-April 17, 2003

Investors must have jumped for joy upon seeing Ebay's fourth-quarter earnings report. Revenues were 89% higher than in the same quarter a year earlier. That's a whole lot of Beanie Babies. But if you ask me, Ebay's financial success stands on the shoulders of poor customer service and corporate irresponsibility.

In January, I found what I was looking for on Ebay: a Fujitsu Lifebook P series ultracompact notebook computer, offered by a user with an impressive aggregate feedback rating of 64 and no negative-feedback postings. Ebay's system doesn't disclose users' e-mail addresses, so I sent a message through Ebay inquiring if the seller would be willing to add the "Buy it Now" option to the auction and, if so, what that price would be. An individual responded via e-mail and said that, although appending Buy It Now wasn't possible because the item had already received bids, he'd be willing to terminate the auction if we could agree on a price.

After e-mailing back and forth several times, he convinced me that he was a legitimate merchant. I also heavily relied on his impressive Ebay feedback rating. I sent the payment to him, and he promised to ship me the item on the following Monday. No dice. Finally, after repeated inquiries, he arrogantly replied that I had been scammed.

I called Western Union, which claimed it wasn't responsible, even though it admitted that the person who received the payment probably used forged identification. Ebay also told me that it was sorry but claimed no responsibility for two reasons: First, I had not purchased the item through Ebay, and, second, the fine print in the legal agreement that every Ebay user must accept during registration disavows the company of any and all liability in situations involving disputes between buyers and sellers.

Do I bear some responsibility for the situation? Of course. Whenever you send money to a stranger, you're taking a risk. Do I bear complete accountability for what happened? I don't think so. Ebay's claim that it wasn't at fault because I purchased the item outside its system is a smoke screen; I probably would have been scammed if I had won the auction, too. The pivotal issue isn't how I conducted the transaction; it's how I was put in contact with the seller in the first place. The Ebay Web site now claims that the user name was suspended on January 1. Trust me; Ebay was, two days later, still allowing the seller to participate in auctions and forwarding messages sent to the user name.

Ebay claims that the original owner of the user name probably had an easy-to-guess password that enabled someone else to reconfigure the profile, thereby redirecting messages sent to that user name to a different e-mail address. More likely, I think, is that someone hacked into Ebay's system, but, even if Ebay is right, its system is flawed. When I subsequently changed my profile's e-mail address in preparation for canceling my AOL account, the confirmation went only to the new e-mail address—not to both the old and the new. What's the point of a profile-alteration process whose only result is to verify to a hacker that he or she was successful—a process that doesn't alert the person whose profile has been hijacked?

Since I was scammed, no less than 25 auctions with the identical title, description, and layout have appeared on Ebay under a variety of user names. By posing as an interested buyer, I've confirmed that at least one of those user names associates with another e-mail address in the same UK domain as the person whose auction I responded to. In spite of my repeated warnings to Ebay, these auctions continue to appear, supposedly from sellers in the United States.

How many other users will Ebay allow to be fleeced? How many other scams just like this one are also going on? And how can any Ebay buyer trust that the person they're conversing with over e-mail is the same one that compiled the feedback rating guiding the buyer's purchasing decision?

What's happened to "the customer is always right," the motto that guided successful companies' policies? It's still the right motto, but, in the rush for ever-higher short-term revenue and profits, Ebay and others are turning their backs on it. Don't follow those lemmings over the cliff. Good reputations are difficult to acquire, easy to lose, and nearly impossible to resurrect once destroyed.

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