This is page 2 of:

eBay’s Day In Court: No Soup For You

February 14th, 2013

Indeed, eBay is not required, either under the contract or by law, to engage in any particular inquiry—just as the Soup Nazi’s rules did not have to make sense. As the court noted:

Nothing in eBay’s alleged policy actually prohibits sellers such as plaintiffs from freely offering their items for sale through other means, or from developing and maintaining independent relationships with customers.

So Genesta could still sell her wares, eBay could enforce its rules, and all is good with the world, right? Not necessarily.

The problem with both eBay and the Soup Nazi is that there may be no meaningful alternative to what they are offering. Each, in their own way, dominates their respective marketplace—eBay, the online auction market; the Soup Nazi, the “quality” soup in midtown Manhattan. If a merchant is kicked off eBay or Amazon, that merchant may still ply its wares, but not in an effective way. Now, eBay and Amazon have a vested interest in keeping merchants online, and in keeping them happy. If there is nothing to sell, then there is no reason for them to exist. The companies also have a vested interest in ensuring merchants’ claims about their products are valid and in minimizing the scope and extent of fraud or deception on their sites (I take no position about who is right here, just that eBay has legitimate interests).

But eBay has a vested interest in enforcing a host of other provisions contained in its Terms of Use, too. Indeed, any violation of these terms, or any alleged violation of these terms, could lead to a merchant being barred from an almost exclusive marketplace. And that could be a problem.

The other problem for eBay users, like the customers of the Soup Nazi, is the unavailability of an independent enforcement mechanism. eBay (like the Soup Nazi) writes the rules of the road to suit its own interests. It can choose to investigate, or not, claims of violations of its rules. eBay can change the rules at will. It can ban merchants for good reasons, bad reasons or no reasons at all. eBay can decide that, to make one merchant happy, it will deny a competitor access. It doesn’t need to take all comers. eBay may not even be required to comply with its own Terms of Use—because it doesn’t have to enter into a relationship with a merchant or seller in the first place.

The difference between the Soup Nazi and eBay is that, if the Soup Nazi kicks you out, you are denied an awesome Turkey Chili. If eBay kicks you out, you are out of business.

So online marketplaces need to have fair and reasonable policies, along with fair and reasonable enforcement mechanisms, that provide a reasonable degree of “due process” to all parties. There should be some type of independent review or, in the words of the late Mayor Ed Koch, a way for E-tailers to find out “How’m I doin?” And if they end up dominating the marketplace, regulators may come sniffing around, too. And that’s not great for retailers, or soup stores.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.