Sunday, July 23, 2006

eBay monopoly complaint filed, in violation of Sherman Antitrust Act

Recently I discovered a news article by Ina Steiner. It stated that eBay is banning the use of Google Checkout in preference over their own payment system, PayPal. This is clearly a classic example of anticompetitive practices. Immediately after reading this article, I have filed a legal complaint with the Federal Trade Commission. eBay's Safe Payments Policy clearly states that Google Checkout is not allowed to be used:

"Payment Services not permitted on eBay: AlertPay.com, anypay.com, AuctionChex.com, BillPay.ie, ecount.com, cardserviceinternational.com, CCAvenue, ecount, e-gold, eHotPay.com, ePassporte.com, EuroGiro, FastCash.com, Google Checkout, gcash, GearPay, Goldmoney.com, graphcard.com, greenzap.com, ikobo.com, Liberty Dollars, Moneygram.com, neteller.com, Netpay.com, paychest.com, payingfast.com, Payko.com, paypay, Postepay, Qchex.com, rupay.com, sendmoneyorder.com, stamps, Stormpay, wmtransfer.com, xcoin.com"

While everyone enjoys eBay as a marketplace, I want to make sure such marketplaces do not have anti-competitive practices. One claim eBay has against Google Checkout is that it doesn't have a history of reputable transactions -- this is circular reasoning, if you don't allow Google Checkout to be tried out, how will it have a history?

If you're interested in filling a complaint against eBay due to this anticompetitive practice, you can do the following:

1. Access the Federal Trade Commission site
2. Provide your contact info
3. Provide eBay's contact info:

eBay
2145 Hamilton Avenue
Suite 350
San Jose, CA 95125
Phone: (408) 376-7400

4. If you don't know what to say, just state facts. Here's what I submitted:

eBay is in violation of the Sherman Act. eBay has restricted the use of Google Checkout, a payment service online because they do not want it to compete with PayPal, eBay's payment service.

In their Safe Payments Policy, dated 7/23/06, they state:
"Payment Services not permitted on eBay: AlertPay.com, anypay.com, AuctionChex.com, BillPay.ie, ecount.com, cardserviceinternational.com, CCAvenue, ecount, e-gold, eHotPay.com, ePassporte.com, EuroGiro, FastCash.com, Google Checkout, gcash, GearPay, Goldmoney.com, graphcard.com, greenzap.com, ikobo.com, Liberty Dollars, Moneygram.com, neteller.com, Netpay.com, paychest.com, payingfast.com, Payko.com, paypay, Postepay, Qchex.com, rupay.com, sendmoneyorder.com, stamps, Stormpay, wmtransfer.com, xcoin.com"

This can be found on:
http://pages.ebay.com/help/policies/accepted-payments-policy.html

The Sherman Act provides: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal" (see 15 U.S.C. § 1). Clearly, because eBay wants to have market position with their payment service (PayPal), they have restricted Google Checkout and other payment services to hinder competition. This is in serious violation of the Sherman Act.

8 comments:

Erin said...

EBay recently ended several auctions I had running because I stated that I accepted cash as a method of payment. They say that cash isn't a safe form of payment (through the mail) so I can't provide that as an option for my customers. I was like what!? How can CASH not be an accepted form of payment? It says right on it that it is legal tender for all debts public and private.

I contacted them after this incident with a scathing email about how cash can't be banned because its legal tender, etc. I got absolutely no response to this email. I was surprised, not even a blowoff, non-answer reply. That made me think that they know what they're doing is wrong.

How is it legal for them to ban cash anyway? Shouldn't the government care about that? Not only that, if someone wants to take the risk of sending concealed cash through the mail, shouldn't that be their choice, not eBay's? I haven't had many folks send cash through the mail, but a handful have used the option. I think eBay is going to come crashing down, hard. They can't stay on top forever.

PayPal is just as bad. I can't even explain how mad I was when I had to upgrade to the Premier account because they took their fees out of ALL transactions, not just the credit card transactions. So, instead of taking fees only for the credit card transactions they also took fees from what they hadn't been getting a red cent out of before. How is that right or fair? Its just another way to rip you off. I'm sick of it, and I'm sure I'm not alone.

