Still believe eBay is where individual consumers can sell to their peers? Then read on. It is already commonly know that eBay is a price gauging mechanism for powersellers. They focus on specific items, by and large avoiding competition among each other, and create well marketed listings. All would be well for these small businesses, but then they have one problem: YOU.

Imagine an eBay store is selling new IBM batteries at a fixed price–above retail value. To maximize margins, several powersellers unite among each other and agree on a a certain price. But then a casual seller comes in and puts up a listing with a uneducated, or simly guessed, estimate of the actual value. This in turn affects not one buyer, but entire market price - as buyers will raise their price expectations (i.e. lower price limit). They will then seek similar prices and might in the end go some place else.

So what is a concerned store owner (with respectable investments) about to do? How about hiring a firm abroad to crush the competition? You come to eBay; post your ad in auction style, and immediately you start getting bids way over the reasonable price. You suspect something, but you decide to wait ’til the end. As expected, someone wins at unregular price, and you follow up with a bill. But it is not a payment that you receive back but a message from “above” stating: “there was a fraud on this account.” Of course, you might spend some energy fighting this with eBay; blaming them responsible for allowing an illegal account to participate in auction - irregardless, the auction & time are already lost!

You then choose another day, and to no avail: different accounts, different bids but same end result. So what is it? How is this done? Nigeria? India? Russia? Work from Home Moms? Probably a bit of all. First Nigerians (& others) piece together databases of stolen accounts. Then an “IT” company (from Russia, China or India) comes and builds a software bot on top of the database to streamline the process. All that is needed is a check for services from an American powerseller.

Conclusion is: next time you think of eBay, think of what it doesn’t do to protect you as a seller–and what it does to make millions for major powersellers!
All of this reminds me of how music industry hired a company to put spam in sharing networks, except it was all a bit different.

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