Law

A Class Action Lawsuit Against eBay

The latest, as pointed out in an article by Eric Goldman (who has the legal complaint embedded below), is somebody filing a class action lawsuit against eBay claiming all kinds of violations to the manner in which eBay’s auction process has always been operated. Here is the crux of the problem. eBay developed a very ingenious system when it first launched to manage bidding on its site.

It has always been the case that when someone bids on a product, eBay does not make any money from that sale.

Rather, it keeps the winning bid and then takes a percentage of that amount from the “earned” money. That percentage has always been a paltry portion of the total price of the item sold. So, the question has been whether or not the company has acted in a way that violates the anti-competition laws, or if it has, and whether it was unfair trade practices act class action law violation. Well, the answer is that, according to a number of class action lawsuit plaintiffs, it has:

In the case of eBay, the anti-competition law was obviously violated.

According to the complaint filed by one eBay class action lawsuit plaintiff: “When eBay did not reduce prices in an item so as to afford an entry into the home marketplace, eBay did violate the Sherman Act, the California Sale Compilation Act, the Florida Anti-Bribery Law, and the New York Uniform Commercial Code. Further, eBay did not properly warn the public about the existence of a ‘Buy Now’ feature, did not provide a clear definition of the ‘Buy Now’ feature, and did not institute and maintain a reasonable disclaimer policy.” Wow!

That’s a pretty strong charge. One would think that the mere reference to the Florida Anti-Bribery Law would be a warning to eBay to watch out for price gouging, but apparently, that’s not what happened.

The complaint goes on to say: “ECB made statements which suggested that they had proof that eBay’s listing of product was inaccurate and could not accurately determine the correct price. Additionally, eBay did not take any action to correct these problems until after it was discovered that its policies had been improperly abused.” Wow.

So now we come to the crux of the matter: was the defendant’s conduct of the eBay business practices based on illegal predatory price gouging, unfair competition, or otherwise unfair employment practices?

And if he was guilty of such, then, of course, his class action lawsuit could have merit. But we already know the answer to that. There are currently no class action lawsuits against eBay, nor has there been any determination by the US Supreme Court that price gouging in and of itself is a form of consumer protection laws violation. Further, eBay and similar websites have anti-spam policies and a fair trade policy; thus, it would seem that if there were proof that the conduct of these website and their advertisers engaged in price gouging – which eBay vigorously denied – then a suit could indeed be filed under the guidelines set forth by both Federal and state consumer protection laws.

So what about the complaint that eBay was guilty of exercising unjust price gouging – and therefore, a violation of the Anti-Bribery and Anti-Spamming Laws?

Again, the complaint relies heavily on both the words of eBay and the Anti-Spamming/Commerce Clause of the United States Constitution, but again, the complaint ignores the existence of any anti-trust laws, or the USTS Act. It also ignores the fact that eBay was one of the first online businesses to subscribe to the New Uniform Trade Practices Act, which sought to impose clearer and more enforceable guidelines on eBay and other ecommerce websites. In short, the contention of the complaint is not based on fact, but on supposition, namely that eBay engaged in price gouging and anti-trust violations based on the fact that another company refused to sell certain items at a lower price than they had been charging, and thus, harmed the company through its wholesale prices.

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