and this does not expose the seller to any additional risk. However a seller using Paypal must provide their credit card details and if they wish to sell at a particular level, their bank account details to Paypal. Paypal can use those details at any time to deduct funds.

Some examples of Paypal in practice:

 Although it is promoted by Paypal as the preferred method of funding, deduction from bank account to pay for an item cleared through Paypal is an “echeque” which commonly takes up to a week to clear. The Paypal payment gateway is set up in such a way that it is difficult to select another funding method. As a general rule I prefer funding payments by credit card as this provides an additional safety mechanism, i.e. I can initiate a charge-back if things go wrong.

 I recently paid a UK seller using my bank account as funding. The seller then advised she had received cleared payment and had sent the item. The seller then went to refund me 3 UK pounds as she had overcharged me postage. I received a message from Paypal that the refunded amount had been put on hold because my original payment had not cleared. I wonder where the funds are?

 A seller refunded me through Paypal for an item that was not received, however the amount I received was less than the amount I originally paid, because of Paypal fees and exchange rates.

 I have had an ongoing problem for three weeks with being unable to sell a particular item worldwide on eBay. eBay has told me it is a Paypal problem. I have spoken to Paypal (in Omaha) three times and they tell me it is an eBay problem. Although the two organisations promote their ability to share information they seem to do so selectively.

 Paypal does not provide access to cleared funds. If I am paid by someone using Paypal I either have to use those funds for purchases through Paypal or initiate a withdrawal to my bank account. If the withdrawal is under $150 I will be charged $1 to access my funds, notwithstanding the range of other fees I am charged by Paypal.

The position of eBay/Paypal as a non-party to the contract

It is a central plank of the eBay model that eBay is not a party to the contract between the buyer and seller. That is, eBay provides the platform on which the parties can transact, but it has no involvement in that transaction, either as a counterparty or mediator. The eBay site contains numerous statements to that effect and section 3.1 of the eBay user agreement specifically states this. If a transaction goes wrong, for whatever reason, the buyer and seller must deal with each other directly to resolve it. It is inevitable given the number of users of eBay worldwide that problems will arise.

(eBay representatives consistently refer to there being 5 million users of eBay in Australia. This is misleading as users will often have multiple user IDS. For example a regular user may choose to have separate IDS for buying and selling, and a private ID where they do not wish their purchases to be known. It is also not clear whether the number given accounts for “active” IDS as a proportion of users will transact only once or a few times.)

Query: why if eBay is not a party to the sale contract they are able to dictate the payment method used for the transaction. In theory at least, if I want to exchange an item for a bag of marbles, then I should be able to, provided the other party agrees.

Paypal as a Clearing House

Paypal is not a bank—it is not registered as a bank or financial institution in Australia. It acts as an intermediary in processing payments by credit card or bank transfer from the buyer to the seller. Like eBay, it is not a party to the contract between buyer and seller. Therefore Paypal could be characterised as a clearing house.

Analogies can be drawn with other clearing houses which may include elements of exclusive dealing within their models. An example is CHESS operated by ASX Settlement & Transfer Corporation (ASTC) which clears and settles trades effected on the Australian Stock Exchange (ASX). However, there are some distinct differences between the two systems:

 The majority of trades effected on ASX are novated to a central counterparty at end of day and transaction obligations are netted. In this way, risk is managed with a demonstrable public benefit (for all parties). The system also provides significant and proven efficiencies.

 The National Guarantee Fund provides for investor compensation in certain circumstances including completion of sales and purchases, loss for transfer of securities without authority and loss in the case of dealer insolvency.

 Participants in CHESS are subject to a range of rigorous requirements including funding which is supported by contractual arrangements with the relevant banks.

 The settlement and clearing systems operated by ASTC are regulated by comprehensive rules, compliance and monitoring systems and disciplinary processes including appeal mechanisms.

Paypal does not stand as a counterparty to transactions between eBay users. It provides no central fund for compensation of users—the much vaunted Paypal protection is provided by the controls it has over Paypal user accounts, which it can interfere with at any time. It can also access a Paypal user’s bank account where the user has given Paypal those details and deduct funds without authorisation. Its rules and policies are opaque and subject to change without notice.

Public Benefit/Interest

It would be reasonable to assume that where an argument is put that conduct is justified on the basis of public benefit, that benefit would accrue to both parties in the transaction. I submit that mandating the use of Paypal skews the benefit so far towards the buyer in any transaction that the seller is put at a significant disadvantage. For example, a buyer can pay me using Paypal, I send the item, and the buyer subsequently claims that the item has not been received even though the item has been delivered and the buyer makes a claim on Paypal. Paypal decides in the buyer’s favour, and freezes my account or accesses funds to pay the claim. I have no right of appeal. To that extent, I believe Paypal actually encourages fraud.

I am now so paranoid about fraudulent claims of this type that I send any item over $50 by registered post and that cost must be borne by the buyer. Ironically, Paypal does not necessarily accept registered post as proof of delivery. The only method that Paypal accepts is a “trackable” delivery system which is beyond the means of the average eBay user.

Protection offered by Paypal

The purported protection offered by Paypal is not insurance, it is made available by Paypal by accessing the funds of the seller. If the seller has disappeared, I believe there would be no protection available. In addition, buyer protection is subject to an extensive set of conditions, including that the seller must be above a certain percentage of feedback and not from certain jurisdictions e.g. Asian countries. Ironically, it is those sellers who are less likely to be the subject of Paypal claims. A search of eBay will find you any number of high volume sellers with feedback and/or location that would exclude a buyer from protection. Ebay could take action to remove those sellers but it doesn’t—it has a financial interest in retaining them.

Conclusion

When eBay announced the Proposal I spoke to three friends who use eBay. They are all primarily purchasers and two of them have never used Paypal. One of them only uses Paypal for international transactions. The immediate reaction of all of them was that if they were forced to use Paypal they would no longer use eBay. Their reasons varied but they had some principal objections, they do not wish to disclose their financial details to a third party, they don’t trust Paypal and many people do not have credit cards.

Perhaps one basic question needs to be asked, taking into account that a central part of eBay’s submission is that the primary driver for the Proposal is not that of profit to eBay (Paypal being a wholly owned subsidiary of eBay). If Paypal were not owned by eBay, would eBay be seeking authorisation of the relevant conduct/exclusive dealing?

Yours faithfully
C***e O***r
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.

[PhilipCohen]

And a very pertinent comment from the Australian Securities & Investment Commission, the full submission therefrom at:
http://www.accc.gov.au/content/trimFile.phtml?trimFileName=D08+40147.pdf&trimFileTitle=D08+40147.pdf&trimFileFromVersionId=827994

"... unlike most AFS licensees that provide banking or non-cash payment services, PayPal has declined to become a signatory to the Electronic Funds Transfer Code of Conduct (EFT Code). The EFT Code is the key consumer protection code of conduct applying to the payment services industry, and covers fundamental issues concerning consumer rights, security, disclosure and resolution of mistaken or unauthorised payments."

A very professional summation of the matter contained in the submission from the Reserve Bank of Australia also makes interesting reading, at:
http://www.accc.gov.au/content/trimFile.phtml?trimFileName=D08+40177.pdf&trimFileTitle=D08+40177.pdf&trimFileFromVersionId=827994
_________________
Clearly, the lunatics at eBay have taken over the asylum and are bent on burning it down.
“The difference between genius and stupidity is that genius has its limits.” ~ Albert Einstein.