As I wrote earlier this month, Tiffany and Co. (NYSE: TIF) and eBay (NASDAQ: EBAY) are embroiled in a landmark legal case.Tiffany is suing the online auction house, arguing that eBay serves as a marketplace for illicit knockoffs of designer goods. According to the New York Times, "If Tiffany wins its case, not only could other lawsuits follow, but eBay's business model could be threatened because it would be difficult and extremely expensive for the company, based in San Jose, Calif., to police a site that now has 248 million registered users worldwide and approximately 102 million items for sale at any one time."
A loss here could be devastating for eBay: implementing procedures to eliminate knockoffs from auctions could kill eBay's juicy profit margins, and force the company to raise listing fees more than it already has. Alternatively, eBay could simply ban the sale of designer products that are a frequent target of counterfeiters. For its part, eBay's reaction is basically "Police your own merchandise, Tiffany!"
This will be an interesting case to follow, and one that could have huge consequences for the parties involved.











Reader Comments (Page 1 of 1)
11-27-2007 @ 8:07PM
BoboTheClown said...
It's about time that eBay takes some responsibility for what is happening on their site. Counterfeiting is just the tip of the iceberg -- there is also the issue of stolen property, and all manner of other scams.
If a hotel owner saw that his property was being overrun by criminals and his answer to complaining patrons was "lock your doors -- there's nothing I can do" that hotel would quickly become nothing more than a flophouse.
12-06-2007 @ 7:46AM
Kevin Davies said...
Yes, I bought 3 Mont Blanc pens on ebay and discovered they were all fake. I paid high prices for them. I sent them to MB and they confirmed these pens as fake. I complained to ebay and they refused to do anything. The Sellers were not even banned from the site. I told ebay that I thought they were facilitating fraud and guess what... They banned me!
Odd thing was MB did not seem to care either.
Good luck Tiffany.
1-06-2008 @ 5:15PM
Paul Harrington said...
I purchased a Jeep Wrangler using ebay and never received the vehicle. ebay says it must have been a fraudulant site and they were not responsible.
Funny thing it showed up in my summary page under my account as an item I won. Can anything be done?
Paul
1-20-2008 @ 2:33AM
MJ said...
ebay is running a scam and they blame sellers,this is how i see it,they let people post expensive handbags such as chanel,hermes ect.. like 20 at a time ebay is making a huge sale off those lisitings
no way there going to delete them.There response "we cant traffic ebay its too big"well if ebay allows this then replicas circulate the web and people keep buying the replicas then the buyer sells the handbag 1 year later to someone else it just goes into a viscious cycle
1-20-2008 @ 11:14PM
Michael M said...
Well I have been on eBay since March 1998 and have watched eBay degrade to nothing more than a mostly sellers located in China selling cheap electronics and counterfeit goods.
Before I woke up to the amount of fraud on eBay, I bought various SanDisk memory chips. Later I came across a Site that informed me [with pics] that three of the five chips I bought on eBay were fake. The Site also said that 95% of memory chips sold on eBay are counterfeit.
And last year I bought a Nokia headset that used to sell for $120. I got it for $50, new in box, from a Hong Kong seller. When I got it, it did not work right and I looked it over and could tell it was a fake. I hammered the seller and he gave me a refund. Later, I watched his feedback and many buyers were posting negative feedback saying he was selling counterfeit items. But he was an eBay Powerseller, had 300 feedbacks, and eBay did not do anything, even though I reported him three times to eBay's supposed fraud department.
And also last year someone went to my MySpace page, stole images of my Bianchi $5000 bicycle and posted a fake eBay auction, selling the non-existent bike for $1500 Buy-It-Now. Although I was not really a victim [I was not selling my bike and it was safely locked in my basement] I reported the criminal to eBay.
Get this, eBay did not close down the auction and at first they simply told me that they don't condone picture theft and suggested I contact the seller to tell him to not do it again.
When I told eBay for a third time that the auction was fake, they finally said thanks for reporting it. But I did not see where they banned the seller as he was still selling other items. [And saying he did not take PayPal, but did take Western Union as the only form of payment.]
IMHO eBay is responsible for these fraudulent sellers, mainly because they are profiting from the criminal's acts. All they care about is getting the listing and final value fees. They obviously could take steps to prevent these people from even posting, but they don't.
And really, when it comes down to it, eBay has dug it's own grave. To preserve its income and revenue streams they stupidly go on TV or print and say "Well, it's buyer beware, we are only a venue."
Guess what, all the innocent consumer hears is that eBay is rampant with fraud. And eBay's response to this is "Buyer beware."
Consumers don't understand technicalities and legal defenses. All they hear is that eBay is a haven for criminals and eBay doesn't do anything about it.
And how stupid is it to say "Well only 1/100th of one percent of eBay auctions are fraudulent." Well, even a dumb consumer can do the math. If 10 million cases of fraud occur each year on eBay, to anyone that sounds like a good chance one will get ripped off.
Yes indeed, eBay has dug its own grave. And apparently they don't think so. I marvel at all the excuses and explanations they come up with to explain eBay's current trading price. They blame everyone and everything except themselves.
And their solution, increase listing fees, commissions on sales, and keep increasing PayPal fees. I think now on a sale eBay [including PayPal] takes about 12% of a sale. What a bunch of greedy morons.
1-23-2008 @ 11:05AM
spratty100 said...
EBay have definitely got to take more responsibility for what happens on their auction site. They always shy away from the problems and sweep it under the carpet. All they do is send rubbish automated messages to people who have issues on there site, basically fobbing them off.
Its so easy to access the site under any name you want and sell any thing you want legal or not there’s no restrictions there at all. The only time anything gets done is when a legitimate user reports it. These problems definitely needs clamping down, if they were more checks in place when registering I.e. users with confirmed name and address through a registered bank account can only use the site, a limited no. of user accounts per household, when each item is sold the seller must agree to the item been real or face legal action if the items found not to be( If I can think of them anyone can). But eBay would never do this as the effect on the amount of users and profit would be devastating due to the amount of crime and fraudulent users on the site.
If they put as much effort and resources in to the fraud and counterfeit problems of the site as they do in chasing their fee's there wouldn't be a problem. They only have them self’s to blame if the law-suits don’t go in there favour, they have got too greedy and neglect the legitimate users on there site by not patrolling their site correctly.