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eBay cutting off points programs

The online auction giant cuts its business ties to at least three membership reward Web sites that it had been paying to send customers to eBay.

eBay cut its business ties this week to at least three membership reward Web sites that it had been paying to send customers to eBay.

Under the program, the reward sites gave redeemable "points" to their members when they registered or placed bids on eBay.

But some eBay sellers have complained that the program just encouraged people with no real interest in actually buying an item to place bids or register. In an e-mail sent to one of the sites Thursday, eBay said it was canceling the site's membership in the affiliates program because the site had sent too few serious bidders to eBay.

"I am writing you today to inform you (that you have) been removed and disabled from the eBay affiliate program," read the e-mail. "The decision to remove you from the program is due to clear evidence that your site visitors are placing a large number of bids on items with no intention of completing the purchase. Due to this issue you will not be compensated for activity that your users generated for March or April."

The operator of the reward site asked not to be identified. Two other reward sites confirmed they had also been cut off by eBay on Thursday.

It was not known how many reward sites have signed up as affiliates of eBay. eBay representatives did not return calls seeking comment.

There are numerous point reward sites on the Internet, including more popular sites such as Ebates.com. The sites offer members points for doing things such as visiting particular Web sites or purchasing goods from online stores; members can then redeem the points for gift certificates, prizes or even cash.

eBay offers a standard affiliates contract through Be Free and Commission Junction, companies that pair advertisers such as eBay with Web sites eager to become affiliates. eBay offers a tiered commission structure, paying affiliates between $5 and $9 for each customer that registers with eBay, depending on the number who sign up.

The auction giant also pays affiliates between 5 cents and 9 cents per bid placed by each of their customers, depending on how many bids they place.

Some 43,000 Web sites have signed up as eBay affiliates through Commission Junction since eBay teamed up with the site in March 2001, said Lisa Riolo, Commission Junction's vice president of client management. Riolo said she didn't know how many of those sites offer membership rewards.

On eBay message boards, members have been criticizing eBay for paying reward sites.

The problem with letting reward sites send bidders to eBay is that many of the bidders aren't serious, said Rosalinda Baldwin, editor of The Auction Guild, a newsletter covering the online auction market. Many bidders placed lowball bids just to get their points, Baldwin said.

The result was unfair for both sellers and the serious buyers on eBay. The serious buyers were forced to pay an inflated price, while the sellers were sometimes getting stuck with winning bids from people who had no intention of paying, she said.

"It doesn't benefit anyone but eBay," Baldwin said. "eBay gets inflated hits, inflated bids and inflated registrations. eBay gets all those listing fees, whether the item sells or not."

eBay seller Linda Farnsworth recently had to contend with a winning bidder who wouldn't pay for one of her auctions. Farnsworth, who sells china and silverware, blamed the affiliates program for reward sites, noting that the bidder had made a slew of bids over a short amount of time and was ultimately suspended by eBay, ostensibly for not paying for other winning auctions. Farnsworth said she was upset that eBay was paying people to simply place bids instead of winning auctions.

"It looks like they got wise to it, which is good," said Farnsworth, of Signal Mountain, Tenn.

eBay has canceled affiliates contracts with CreationsRewards.net, PrimaRewards.com and ClicktotheMagic.com.

CreationsRewards President Chris Basista said he was disappointed that eBay had canceled his membership in the affiliates program. Basista, whose site has about 20,000 members, said eBay owes him some $15,000 for bids and registrations made by his customers for March and April.

"That's a lot of bids," he said. "I'm not too happy."

Scott Hammond, chief executive of PrimaRewards, said he understood eBay's decision to cancel his and other reward sites' membership in the affiliates program. But Hammond said he had warned eBay of the problems of rewarding members with points for each bid they placed on eBay. Instead, Hammond advocated that his and other reward sites should award only one point a day to members who placed bids.

That eBay is now curtailing the program because too many bidders were placing bids just to get points is no surprise to Hammond.

"Our take was almost, 'I told you so,'" he said.