Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

PayPal Foots The Bill For Fraud

Posted by: Catherine Holahan on June 19, 2008

For years, eBay executives have touted the trust worthiness of the sellers and buyers on their site. Now they’re backing up that claim with cash.

On June 20, eBay announced that it will fully reimburse buyers and sellers when transaction problems arise, providing they use eBay’s PayPal payment service. That means eBay will foot the bill when, say, a buyer purchases an item that was misrepresented on the site or not sent. So, if that too-good-to-be-true bargain Gucci bag turns out to be a cheap knockoff, eBay will give the buyer a refund. The additional protections will go into effect this fall.

“We’re combining the power of eBay and PayPal to give all buyers and sellers more confidence and trust,” said Lorrie Norrington, eBay’s president of Marketplace Operations in a statement. “Buyers who pay with PayPal on eBay will be covered, with no limits, on most transactions.”

EBay will also refund sellers’ money in many cases when buyers stop payment on an item. The practice, known as “chargebacks,” costs many sellers hundreds to thousands in losses each year. EBay sellers even have a forum where they vocally complain about the practice. . “I had a buyer commit fraud once. They filed a complaint saying item not as described, eBay told them to mail the product back… they did. It was a box full of rocks,” wrote one forum member under the handle Althema . “They got a refund and my product (a digital camera).”

The protections for sellers, however, are not as comprehensive as those for buyers. The company will dole out refunds to sellers that have proof of shipment when a buyer stops payment, claiming the item was not received. EBay will also reimburse sellers when items are purchased with stolen accounts or credit cards. It will not, however, give refunds when a buyer claims that the item was substantially different than advertised. So, sellers like Althema would be out of luck.

The program could significantly improve shopping on eBay’s site going into the holiday season. Safety concerns are often cited by shoppers and analysts as preventing more sales from taking place on the site, particularly for higher priced items. The move is also central to eBay’s goal of fostering the sale of more new, in-season, higher-priced retail-type inventory. EBay struck a deal in May with to sell the big box online retailer’s brand new consumer electronic devices, luggage, and other items on the site.

The reimbursement plan isn’t all upside for eBay, however. Should the incidence of fraud on the site turn out to be higher than the fractions of a percent that the company claims, eBay could end up footing a high bill for problem transactions. That could take a toll on profits.

EBay’s announcement, made at the annual eBay Live conference, held this year in Chicago, was a clear vote of confidence in the security of their site and the honesty of its community. It’s a message that eBay users, many of whom have been vocally upset by some of eBay’s recent changes, particularly those to eBay’s system of rating other members, needed to hear. EBay stopped allowing sellers to leave negative reviews for buyers earlier this year, causing many sellers to complain that they had little recourse against buyers who unfairly refused to pay for goods or left unduly harsh criticisms of products. Now, at least, some sellers will get their money back. Plus, with eBay footing the bill, it gives the company added incentive to remove bad buyers from the site.

EBay also announced additional incentives for sellers to ensure buyers are 100% satisfied with their purchases. The best “Powersellers” will receive 20% off the fees that eBay charges on a completed transaction. According to eBay, 16% of all Powersellers have ratings that are high enough to immediately qualify for the discount.

Reader Comments


June 19, 2008 1:38 PM

eBay still isn't doing what they need to do! The level playing field needs to be returned to the feedback process, and small sellers need to be treated equally with large ones. eBay needs to remember that it is the seller, not the buyer, who pays the fees and should be treated as eBay's customer.


June 19, 2008 1:41 PM

Ebay has a long history of making false promises.
There is no sense in repeating ANYTHING coming out of the mouths of this company's management. Policy must be backed up by fact. There is NO assurance the many years of mishandling of claims and lack of proper communication and support will change.
You got that??


June 19, 2008 1:42 PM

Its getting harder to find the rose among the thorns here at eBay. Sellers are hypnotized with one hand and fleeced with the other.
A Venus Flytrap. Pandoras box.
Shes a beautiful horse but it dumps us in the drink when the show starts.
Its race car that suddenly goes backwards and the door wont close.
eBay is a cute new puppy that poos before you can get the leash on.
Its a beautiful museum that has been looted and the door is always left open.

