Court rejects appeal in eBay fraud suit

The decision stems from a case filed two years ago by a group of eBay buyers who charged that eBay knew about the sale of the phony merchandise and did little to stop it. The California Court of Appeals in San Diego rejected an appeal of a decision last year by a state superior court judge to dismiss the case.

"We conclude appellants cannot state a cause of action against eBay...because their allegations reveal eBay did not sell or offer to sell the collectibles at issue," the appellate court said in its decision. "Additionally, we conclude imposition of...liability on eBay in this particular case is inconsistent...because appellants' causes of action ultimately hold eBay responsible for misinformation or misrepresentations originating with other defendants or third parties."

eBay attorney Rob Chestnut declined to comment on the decision. Krause & Kalfayan attorney James Krause, who represented the eBay buyers who sued eBay, was not available for comment.

eBay has maintained for years that it is only a venue and is therefore not responsible for the items bought or sold on its site. The sports-memorabilia suit is the latest in a growing number of decisions that have backed up eBay's stance.

The company has taken steps to control fraud on its site, including a new fraud detection system it introduced earlier this year. The company has canceled auctions, suspended sellers, and reported suspicious activity to authorities in response to auctions that violate its rules or are illegal. But with millions of auctions running at any one time, the company does not promise that everything on the site is legitimate.

The company acknowledged recently that the sports memorabilia auctions on its site tend to have higher-than-normal rates of fraud. Other areas that have relatively high rates of fraud are higher priced items such as computers and electronics products, eBay executives said.