Dohboy said...

I agree with you in principle that cash should be an allowed method of payment. However, the law doesn't agree.

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues."

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

mrduck said...

Dohboy,

Not sure which "private" entity you may be referring to. ebay is a market place, and has no involvement as an escrower (?) of transaction funds when checks and money orders are used. The private entities involved are the buyer and the seller and they can complete the transaction in any manner mutually acceptable to both. For instance, a buyer could offer to barter one rare item for another the seller wishes to acquire. As long as buyer and seller do not attempt to circumscribe ebay fees by violating ebay policies (i.e., as long as ebay gets their pound of flesh), ebay should have nothing to say about methods of payment.

Dohboy said...

mrduck,

eBay unfortunately does control the method of payment. Try posting something on eBay and advertise Google Checkout, you'll find your listing removed and your account may be restricted.

mrduck said...

dohboy,

I think we're both preaching to the choir. We all seem to agree that ebay is probably using anticompetitive practices. Where you and I may disagree is in the premise of your argument. Staying with your example of the "bus line" company; ebay may be able to restrict the use legal tender as payment to ride (i.e., use the serivice)and require the use of bus company tokens, but, once on board, passengers (sellers and buyers) should be able to make mutually agreed-upon exchanges in any legal manner. For example, I bring a dozen fresh donuts on board; you skipped breakfast and ask me how much I'd take for one of the donuts. We agree on a quarter, and we're both satisfied with the exchange.

The bus driver/bus company should have no role in the exchange as long as you and I are not violating any bus company policies (e.g., riding for free, safety, etc.).

ebay is a marketplace service. Legally, they may be able to restrict payment for their services to an exchange through PayPal (bus company tokens), but they should not be able to restrict how you and I mutually agree to an exchange involving the donuts.

Participating in a marketplace and the mutually-agreed-upon exchanges between private parties within that marketplace are two different things.

Erin's point is that restricting the use of cash for mutually-agreed-upon exchanges is another indication of ebay's anticompetitive practices. I agree.

I suspect that ebay hasn't restricted the use of money orders and personal checks only to avoid being blatantly anticompetitive.

If it walks like a duck....

cheers,
mrduck

Monique Buckmaster said...

EBay has limited my selling to within Canada because I refuse to "verify" or register with PAYPAL. I am a business person with a storefront, and have my own credit card merchant accounts with visa and m/c. They have also removed the credit card payment option from my listings.
IS THIS LEGAL?

Anonymous said...

Paypal and ebay are violating the law regularly, and seem to be getting away with that due to their financial strength, due to "lubrication" of the authorities in San Jose. The member agreement of Paypal is entirley illegal, yet they been settling many law suits out of court.
The following websites have a lot of info regarding the illegal business conduct of paypal:
www.paypalwarning.com
www.aboutpaypal.org
www.nopaypal.com
www.paypalsucks.com
There are many more .
Paypal is in my opinion an modern day organized crime organization (which in fact includes ebay).
Paypal forcefully inserting their logo into auctions, which are clearly marked "other merchanta services" and they collect payments from buyers who pay sellers, who do not even have an account with paypal.
Recently Paypal has launched a new crime: Now they are holding every payment for 21 days (!) before releasing it to the sellers. It is INTEREST FREE money for them. They just keep pushing their "illegal conduct envelope", and eventually it will burst, I hope... They do not deserve to be in business. This is an old day mob operation, disguised as a legit business.

Ben said...

While I'm not as experienced with law language as most of the responses I've read, I'm in agreement with the original post. This brings to mind the Microsoft Antitrust case in where they limited their operating system to only ship with Microsoft Internet Explorer therefore favoring Internet Explorer over third party web browsers. This seems to be a similar case here where only Paypal is to be used in conjunction with EBay. It's bad enough their fee's are astronomical within eBay, but are now reaping even more rewards with the enormous fee's of PayPal. There is plenty of safe pay services lurking on the internet. Let us choose, not monopolize the industry.