Member protections, safety and security should be the reins that keep the cart to the horse.

Will it be a great warehouse that holds only promise?

Drew U Picture

June 19, 2008 1:45 PM

How do you get around with all those puppet strings attatched?


June 19, 2008 2:21 PM

Ebay is absolute garbage - don't even bother using it. Big deal, they claim they will give you a refund you if get ripped off, yet they force you to use PayPal which levies exorbitant fees - so you get ripped off either way and there is no free lunch. Ebay is nothing more than the largest criminal organization in the world. Good luck trying to even get Ebay to respond to your claim when you get ripped off.

Disgruntled Ebay Powerseller

June 19, 2008 2:56 PM

You've got to be kidding me right?

I that link to the fraud/chargeback board, was a link to the wrong board. Come look at the feedback board, where we are protesting the changes. Seller after seller after seller, being ripped off left and right, from the new policies.

It is quite obvious, that this has made it more UNSECURE!

Come see the revolt:


June 19, 2008 3:36 PM

If you're selling, try It's so much better, in terms of lower transaction costs, and you can list it forever. These days, ebay and paypal are such a rip-off, they're sucking all the sellers dry.


June 19, 2008 3:43 PM

Ebay is perfectly fine if you are an intelligent buyer. Obviously you aren't one. I've conducted hundreds of perfectly transacted transactions...


June 19, 2008 3:44 PM

I once loved ebay, now I absolutely hate it. Wish google would start their own auction site


June 19, 2008 3:57 PM

For all those with the recent comments I just want to know what rocks you used.

Leo Turner

June 19, 2008 4:18 PM

Sellers have more to worry about than buyers on Ebay. Sellers who have top ratings jealously guard those ratings by providing buyers with honest descriptions, prompt service and fairness when dealing with disputes. As to PayPal's Seller Protection Policy, don't count on it - I lost my last 6 months profit on the one transaction that I was defrauded on because PayPal wouldn't live up to their agreement - for further information Google them with the search term "Google Sucks"

Not one Positive Comment

June 19, 2008 4:19 PM

Nope, not a one.

The comment above is the most telling. Promises we got; Good luck trying to get a response when you get ripped off.

Foolishly I left ONE auction listing running when the feedback changes went into effect. Guess what? -I got ripped off.

Mark Anthony Cachia

June 19, 2008 4:23 PM

With respect to your posts, I believe that you never used ebay and are speaking from others' gossip. I bought loads of stuff on ebay including a couple of pricey items such as $600 items such as PC components. I only had trouble once when a seller sent a wrong mobile cable but immediately refunded my payment (he did not want the cable back!). Also note that I do not live in USA (Malta in Southern Europe) therefore I do not have the loads of consumer rights which you Americans are fortunate to be eligible to.
The PayPal system is satisfactory to say the least. It offers buyer protection and with respect to the latter post, there are no fees except a one time fee as to make sure that you own the credit card (and only costs a couple of dollars)
Ultimately, I believe ebay is an easy way (and cheap) to buy stuff and I would recommend it as long as the seller for any given item has 98% positive feedback or better.


June 19, 2008 4:27 PM

Proof is in the pudding.... too many screwy sellers on ebay. The money back guarantee is probably full of caveats and anyway paypal customer support is slower than a sleeping snail. It took them 3 weeks to resolve my case while the seller bombarded me with 'pay up' emails, even after a paypal payment.


June 19, 2008 4:31 PM

eBay/Paypal is the worst.

Had a transaction last month where I bought "brand new take off" rear end for a car for $400. Had a mechanic install it only to find out it had a bent axle housing. Mechanic had to remove it and put the old one back in..

No problem, right? I paid with my PayPal card. I have BUYER'S PROTECTION. I sent eBay pics and videos of the broken rear end which were corroborated with the pics in the sellers ad... eBay still said I needed to pay to ship it back before they would even consider refunding "a portion" of it. Shipping = $150. That means I'd have paid $300 shipping total and $425 for the mechanic on a $400 item that they wouldn't even tell me if was refundable or not.

