Just as eBay has increasingly become the online marketplace of choice for selling used products, buyers have become increasingly suspicious of the fact that many sellers are in fact advertising fraudulent and shoddy goods. There have been countless cases of auctions for seemingly high-quality products that in fact turn out to be lemons. Of course, in the online world, it is much easier and cheaper to send false signals to lure unsuspecting buyers into buying a counterfeit product. Most online auctions listings on eBay consist of little more than a few descriptive sentences and a few pictures, and eBay simply does not have the manpower or resources to police the millions of auction listings posted each day. Many times, buyers do not even know that their recently acquired product is a lemon until quite some time afterwards. A good case of this is the recent rash of “hacked” MP3 player and memory card scams on eBay. Certain sellers modified their MP3 player and data card operating systems to display a data capacity much larger than the actual capacity (often several gigabytes larger), and buyers could not find out until they tried to fill the MP3 player or card with more data than the actual capacity. Of course, this began to push the sellers of genuine (and more expensive) MP3 players and data devices out of the market. Another famous example of this occurred some time ago when the jewelry giant Tiffany & Co. sued eBay for failing to provide an adequate level of auction policing. Apparently, tons of listings of counterfeit jewelry were sold on eBay, often for prices more than 10 tenfold their real value, driving the sellers of genuine jewelry (Tiffany’s & Co.) that sell at still somewhat higher prices out of the market.

Many other similar examples exist, and so, PeSA, the Professional eBay Sellers Alliance, recently published an article on the causes of and solutions to the unhealthy dynamics of the eBay online marketplace. They proposed a solution different to what Tiffany’s & Co. suggested. PeSA surmised that because buyer confidence steadily declines with the introduction of more and more fraudulent auctions, buyers on average are willing to pay less, and sellers of genuine products are driven out. Therefore, it recommended that eBay put auctions from sellers with large amounts of positive ratings higher on all search returns. This way, customers have higher chances of finding and purchasing products that will give them a positive marketplace experience, instilling within them confidence, thus negating the effects of fraudulent listings. With any luck, eBay will implement such a suggestion, and prevent itself from transforming into a market for lemons.

Referenced Articles:

http://news.softpedia.com/news/Hacked-MP3-Players-Cause-eBay-Members-039-Revolt-71892.shtml

http://www.msnbc.msn.com/id/6030048/

http://www.gopesa.org/news/index.cfm?page=ebayunheatlhymarketplace2007