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eBay Loses Bid to Dismiss Payment Monopoly Claim

Class action suit calls eBay's PayPal requirement anticompetitive.

Antitrust claims over eBay’s accepted payments policy were allowed to stand this week in a class action against the company and its payments subsidiary PayPal.

The suit, filed in 2010, alleges eBay’s accepted payments policy has made PayPal the only viable payment method, and forces sellers to pay fees to both the marketplace and PayPal.

Earlier this year, the class narrowed its “tying claims” to focus on the continued modification of eBay’s payment policy, which locked out competitors including Google Checkout, according to the suit. eBay’s motion to dismiss the tying claims was denied on Tuesday.

The judge also denied the company’s motion to strike paragraphs about its acquisitions of PayPal and Verisign that “demonstrate the historical progression of the eBay/PayPal business empire,” according to a Courthouse News Service report.

About the author

Crista Souza
Crista Souza is founding editor of TheOnlineSeller.com. A journalism graduate of San Jose State University, she spent 13 years as a business and technology reporter in Silicon Valley. Crista has been writing about B2C and C2C ecommerce since 2008. Opinions expressed here may not be shared by The Online Seller and/or its principals.

  • Jimbo

    I said 10 years ago that this was lawsuit going to happen, and it’s finally coming to fruition!!

    In the beginning of eBay, personal checks and money orders / cashiers checks were the norm for payment. Then came PayPal.

    What an idea! Buyers no longer had to purchase money orders or take time writing checks (not to mention buying stamps & envelopes to mail payments). It was free to use, too. Heck, PayPal was even giving everyone $5.00 to sign up for this new service. Wonderful!!

    The concept was that they would make their income on the “float”- the interest earned from the millions of dollars of daily transactions that weren’t deposited in sellers’ bank accounts immediately.

    Sure, there were bugs to be worked out (buyers not giving the right mailing addresses, credit card fraud & chargebacks, etc.), but for the most part it simplified eBay transactions, and soon it got to the point where buyers would not purchase items unless PayPal was accepted.

    BUT IT WAS, AGAIN, A FREE SERVICE!!! And they were a cash cow, too.

    Then eBay purchased it, and started adding fees to each transaction (surprise). Soon after, sellers were forced to list them as a payment option and no longer put the words “Checks”, “Money Orders”, or “Cashiers Checks” in their listings, or the eBay police would pull your listings, and cancel your auctions.

    It happened to Mr. Gates, and now it will finally happen to eBay as well. Obviously, there is much more of a blatant misuse of power here than the Microsoft antitrust suit, and the class will win. COUNT ME IN!!

    What will we get for a settlement when we win this suit? Plastic coffee mugs branded with the eBay logo? PayPal beach towels?? Copies of Griff’s next book???

    How about the courts forcing eBay to create a site for all used / pre-owned/ collectible merchandise separate from the Wal-Mart, Asian made junk flea market they have now become? And, of course, broaden the process to accept more forms of payments.

    YOUR GREEDY HANDS HAVE BEEN IN THE COOKIE JAR TOO LONG, FeeBay! TIME TO GET DOWN OFF THE CHAIR IN FRONT OF THE REFRIGERATOR!!!

    Memo to Donahoe: This suit is only the beginning of many………………………..

  • Anonymous

    Given
    that we now live in the era of ‘corporatocracy,’ it is naïve to think that the
    courts will rule in favor of the consumer. 
    Today the golden rule takes on a whole new meaning – those with the gold
    make the rules.  The intent of federal
    anti-trust laws is to break up monopolies like eBay which have all the money
    and power to eliminate competition.  EBay
    will spend millions in legal fees to protect and preserve billions in revenue.  The end result is the same – protect the 1%
    at the expense of the 99%.

    • Ynotpet

      This 1% crap makes me sick. It’s the 1%’ers that inables us 99%’ers to put money in our pockets. Take away the big business and that’s the end of your income. Unles you work for the gov. Even eBay with all the issues still creates money for me. Get rid of Ebay and I loose money. Thats the way it is.

      • Bwsrecollections

        I am reading through the replies regarding Ebay/PayPal fees, and it is true what you state, because Ebay is big and progressive, we make money.  Requiring us to use PayPal only is restrictive, but I like it as it keeps all the hubba dubba doo daahing in listings, and loss of time holding auctions for the money to clear.  I hated that.  BUT more importantly>…my last fee for paypal final value was 10% and included shipping.  Why would we have to pay fees on money that is going through to the USPS?  it’s just not right and that is where the law oughtta change…between the insertion fee, final value fee and now paypal fees (used to be 2% now 10%) which double the final value Ebay fees, I am figuring 25-30% in fees for one item alone, half goes to double fees. Pretty soon, they’ll be charging us a monthly fee to keep an account open.  Let’s hope not.  I sure hope we can keep Paypal but get an order to reverse those double fees, since it is the same company, and an order to squash fees on true shipping (handling should be have associated fees) 

  • slim

    I sell on eBay (20 listings a week is all though – more a hobby), and I like PayPal,  I just want the fees paid on shipping and “double fees” paid. After all, if I charge 50¢ to mail a milk bottle cap and it costs me a stamp and an envelope, I’m losing money because of the fees. However, if I charge extra then I get bad DSR’s about shipping costs.

    With eBay charging fees on shipping along with the PayPal fees, I’m losing money on everything I ship!

  • Anonymous

    I hope the plaintiff prevails and eBay along with it’s eveil step-sister Paypal are pounded to the dirt on this one. We’ve all had issues with both whether justified or not. I’ve not used Paypal in years and it’s DOES MATTER when it comes to a sale. 

    After a major “disagreement” with Paypal years back, I ended up contacting the CA Attorney General’s Office and filed a complaint. Of course Paypal complied but mysteriously within a couple of weeks, my account was shut down due to a “random credit check”. WHAT??

    I’m going to try and found out how to contact the Plaintiff’s attorney as I have a few more sticks of wood they can throw on the fire.

  • Elizabeth.

    Paypal is a great concept except for their Double Dipping.You sell something on Ebay,pay their fees for selling that Item, then along comes Paypal (part of Ebay) you pay a fee for them collecting your money but, not only do they charge you for getting your money for the item sold, they take their fee from the postage as well which puts the seller behind the 8 ball.The postage shouldn’t have anything to do with them.

    • Melvin Thompson

      Not only that, but PayPal charges for the entire amount the item sold for. If it sells for $100 and ebay takes $20, PayPal will still charge the fee on the $100, even though you did not actually receive the $100.

  • Paypal is a great idea but I DON”T go along with their fee structure,they take their fee out of the total not just the item sold, but the postage as well,which shouldn’t have anything to do with them.  They know what the postage is so they could be like Ebay,  Ebay only take their fee from the item’s sold. I call this practice DOUBLE DIPPING, this is leaving sellers behind the 8 ball in most cases.

  • I didn’t mind the fees too much until they until they started charging their fees on shipping. It is not fair to charge us. I never even charge a handling fee, just actual shipping. I’m not making money on shipping, the USPS is. The only little perk I get, is my seller discount, which is nice, but I work hard trying to please my customers and follow Ebay policy to make a little extra money. Give me a break!

  • sirboo

    The latest EBay scam is to charge sellers a 7% fee for shipping charges. Shipping has nothing to do with a transaction between buyer and seller. It is a strong arm tactic to make sellers offer FREE shipping (where they get the fee for product and shipping).
    This company has a long history of finding new and creative ways to extract money from sellers.
    They know that they will lose big money in a class action lawsuit settlement. I say bring it on.



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