Total BS. This isn't going to do anything except make buyers feel "secure" until they have a dispute where eBay will leave them high and dry.

eBay dowm the tubes

June 19, 2008 4:38 PM

The eBay day has passed. Too many problems, too many rules, too much competition from big sellers.

They didn't say how PPal was going to figure into this. Are they going to use it as a big stick to beat people down?

EBay/PPal doesn't have enough employees to handle complaints properly.

June 20th comes after June 19th

June 19, 2008 5:46 PM

So how did they announce this? GMail Custom Time?

another Jim

June 19, 2008 6:01 PM

Yeah, but how retroactive does eBay/PayPal intend on being with this? I made a repeat purchase in March '08 from a woman I had dealt with successfully a month or so earlier one Ms. Nancy Trofemuk, eBay Username "neverstopcollecting", and became one of many poor suckers who were totally ripped off by her, with no merchandise to show for it, and no response from Ms. Trofemuk at all. Duly reported problem to PayPal/eBay, case was investigated and determined in my favor, but nothing was left in her PayPal account, so along with many others, I lose out if eBay/PayPal doesn't go retroactive for a few months.


June 19, 2008 6:44 PM

The feedback policy needs to be reversed. People get obnoxious and sellers get trashed. 99% of the larger, regular sellers are honorable and act with integrity. Even if that's not true, it still isn't wise to leave industrious people so vulnerable. It is way too lazy, too brute and too over-efficient to just say that "sellers are all crooks." Ebay should think about hiring arbitrators and have them weed out imbiciles who are catagorically abusing people, especially sellers who are expected to be perfect.

PayPal Sucks Now Too

June 19, 2008 7:42 PM

PayPal is worthless as well. I had a clear case of absolute fraud take place on a transaction from a secure website. The dispute process was an absolute joke even though I eventually proved beyond any question that I was absolutely right. The result? The defrauding sucker that owned the website didn't have a dime in his account! What did I get? "Sorry sucker!!!!" Back in the days before the merger, this wouldn't have happened at PayPal. Obviously this has become such a problem at PayPal/e-Bay that they have to put up some smoke in mirrors to bolster their image. My grade for PayPal/e-Bay? F------


June 19, 2008 9:24 PM

I dont use ebay anymore either. They never protected people in the first place. I sold a flat panel computer moniter and the transaction goes through fine. Then ebay comes back and tells me that the credit card was not valid and wanted me to pay them for the item which was $100. I said no and they froze my acct. Never trust them they are all crooks.

Frank Parkin

June 19, 2008 9:57 PM

EBAY Fine if know what you buying if looks to cheap it is.


June 19, 2008 10:14 PM

A Lot of eBay Sellers fall into the EBAY and PAYPAL TRAP...

This is they first sell off their totally unwanted stuff in their Attics/Garages/Basements. They get some money for the stuff and think it is like pure profit when it isn't. They foolishly forget that they actually paid in the distant past for those items in time/money/effort/storage/moving... Then when their old stuff inventory gets depleted they start buying new items at the stores/garage sales/etc. Most of these sellers Do Not do the Math to determine how much money they are really making per hour of time spent acquiring/photographing/writing a description, uploading pictures/answering numerous buyers questions/sending out invoices/packaging/answering complaints and disputes/etc., etc.

New (and even Old) eBay Sellers Need to understand that eBay and it's PayPal unit often combined can often make from 10% to 60% of Your Total Profit. Because Sellers don't do the math ahead of time, they then spend months or a year or two selling only later to realize that they are not making too much for all the effort involved.

To learn how much eBay + PayPal are Realistically taking out of Sellers profit, please check out this new free online eBay Profit Calculator here:

If used over time it can also help eBay Sellers (New and Old) learn how to increase their overall profitability (by showing which items make more profit and which ones make too little profit).

Jim Graham

June 19, 2008 11:08 PM

Too little, too late. First, eBay bogs down performance with spyware and tracking crap that serves neither the buyer nor the seller, but boosts its ad sales revenue, then it ignores blatant patent and copyright piracy (fake iPods, to be specific) being pushed via its tool.
It was once a good idea, then along came Meg with a better idea. Not such a better idea, after all.


