Chancellor William B. Chandler found that “Jim [Buckmaster] and Craig [Newmark] breached their fiduciary duty of loyalty by using their power as directors and controlling stockholders to implement an interested transaction that was not entirely fair to eBay, the minority stockholder.”

“We are very pleased that the Court gave eBay what it sought from the lawsuit,” said Michael R. Jacobson, eBay general counsel. “eBay brought this suit to protect its own shareholders and preserve its valuable investment in Craigslist. The evidence presented at trial demonstrated that the actions were taken by Mr. Buckmaster and Mr. Newmark to benefit themselves at the expense of eBay, and we are gratified that the Court recognized these actions were both unfair and unlawful and rectified the situation.”

I’ll update this post with any information if and when it becomes available.

Cheers,
RBH

“eBay sued craigslist to, among other things, rescind unfair indemnification agreements granted to Newmark and Buckmaster. Since both Newmark and Buckmaster agreed, under oath, not to sign those agreements now or in the future, we are pleased that the Court agreed those claims are now moot.

“The trial beginning on December 7 will try the remaining charges against craigslist. The evidence we will present will show that the board of directors engaged in a scheme to dilute eBay’s shares in craigslist. eBay is asking the Court to reverse these transactions and return the property that was wrongly taken from it by the craigslist board directors.”

I’ll be sure to update the blog with any and all info/statements as they become available heading into – and out of – the trial in December.

Cheers,
RBH

1. Buyer found a car with a Kelley Blue Book Value of $9,970 listed on Craigslist for $2980. (This price with free shipping—too good to be true?)

2. Buyer contacts seller through Craigslist.
3. Seller e-mails buyer and pretends this will be an eBay transaction through eBay Safe Pay Insurer (there is no such program).

4. Seller sends buyer spoofed, or fake, eBay Purchase Protection Membership and seller “certification”—claims coverage up to $20,000.

5. Seller sends another spoofed but official-looking document specifying transaction conditions from the eBay “Vehicle Purchase Protection Department” which does not exist.

6. Seller sends spoofed “eBay payment instructions” and buyer is required to pay immediately with MoneyGram (Instructions contradict eBay policies- MoneyGram is banned on eBay.com)

7. Buyer pays with MoneyGram but doesn’t receive car and is out $2980.
8. Buyer brings complaint to eBay and law enforcement.
9. Buyer is not eligible for eBay Vehicle Purchase Protection Program (VPP) because it was not an eBay listing and eBay does not cover transactions off eBay.

Here are some tips that would have helped the buyer avoid her loss:
• Consider buying on eBay; we have the PayPal Buyer Protection Program and also a Vehicle Purchase Protection Program specifically for eBay Motors. See more tips from eBay Motors at http://www.motors.ebay.com.
• When buying on eBay, look at seller’s ratings and reputation.
• If you are shopping on Craigslist, follow its safety tips: http://www.craigslist.org/about/scams. If you are shopping on eBay, don’t be lured off of the safe confines of the site to complete transactions.
• Research the item as far as model, price, book value etc., read description carefully and look for the eBay VPP if you are buying on eBay Motors.
• Be sure that requests for payment come through eBay channels and are in keeping with eBay policies.
• Never use Western Union, MoneyGram or wire transfer services because they leave you exposed to fraud and with little recourse. You are automatically covered by the eBay VPP for all eligible listings on eBay Motors.

Please see the warning message posted on the eBay Trust and Safety Community Message Boards.

Thanks and have a safe and happy holiday!

- Rich LaMagna
Online Safety Advisor, eBay

UPDATED 1/6/2009

Hi Everyone,
I hope that you have all enjoyed a pleasant holiday and wish you a safe and prosperous New Year!

I’d like to address some comments and emphasize that my goal is to provide information and advice to allow eBay customers to make informed decisions and have a safer online experience. I am a paid consultant to eBay and not an eBay employee. While I fully support and agree with eBay and PayPal policies, my job is to promote online safety.

As for the suggestion that I need to get out into the world more—during 28 years of federal law enforcement experience and almost 10 years in the security field in the private sector, I’ve lived and worked in four different countries and traveled to about another 30 on business; I also try to keep up with the latest in online safety issues. Here are a few points I’d like to make:

Although @Laura Greenfield’s question pertained to bank and wire transfers I’d like to address other payment forms since they were also raised.

Some people indicated that they often use money transfer services or bank wire transfers as sellers and have had no problem from regular corporate clients and wholesale customers. Granted that the risk is greater for the buyer than the seller and dealing with known clients does reduce some risk. However, suppose the buyer makes a claim that the item was not received or otherwise flawed? For both buyers and sellers, taking the transaction off eBay leaves you with few protections and options. This could also result in a dissatisfied buyer, who might leave negative feedback which is harmful to your DSRs. Why risk it? I recently attend an industry meeting where a Western Union security official stated that he does not recommend their service for payments to other than known and trusted individuals.

If you use PayPal, the buyer is protected for the full purchase price of the item plus shipping costs on eligible transactions? The seller is protected for unauthorized payments and “Item Not Received” claims. Credit card companies also offer recourse and protection that bank and wire transfers do not offer. That is another reason why wire transfers are no longer legal on eBay. Buyers expect safe, convenient and fast transactions, which PayPal and other online payment services offer– there is a good reason why 90% of eBay shoppers prefer online payment services, as do most eCommerce buyers.

I’ve done bank wire transfers for my own business and they are costly and inconvenient—I’ve wasted valuable time sitting in front of a bank employee doing a wire transfer which often takes 24 hours to complete. Recently, I had to go back to the bank a second time because they made an error on the transaction and the recipient had to wait another 24 hours for the money. As for trusting PayPal, as a buyer, I recently filed claims with PayPal on items and services that were not as described—they responded immediately and I had my money back within 12 hours.

