Thursday, August 31, 2006


Like many other important enterprises, eBay was founded in a living room, in September 1995 at Pierre Omidyar's home in San Jose. From its earliest days, eBay was envisioned as a marketplace for trading goods and services between individuals, with a strong focus on collectibles.

In 1998, Pierre and cofounder Jeff Skoll recruited Meg Whitman to sustain and develop eBay’s initial success. Meg had learned the importance of branding at companies such as Hasbro. She chose her staff from companies such as Pepsico and Disney and built a vision for a company whose essence is connecting people.

eBay quickly moved beyond an initial focus on collectibles into lucrative high-value markets such as automobiles and real estate. Building an online person-to-person trading community on the Internet, eBay brings buyers and sellers together in a venue where sellers individually auction items for sale, buyers bid on items of interest and users may browse through listings in a fully automated way in which items are classified by topics, each type having its own category. Recently eBay expanded its business model to include seller storefronts and immediate fixed price sales.

eBay’s web interface has streamlined and globalized person-to-person trading, traditionally conducted via garage sales, collectibles shows, flea markets and the like. Buyers can locate items quickly and sellers can list items for sale within minutes of registering. In theory this is the ideal marketplace, eliminating middlemen and maximizing economic efficiency. I like eBay’s efficiency and I buy on eBay regularly.

Unfortunately, we don’t live in an ideal world, and in our real world theory is not reality. eBay’s concept works well enough for the vast majority of transactions, but eBay regrettably has also become a thieves’ market where unscrupulous criminals constantly prey upon the unwary. In no category is this pestilence more marked than in trading collectibles and branded merchandise, for which authenticity, accuracy of description and condition are significant value components.

As a coin dealer I’m a middleman, a category eBay has targeted for elimination in much the same way as Wal-Mart and Home Depot are eliminating traditional businesses such as hardware stores. Obviously I am not an unbiased commentator, and readers will realize that I do have an economic interest in this. On the other hand, I’m really not in the coin business for purely financial reasons, and have many reasons to care about welfare of collectors that transcend economics. I have devoted a great deal of effort to creating a website, Classical Coins, whose attractions include offering those first exploring ancient coin collecting a friendly, helpful and honest introduction to the subject. This constant preying upon neophyte collectors on eBay is extremely offensive to me.

eBay’s approach toward transaction honesty is too simplistic. Did the buyer pay for the item? Did the seller deliver it promptly in the expected condition? These are the concerns eBay’s feedback system addresses, and in trading collectibles they are not adequate. The missing elements that are not addressed: Was the item sold authentic? Was it accurately and honestly described?

eBay contends that its feedback system provides a way for users to penalize sellers whose merchandise is not authentic or correctly described. In reality, it’s all a numbers game. All that a seller has to do to stay on good terms with eBay and avoid negative feedback is to offer a guarantee allowing any buyer dissatisfied with a transaction to return the item for a refund.

There are unscrupulous eBay sellers who do offer such refunds, and actually honor them. They have well established, excellent feedback despite the fact that in my opinion and in the opinion of many other knowledgeable experts, they are selling items not only questionable but obviously fake. There is no question in my mind, looking at images in these auctions, that the probability of the item being authentic is zero. But in the real world numbers game, how many buyers have my expertise? How many buyers can recognize that they have been sold a fake, or dishonestly described or “doctored” collectible? If the answer is “a few per cent,” it is clearly profitable for an unscrupulous seller to give them refunds, avoid negative feedback and go on fleecing those less perceptive.

Unscrupulous eBay sellers also take advantage of features eBay provides to protect sellers from competitors seeking to “trash” their auctions. Private auctions, private feedback and the like are exploited to prevent concerned eBayers from warning those about to be defrauded. The worst single issue is that eBay seller identities are anonymous. To become an eBay seller you need an email address and a credit card. Your identity can be bogus, designed to prevent anyone from finding out who you really are. Many outraged eBayers, seeking to discover who defrauded them, have found that there is no way to penetrate the system to learn the seller’s real identity.

For years a forgery vendor centered in Toronto has been defrauding neophyte ancient coin collectors by offering fake ancient coins on eBay, typically castings made from molds taken from authentic originals or Bulgarian forgeries ( . Many efforts have been made to track down the identity of the criminal or criminals involved. The best reported wisdom is that a criminal gang of Vietnamese expatriates is involved, led by Dang Lieu, which of course may be another bogus identity. Literally hundreds of eBay identities have been used by this seller, who prepares them in advance trading in cheap items like postage stamps, and moves to another “clean” identity whenever a scam is discovered. Canadian law enforcement officials seem to have given up on this case, and to no longer have any serious interest in identifying and apprehending those responsible.

A great deal has been said about eBay collectibles fraud in discussion forums such as Numism-L, rec.collecting.coins and Moneta-L, in which I have participated for years. Recently I was venting my feelings on RCC, citing some egregious examples of fraudulent eBay auctions. RCC listreaders include a number of eBay sellers who are sensitive to such criticism of eBay, apparently seeing that as a threat to their interests. One of these sellers challenged me to do something concrete, instead of merely posting more complaints. That was a valid point. eFakes-L was the result.

This new discussion list is dedicated toward exploring the problem and finding ways to do something about it. eFakes-L has attracted a great deal of interest, and almost 100 members in its first week. A register of suspicious eBay auctions with images of items offered is being compiled.

My perspective: it’s not right for neophyte collectors to be exposed to hazards such as confront calves in herds crossing African rivers. Neophytes should not become dinner for Dang Lieu and other eBay crocodiles. In Vietnam and similar parts of the world, it seems that all loyalty is to family, and everyone else is viewed as fair game with no ethical constraints. That is not acceptable to me. The Internet, eBay specifically, is not a third world country and “caveat emptor,” where fraud is something the buyer is responsible for recognizing and preventing, is not an acceptable way of doing business.

eFakes-L will make a serious attempt to do something about this. The “Suspicious Auctions” database will become an important resource for those who realize how self serving and misleading eBay’s fraud statistics are. Hopefully, we can bring the public and Government authorities to understand the true nature and extent of the problem. This new forum is off to a rousing start with nearly 100 members in its first week. I’m encouraged by that reception, and see every reason to expect that the united efforts of concerned collectors will lead to meaningful eBay reform.