June 20, 2008 12:23 AM

Ebay+PayPal duo are a complete rip-off and/or broad daylight robbery.The fee they charge small sellers are out of control.As result,only ebay benefits,while sellers loose.What a pathetic fraud and pure exploitation of the seller!Ebay sucks as never before!

Jul in Georgia

June 20, 2008 1:07 AM

Last year I sent payment for a gristmill listed by this guy in California. $39.95
He got paid, I got nothing.
I submitted a complaint to E-Bay and was notified that my account was suspended because the thief retaliated by submitting a horrid erroneous complaint about me.
There is no satisfaction through EBay


June 20, 2008 1:46 AM

I agree with the new feedback policy. I buy more than I sell and I'm don't see why sellers should be able to post negative feedback once an item is paid for in full. Too many sellers hold their customers for ransom by not posting feedback until the buyer has posted theirs. The buyer has an obligation to pay in full asap. Once that's done the seller should leave positive feedback immediately, because all a customer is required to do is pay, just like in a standard shop. I also disagree about good sellers getting their feedback rating trashed. If you check the feedback carefully it's pretty easy to sort out the reasonable complaints from obnoxious abuse.

lost confidence

June 20, 2008 4:08 AM

no confidence any more

I Can't Stand Ebay

June 20, 2008 10:19 AM

I rarely use Ebay anymore - only for unusual or rare items where an auction sale really is an advantage. There are so many reasons for Ebay's downfall; excessive fees intended to gouge (including PayPal), massive fraud, Ebay's website technology is grossly inferior making the site difficult to buy or sell, etc. But all of the reasons point to one thing, massive managerial incompetence at Ebay. Meg Whitman ran this company into the ground.

I use Craigslist a lot more now; limited to mostly local pick ups. You still have to watch out for fraud and criminal behavior of course, but if you use good common sense you will be ok.

Done With eBay

June 20, 2008 10:31 AM

I too am done with eBay. Aside from the compounded selling fees between eBay and PayPal, they've done nothing but cause me headaches as both a seller and a buyer.

Cases in point:

1) I was notified by a friend recently that a "Power Seller" was using photos taken from my Website to sell an item. The Power Seller never sought permission to use my photos, and the item from my site was not "exactly" what he was selling (i.e. fraudulent mispresentation). I contacted eBay and notified them of this as it is against their Terms of Service. In return, I got a standard form letter along with a form to fill out and fax back to them, where they would review it for up to five days. The guy's auction ended in four. What was the point? Why should *I* have to jump through hoops to prove my case when in my initial complaint, provided the URL to my site, and proof of ownership of the photos? So, I took matters into my own hands and contacted the seller directly. He removed the pictures immediately. eBay should have protected my intellectual property when I notified them of the problem.

2) I was burned by a seller who I made a purchase from. He had good feedback at the time I bought the item, but two weeks later, 7+ negatives rolled in and he was suspended. He was essentially taking people's money and never shipping items out. What did I get in return from eBay? An apology and a $1.30 credit for my troubles. I paid over $60 for the item. In retrospect, I should have contacted the authorities in his town since I had his mailing address (his phone number given to eBay was bogus).

3) I had an auction going on during the recent feedback transition. It started before the policy, but ended three days after. Of course, the winning bidder never paid, and I was the third or fourth person to leave him negative feedback for not paying. As of today, he is still an active member of eBay (no suspension). I was given a final value credit, but not an insertion credit - - which I could only receive if I reposted the item.


June 20, 2008 10:46 AM

Poster "Jim Graham" mentioned Ebay's web site performance being bogged down by spyware and tracking. I don't know the precise reason, but saying it is "bogged down" is a gross understatement!

Spyware and tracking would certainly make sense though; given Ebay's history of maliciousness and treatment of their customers. I find Ebay pretty much unusable now and I don't even bother. I'm glad Ebay offices aren't near me because I think I would have thrown a large boulder through their picture window by now. Pages won't even load! You can't buy or sell if you can't navigate around.

I frequent many other web sites and often make web purchases with virtually no technical problems whatsoever. Ebay is in a league of incompetence and maliciousness by themselves. I haven't even mentioned their ridiculous fees, fraud, criminals, etc. Good riddance to Ebay - they will soon join Enron.