Here is what Western Union and the Federal Trade Commission say on their sites about money and wire transfers as well as other payment methods:

Western Union

Remember, Western Union recommends against using the Western Union Money Transfer® service to pay for online auction purchases. It is important to note that Western Union does not offer any type of purchase protection or escrow service and is not responsible for the nonreceipt
or quality of goods or services.

Federal Trade Commission(OnGuardOnline.gov)

Carefully consider your method of payment. Don’t send cash, and don’t use a money wiring service. To protect both buyers and sellers, some auction sites now prohibit the use of wire transfers as a method of payment.

Online Payment Services. Online payment services are popular with both buyers and sellers. They allow buyers to use a credit card or electronic bank transfer to pay sellers. They also may protect buyers from unlawful use of their credit cards or bank accounts because the online payment service holds the account information, not the seller. Many sellers prefer online payment services because the services tend to provide more security than, say, personal checks.

Wire Transfers. The FTC recommends that buyers not wire money (via a money transmitter or directly to a seller’s bank account). …..In fact, to protect both buyers and sellers, some auction sites now prohibit the use of wire transfers as a method of payment.

Finally, I’d like to address the issue of personal checks:
• Checks can easily use a forged signature
• Checks can be easily written when there are insufficient funds in the account
• Bank accounts can be opened in bogus names (see identity theft)
• Checks contain personal information that should only be given to trusted merchants
• Banks will not make good on bad checks and will charge fees
• Checks take longer to clear
• Checks on foreign currencies take very long to clear and require fees

Frankly, as a buyer, seller and business person, I can’t imagine why anyone wouldn’t want to use PayPal or another approved electronic payment method.

To file a complaint with the Federal Trade Commission go to FTC.gov.

Thanks for your comments and Happy New Year!

Rich LaMagna
Online Safety Advisor

“We focus on building local communities by providing our users with an online marketplace to inquire, meet, transact and share with others in their town. Everything starts with this local community. Consequently, it’s very important for us that ads are posted directly by Kijiji users.”

He went on to add…

“We think this approach, supported by a very easy-to-use interface and clean environment, will allow us to capitalize on the market’s full potential and continue our explosive traffic growth. This potential is reflected every day in our community of over four million Kijiji users who often share their wonderful experiences with us, whether it’s finding a new puppy, buying a car from a neighbor, selling a couch, or finding a nanny for their kids.”

Given Wal-Mart’s core focus on new retail goods, I don’t think it’s a surprise that they chose to partner with an established classifieds aggregator over building their own from scratch. However, given that Oodle is essentially a search engine for classifieds (and less of a true marketplace) it does make for an interesting partnership. One could argue that with eBay already established as the leader in consumer-to-consumer marketplaces, the extension into consumer-to-consumer classifieds marketplaces represents a much more logical, natural extension of their business. But, as Martin indicated, it’s a huge market with plenty of room for new players. Why wouldn’t the “mother of all marketplaces” get in on the online classifieds action?

On a related note, I received some one-off emails since I first referenced Kijiji – ranging from “What’s up with that name?” to “how do Classifieds fit into the big picture for eBay?”. Some fast facts follow:

– Kijiji means “village” in Swahili and was first introduced in Canada, France, Germany, Italy, China, Japan and Taiwan back in early 2005. Later that year, Kijiji spread to Austria, Switzerland and India. In July, 2007, eBay launched Kijiji U.S. in 220 cities.

– Kijiji is available in more than 1,000 cities/neighborhoods around the world with over 47 million users.

– Classifieds is the fastest growing business unit within eBay Inc. The Classifieds business includes five major brands: Gumtree, Kijiji, LoQUo , Marktplaats and Mobile.de.

Cheers,
RBH

2) It’s not like I can provide facts beyond what has already been made public. Unfortunately, any questions asked here on Ink, regarding the lawsuit(s) specifically, will go unanswered until a time when further details can be given.

However, with all the lawsuit hubbub surrrounding Craigslist and eBay , it would be easy to miss a little story that ran in Reuters recently regarding the overall rise of web classifieds.

The article references motorcyle and bicycle listings on Kijiji growing nearly 300% since January, and similar spikes have been noticed in ads for cameras, phone and computers over the 80% overall growth of general “For Sale” items.

“We’ve been growing quickly as a site, but 300 percent really pops out,” said Martin Herbst, general manager of Kijiji.com, adding that consumers may be selling higher-value goods first as they try to clear out what they don’t need.

The full article can be found here.

For further reading, IBD put the whole online classifieds business in perspective back in April – showing that ComScore lists Kijiji as 6th overall in the US for online classifieds and growing steadily. No awards for those correctly guessing number 1.

Cheers,
RBH

eBay VP and Deputy General Counsel for Government Relations, Tod Cohen, testified on this issue yesterday before the House Subcommittee on Government Oversight and Oversight Reform Subcommittee on National Security and Foreign Affairs. Jim Buckmaster, CEO of Craigslist, also testified.

Since 1995, eBay has created the most proactive and comprehensive policies to combat the sale of illegal items, covering over 60 classifications of prohibited and restricted items, including banned military items, firearms, prescription drugs, counterfeit goods and drug paraphernalia. More information about eBay’s policies on military items can be found here.

Further, it was pointed out that during 2007, eBay’s Global Law Enforcement Organization assisted law enforcement agencies around the globe in 66,132 investigations and assisted law enforcement in the arrest or conviction of 518 individuals linked to 375 unique investigations.

To read the official overview and full testimonies of all participating individuals in yesterday’s hearing, please click here.