The company is promoting the Auction for America, which launched Monday, across its home page and promising to deliver all funds raised to the United Way's September 11 fund.
But in postings on message boards at eBay and on AuctionWatch, many eBay members attacked the effort, accusing eBay of hurting their for-profit sales by forcing them to compete with the charity auction.
"I just don't think they get it," said Ross Wright, a longtime eBay seller. "I think eBay didn't think before implementing this program of all the trouble it would cause."
eBay launched the Auction for America after receiving a direct appeal for help from New York Gov. George Pataki and New York Mayor Rudy Giuliani and after hearing from members who wanted eBay to do something to assist with relief efforts, company spokesman Kevin Pursglove said. eBay is waiving its fees, as have many of its partners, including Billpoint, eBay's online payment service, major credit card companies and picture hosting service IPIX, Pursglove said.
"We are asking members of the eBay community to chip in and help out with the events in New York City and in Washington, D.C.," Pursglove said. "It's clear that a large number of eBay users are heeding our call. Those users that want to search for other ways to donate, that's their choice."
The auction is the latest charity effort by an online company in the wake of the Sept. 11 attacks on New York's World Trade Center and the Pentagon. Last week, Amazon, PayPal and Yahoo all set up online donation centers that funneled money to the Red Cross and other charities. By Tuesday, Yahoo customers had donated more than $17 million through its donation center.
Palm has donated $5 million in goods to the eBay auction, while rival Handspring's executives sent an e-mail to employees encouraging them to participate in the auction.
Last week, Handspring shipped 500 Visor Deluxe handhelds and Visor Phones to Red Cross emergency workers and workers at the New York Police Department and New York Fire Department. The company's wireless partner, VoiceStream Wireless, will provide free airtime on the cellular phones.
Handspring is also organizing an internal donation drive, and the company will match employee donations up to $10,000. Handspring plans to host a blood drive at the headquarters later this month.
Claims of unfair competition
Sellers complained that eBay is requiring sellers in the auctions to pay for shipping their items, instead of charging buyers for that cost.
That sets up an unfair competition for sellers who aren't participating in the charity auction, said eBay seller Sandi Siemers. "If a buyer looks at this and sees free shipping, what are they going to bid on?" Siemers asked.
Another eBay member, Dallas resident Bobby Beeman, said he has no plans to list any items in the charity auction. Beeman, who sells toys, antiques and jewelry, said he's concerned that the charity auction is going to divide sellers into opposite camps.
Sellers such as Beeman, who make their living on eBay, are being forced to compete against casual sellers who can afford to donate items to the charity auction and who are getting big promotion from eBay for their efforts, he said. And the charity auction comes at a bad time: on the heels of a slow summer for selling and right as many sellers are gearing up for the holiday season, he said.
"It sounds like we're (ungrateful) for not wanting to participate," Beeman said. "It's not about not wanting to participate or not caring or not wanting to give, but eBay's kind of selling us down the river."
Many sellers are also concerned that eBay is requiring them to use Billpoint on the charity auctions. Billpoint has trailed far behind rival PayPal in usage among auction users and many sellers have resisted using the service.
"They're doing it to sign people up for Billpoint," Siemers charged. "PayPal has the same options. Why can't we use PayPal?"
The only way eBay could guarantee that all money from the auctions was going to the charitable fund was by requiring sellers to use Billpoint, eBay's Pursglove said. Additionally, Billpoint relationships with the major credit card companies ensured that they would waive their own fees on credit card transactions and all the money donated would go to the fund, he said.
A PayPal representative told CNET News.com on Monday that the company would waive its fees if it were allowed to participate in the eBay auction. It is deducting credit card processing costs from the amount customers donate to the American Red Cross.
By Tuesday, more than 12,000 auctions had been listed as part of eBay's Auction for America.
News.com's Rachel Konrad contributed to this report