June 20, 2008 3:09 PM

Paypal doesn't have any guarantees. I bought a item on ebay, paid with paypal. Never received the merchandise, tried for weeks go get paypal to do something. Finally they told me the seller had no money in his paypal account and I was out of luck. Ebay did nothing, paypal is a joke, buying on ebay with paypal is like the slot machines in Vegas.


June 20, 2008 3:29 PM

It's a very very tough situation. As a merchant, we get charge backs all the time and usually if we are able to produce tracking information, it will get resolved. However, if the claim is for item that's "not as described", it becomes very tricky. The customer can send the merchandise back and the company HAS TO refund the full payment regardless of your store policy. It's hardly fair for merchants but I guess they value buyers more than sellers.


June 20, 2008 3:52 PM

2 main problems:

Too much fraud going on. Even with the vast amounts of honest people on ebay, with the volume they work with, the 1 or 2 percent who are scum still amounts to ALOT of fraud.

Too many get rich quick bums who buy some wholesale crap from China, open up an Ebay store and flood the market with stupid crap nobody wants. Search for any common consumer product, and you'll find that a majority of the listings are "junk." The average joe doesn't know how to narrow that search down to get relavent results.


June 20, 2008 9:31 PM

Why don't they just use this way?

When the buyer send the money via paypal, Paypal just only hold the money and then give the notice to the seller that the payment has been made. And after the item reach the buyer, then Paypal will unhold the money and send it to the seller.


June 21, 2008 12:44 AM

Chatchavit, what is the point of doing that? How do Paypal know if buyer/seller really receive/ship what they purchased/sold? buyer and seller have to be honest, right? what if they don't?
There are plenty of black holes between eBay and Paypal. They are unable to make things right when certain fraud(s) arise. Don't stay with eBay/Paypal unless you're ready to take risk!


June 21, 2008 9:00 PM

Paypal Buyers Protection, my ass. I was defrauded by a Canadian seller who was selling a Daytona, and shipped me an empty envelope. I didn't know what it was when I signed it. When I found out, I opened the dispute with Paypal, opened a dispute with my credit card company (that funded the paypal transaction), the seller eventually agreed to refund (since paypal held the fund).

I had thought everything is supposed to be what it's like. 1.5 months later, paypal suddenly suspended my account. I called them, and was told that they REOPENED the dispute, since their fraud team saw a tracking number in the transaction. THE STUPID PAYPAL IDIOTS THOUGHT IF THERE WAS A TRACKING NUMBER, THEY MUST BE ABLE TO GET THE $7500 BACK. And since paypal had refunded the money back to my credit card company, paypal now told me I had to pay paypal $7500 in order to unlock my account.

I was completely flabbergasted. I basically yelled at the paypal rep on the phone, telling them GO READ THE DISPUTE NOTES AND THEY WOULD HAVE KNOWN IT'S AN EMPTY ENVELOPE, IDIOTS, AND THE SELLER ADMITTED IT.

It's been a week now since my yelling. Nothing has come out of it.

And you know what, amazingly, ebay sent me a $500 coupon for the last 5 transactions that were chargeback (fraudelent sellers). But now they lock my paypal account, so there's no way I can use the coupon before the account might be unlocked.



June 22, 2008 11:13 AM

I'm sure there will be a bazillion strings attached for the reimbursement, caveats that will make getting the money back a miserable experience - that the buyer will just bite the fraudlent transaction and will settle for a brick and mortar establishment. I was defrauded of $10400 on Ebay and ZERO recourse. Con artists will find new ways to swindle buyers and paypal will put new restrictions on claims.


June 22, 2008 1:18 PM

After being an Ebayer/paypal for almost 10 years, I closed both accounts.

These folks don't have a clue as to how they need to treat Sellers and/or buyers.

I had a buyer who attempted extortion; I refused to bend to his demands. He writes a scathing negative; I gave him one also, but he got Ebay to remove my negative comment, but allowed his to stay.

The heck with Ebay -- who needs them?


