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eBay cracks down on members' offline deals

The online auction company is coming down on offline business deals between its buyers and sellers that circumvent the fees normally paid to the company.

eBay is cracking down on offline business deals between its buyers and sellers that circumvent the fees normally paid to the online auction company.

Effective immediately, eBay will first warn, then suspend, members who use their eBay connection to conduct business offline. For example, it is against eBay rules for a person to contact a losing bidder on eBay to offer that person the same product without going through eBay.

The company also announced that it would start cracking down on spam, or unsolicited email, sent to its members.

The rules against offline trading have been in place for some time, eBay spokesman Kevin Pursglove said Wednesday. But the company initially chose not to enforce the rules against offline deals at the request of members, he said.

However, fraud that occurs in those offline transactions and spam have become the two biggest complaints eBay receives from members, prompting the changes, Pursglove said.

"In the very early days, many of our users didn't want us to crack down on offline trading. They felt it built a sense of community on eBay," he said. "That may have been appropriate in the early days, but it isn't appropriate now."

For most auctions, eBay charges about $2 or less to list an item and a transaction fee of up to 5 percent of the closing bid. Additional fees may apply to real estate, auto listings or reserve auctions.

Some eBay members complained on's message boards that the new rules are draconian, stifling legitimate commerce and communications between bidders and sellers.

"Someone out there has lost their grip," wrote one member. "Obviously eBay needs to rustle up more money. Sales are down. They ain't looking so good on paper. Did it ever occur to them to be more conciliatory toward their sellers? No. Instead there is going to be a long list of 'thou shalt nots.'"

The auction house rules
Under the rules, sellers are banned from offering to sell items offline to people other than the high bidder in their auctions. This means sellers would violate the rules if they contacted not only people bidding on competitors' auctions, but those bidding on their own items.

Sellers also are not allowed to send unsolicited email to people about products similar to what they have bid on in the past. It wasn't spelled out whether sellers can contact bidders about such products if they are offered on eBay.

The rules also target bidders, banning them from contacting sellers about purchasing a listed item away from eBay.

These sorts of scenarios are not uncommon on eBay. Many small businesses use eBay like they would banner ads or newspaper classifieds: as a way to draw in new customers.

It's not unusual, for instance, for sellers to contact losing bidders offering similar goods to the ones they just sold. And buyers often contact sellers to find out whether they can purchase items such as tickets in advance of the date the auction closes.

Auction service sites such as AuctionWatch and Auctionworks have customer relations management software that allows auction sellers to create databases of their customers. Such databases could be used to send unsolicited email to bidders or to offer products to eBay members off of eBay.

In some cases, such as reserve auctions, eBay has even encouraged sellers to contact losing bidders to inform them of the reserve price and to offer the item offline, said Rosalinda Baldwin, editor of The Auction Guild, an online newsletter. In reserve auctions, a seller won't sell the item unless bidding reaches a preset, hidden price.

"What was once good manners is now a violation of eBay rules," Baldwin said. "All this does is (upset) what is left of the eBay community."

For profit or protection?
eBay is not able to collect a fee on sales between eBay members that occur offline. Some eBay members and industry experts suggested that new rules are part of an effort to boost the company's revenues.

Pursglove said the amount of revenue lost to offline transactions is "insignificant" for the company, and that the changes were prompted by customer complaints. In addition, offline transactions are not covered by the company's insurance program or feedback system, and eBay is powerless to investigate them should fraud occur, he said.

"This is probably the largest source of fraud complaints that we get in our customer service department," he said.

Some eBay members questioned how the company will police the policies since it will have to rely on members themselves to turn in their fellow members.

"Do they really think sellers are going to turn business away just because eBay isn't getting their cut?" wrote one seller on AuctionWatch who said he often gets email from bidders wanting more copies of his auction items. "They should concentrate on getting the deadbeats and bad sellers off eBay and bring in more bidders."

And a self-policing community could lead to abuse, such as a seller trying to get a rival kicked off eBay by asking the person to sell his or her goods offline.

"This whole thing is supposed to be based on honesty and trust, and they're doing the one thing that will ruin that honesty and trust," Baldwin said.

The rules are only the latest controversy between eBay and its auction community. Earlier this year, some members complained about the promotional deal eBay signed with, the relaunch of its automotive site, and an effort to clean up auctions of pornographic material. In each case, some members felt that eBay was not communicating with its community and was unfairly restricting or affecting people's ability to trade on the site.