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Antitrust Lawsuit Filed against eBay over PayPal, Payments Policies
By Ina Steiner April 06, 2007

Michael Malone filed an antitrust class-action lawsuit against eBay this week under the Sherman Act, alleging eBay "utilizes its nationwide monopoly of the on-line auction market to monopolize the available forms of payment that sellers can use on eBay." eBay controls which payment methods sellers may advertise in their listings, and this year, it eliminated buyer-protection for non-PayPal transactions. eBay owns the PayPal payment service.

The lawsuit alleges that "Sellers who would otherwise accept only money transfers must also accept Payment Card transactions." Some sellers have expressed the desire to use PayPal with the ability to reject PayPal payments funded by credit cards, which they may not do under eBay's current policy.

Malone, who resides in Texas, sold a pair of Sansui SP-2000 speakers on eBay for $200 in December 2005. eBay charged him $10.38 in listing and final value fees, and PayPal charged a $5 processing fee. Malone's lawsuit states he had requested of eBay that he be able to use his personal PayPal account to receive the winner's payment, but says he was forced to use his Premier account, requiring him to accept PayPal payments funded by credit cards.

eBay instituted a "Safe Payments" policy, later renamed "Accepted Payments" policy, that prevents sellers from advertising certain payment methods in their auctions. One of the banned methods is Google Checkout.

The lawsuit also references PayPal management's alleged threat to file an antitrust lawsuit against eBay for engaging in an illegal bundling strategy when eBay owned a payment service called Billpoint, before it had acquired PayPal. And it cites the demise of PayPal competitors Citibank c2it, Yahoo PayDirect, and BidPay (now under new ownership with a different payment model).

Malone initially filed suit in Texas in March and refiled his lawsuit this week in California, where eBay is headquartered.

Superior Court To Ebay; Motion Denied
By PayPalSucks.com March 15, 2008

Judge Fogel, of the Superior Court of California, has Denied Ebay's motion to dismiss the most recent class action anti-trust lawsuit, brought on behalf of ebay Users and initiated in April of 2007. The plaintiffs have complained of eBay's practices with regard to its online payment service PayPal. The same judge had presided over a PayPal-related class-action lawsuit that was filed in 2002.

In This most recent Class Action Lawsuit, Plantiffs allege that eBay has been engaging in three types of anti-competitive conduct: (1) The acquisition of person-to-person electronic payment services; (2) The adoption of new policies designed to promote PayPal; and (3) The negotiation of marketing agreements with potential competitors.

Plaintiffs argue that this behavior has harmed the consumer by causing sellers to pay "artificially inflated and supra-competitive fees." They also allege that eBay's acqusition of electronic payment services and exclusion of competing services is anticompetitive because if eBay allowed its competitors to purchase electronic payment systems, the competition would be able to break into the relevant market of online auctions.

EBay argued that its acquisition of PayPal does not constitute anticompetitive behavior because the purpose of its conduct was to expand a set of services that eBay needed in its marketplace.

This latest setback for eBay comes on the eve of a new PayPal Only policy for eBay Australia users. As of This June, all items on eBay Australia will have to be paid for online using a PayPal account or a Visa or Mastercard transaction through PayPal. Expanding similair policies to the UK and possibly the EU has been discussed. Though the number of eBay and Paypal users has increased substantially over the years, they are not without detractors.

Several anti-ebay consumer complaint sites have emerged in recent years, the most notable being www.nopaypal.com and http://www.paypalwarning.com. These sites detail an ever-growing number of posted complaints against ebay and PayPal. Several recent complaints come from frustrated Austrailian Ebayers, who are upset about eBay's new PayPAl only policy.

Others posted complaints that their long-standing ebay auctions were shut down and the funds in their paypal accounts were locked, sometimes for no apparent reason, other times for reasons such as a change in credit score, logging onto the account from a different computer, or an unusual transaction amount. Though these scenarios are clearly listed in PayPal's terms of service, many complain that the terms of service give eBay authority to freeze funds and shut down auctions for almost any reason as well as no reason at all.

For more information on Judge Fogel's ruling, visit www.nopaypal.com and click on the link titled "Ebay Anti-Trust Lawsuit"