eBay’s Worst Nightmare


Sitting in his eight-by-ten cell in a federal prison in North Carolina, Michael Paul Jackson, 23, still marvels at how easy the whole thing was. Several years ago when he decided to post fake auctions on eBay “selling” products he didn’t own, Jackson knew, in some recessed corner of his mind, that one day he’d probably get caught. He just didn’t imagine it would take four years. “I never knew how easy it was to manipulate people,” Jackson said in a recent phone interview. “It was like taking candy from a baby.”

All told, he stole $120,000 from more than 100 eBay users, most of whom won’t get any of it back. A student at Radford University, Jackson would get photos of laptops and digital cameras from other people’s auctions or elsewhere on the Internet and pretend that he owned those items. If the product retailed for $2,500, he’d sell it for $1,500, offering a killer deal people found hard to resist. When someone “won” one of his auctions, he’d ask for a bank check or money order and within a week or two the payment would show up in his post office box. Jackson was having the time of his life. He bought his girlfriend diamond rings and went on trips to Europe. He wasn’t even trying all that hard to disguise himself–he registered with the Post Office using his real name and had people make the checks out directly to him.

Welcome to the dark side of eBay. Every day shifty opportunists like Jackson lure hundreds of unsuspecting users with auctions that appear legitimate but are really a hollow shell. They hop from user ID to user ID, feeding the system with fake information and stolen credit cards so that eBay can’t tell who they are. Sometimes, like Jackson, they go on for years and are shut down only after law enforcement decides to get involved, which is something that’s been happening with increased vigor over the past year. In response to a dramatic increase in auction-fraud complaints, on April 30 the Federal Trade Commission banded together with the National Association of Attorneys General to announce Operation Bidder Beware, a nationwide crackdown and consumer-education campaign. Last year the FTC logged 51,000 auction-fraud complaints, double the number in 2001. “It’s one of our top priorities,” says Barbara Anthony, Northeast regional director at the FTC. “It jeopardizes the e-commerce marketplace and the confidence consumers have in the Internet.” These numbers include auctions on Yahoo.com and other sites, but the bulk of them are on eBay, which boasts 85% of the online auction market.

That isn’t the picture of eBay most people are used to seeing. One of the dot-com era’s most remarkable success stories, eBay now represents 2% of all of U.S. e-commerce and is one of the most significant technology companies created in the past ten years. Unburdened by costly warehouses, huge shipping facilities, or armies of customer-service people, eBay is a profit machine. Last year the San Jose company had earnings of $250 million, to-die-for profit margins of 20%, and a gravity-defying stock–up a stunning 90% since last May. But the very thing that makes eBay so wildly profitable, its hands-off business model, also leaves it vulnerable to fraud. Because the site is not so much an auction house as it is a swap meet, the company is purposely not watching everything that happens. It provides the virtual campground and then steps out of the way. Everything else depends on good will between users. “eBay is built on a belief that people are basically good,” reads the Community Values section of eBay’s site. (segue)

By Melanie Warner

Site relacionado: www.ebay.com

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