June 23, 2008 5:48 PM

If you accept Paypal as a seller -or- pay for it as a buyer (I have done both for 10 years), you have no real protection or coverage. Don't buy into the BS fuzzy concept of "Buyer/Seller Protection". It does not exist.

Buyers need to know that Paypal does not have a fund set aside. The anger and frustration you will feel as you hang out there all on your own (when a problem arises) will make you truly ill.

As a seller, you are totally exposed to complete loss if a dishonest buyer comes your way (-thanks Ebay for changing your feedback policy now so that I can't even see them coming at me in advance so I can block them).

I have now lost money both buying and selling & accepting Paypal thinking I was "protected". Yes, I read their 25+ page "user agreement" and I followed their long list of do's & must really do's. In the end, you are 100% on your own.


June 23, 2008 8:29 PM

When a buyer receives a refund it comes out of the sellers account - NOT PayPal's!

I have yet to see or hear of any case where PayPal has refunded both the buyer and seller.

Its me J

June 23, 2008 10:37 PM

Here are all eBays Management,CEO
e-Mail adress: Send those right guys a Message:,,,,,,,


June 24, 2008 2:47 PM

If you all you unhappy users of ebay would go and post your comments in, search "ebay" and post your complaints, you would bring ebay to its knees. You choose to come to forums where nothing you say will help. There is where the shareholders are paying attention to every news about ebay.

Chuck Paugh

June 25, 2008 3:45 AM

Over the years, I have read so many legitimate claims of fraud committed by PayPal BUYERS documented by independent news agencies, and PayPal has yet to budge on the issue. The biggest problem is that PayPal refuses to accept as proof of delivery any method other than something that is traceable online. If you ship via the USPS using registered mail that returns proof of delivery with a signature, but you didn't pay extra for the form to be viewable online PayPal forces YOU to still refund money to a buyer. Its a big scam and PayPal is participant in the fraud.


June 25, 2008 12:15 PM

The biggest fraud going on eBay right now is eBay's service itself.

eBay has implemented their "Best Match" search and made it the default search format. eBay now has a tool it uses to disadvantage some sellers placement in search, increase other sellers placement in search, or give the seller "standard" placement in search.

This scenario would be exactly the same as if you pulled into a gas station and found that if ten people paid for 20 gallons of gas, three people only got 17, four people got 20 and three people got 23. It would be illegal for a gas station to do this, so why can eBay?

Some Blabbering Asshat

June 26, 2008 2:27 AM

You know, out of my last 70 transactions, only 2 have gone wrong.

But I agree. Try to list 10 items, it costs you a few bucks. And that's if they don't sell. If they DO sell, they get a percentage of the sale, plus your listing fee, plus paypal's fee.

Hooray for "breaking even" as a seller.

That's why I only buy on Ebay.


June 26, 2008 8:30 PM



September 15, 2008 4:19 AM

I had bought iphone, and it didnt come and I didnt get any refund from paypal


November 13, 2008 3:11 PM

I just shipped an iphone that I sold on ebay two days ago. Just a few hours later, I get a 'review' notice saying the buyer wasn't authorized or something. I'm hoping I won't be out $350...


November 3, 2009 12:45 PM

What Paypal/Ebay says and what they do are different things.

I will not use Ebay nor will I use Paypal. Its jut asking for problems. Its not a matter of if but when. Fraud abounds on both sides and people are happy as can be until the fraud sets upon their doorstep. Than they scream bloody murder.

Ebay fully supports buyer fraud. In this economy there is substantial people who order good than complain they are not as decribed. They often get a refund and keep the item. I have been owrking on a class action case for 2 years regarding this matter. The amount of voctoms is staggering and when we do backgroud checks we find the vast magority really are honest people with no record of fraud behaviour. People who have had their busness bankrupt by Paypal limiting ther accounts for instance and stealing their money. When it happen to you - and it will, it will all make sense. UNfortunately people have to have it become personal before they look hard at the facts. Ebay offers no protection and Paypal just plain rips people off. THe percentage of bad guys using both is extremely high compared to regular merchants. Ebay and Paypal users who are blatant fraudsters is int eh double digits. Not what they claim. In the real world its less than 1 percent.

Post a comment



Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



BW Mall - Sponsored Links

Buy a link now!