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Judge rules for eBay in Arbitrage legal case

By Chris Dawson May 29, 2018 - 8:30 am

Earlier this month we reported that an arbitrage software provider was taking eBay to court in Israel over eBay’s alleged lowering in search results listings from users of the service.

Arbitrage is the process of finding a product at a low price from one supplier and selling it at a higher price to the customer. The difference from traditional online merchant operations is that instead of buying cheap in bulk, with arbitrage you’re often buying from a retailer and getting them to ship direct to your customer.

The problem many sellers face, is that if an arbitrager picks upon their listings to copy, list on an alternative marketplace at a higher price and then use the seller to fulfil any orders, is that the seller is left with any defects to their seller metrics even though they don’t own the relationship with the end customer. We have also seen instances where non-delivery has been claimed and the seller loses the product, the money and suffers with their performance ratings due to the arbtitragers behaviour.

Those involved in arbitrage would assert that they are simply filling a gap in the market and making products available that otherwise wouldn’t be available on eBay. They claim that eBay lowering their products (sorry, I should have said ‘listings’, arbitragers of course don’t possess any actual products) in search results is unfair and unjustified.

It appears likely that eBay have indeed changed their algorithms to lower arbitraged listings – indeed an eBay spokeswoman said recently “The appearance or placement of listings in search and browse results depend on a variety of factors, including but not limited to sellers’ compliance with eBay policies and listing practices. Actions were recently taken against sellers because these sellers were not complying with eBay policies“. The only question for the court would appear to be if eBay have the right to present product listings in the order they think best serves the buyer or if it’s more important to pacify sellers.

It would appear that initially the court has sided with eBay and the Judge had two main reasons for his interim decision:

  1. eBay claims to protect the buying experience may be justified, which will only become clear after the main prosecution process is concluded.
  2. The judge acknowledges the damage caused to sellers dropshipping from online sites by eBay’s search throttle implemented on April 20th, 2018. But also said it did not take “a disproportionate step” since they are still allowed to sell on eBay’s platform.

“It is important to emphasize that the court’s decision concerns only temporary relief and does not affect the main claim, which we plan to continue.”
– Adi Reiss, founder of Salefreaks

Adi Reiss, founder of Salefreaks, the Israeli arbitrage software company bringing the case, say that they plan to continue the legal action. How successful this will be is questionable as eBay publicly state that listing on eBay gives no guarantee as to placement in search results. As anyone who has seen their seller standards slip below standard will know, eBay have no hesitation in demoting listings in search when they consider either the listing or the seller aren’t the best buying experience for customers.

  • David
    6 months ago

    “Israel,” not “Isreal.”

  • 6 months ago

    About time too. Fed up of these parasites copying my listings, adding 75% mark up.
    A lot of them pretend to be UK based, like the Chinese sellers too. And they have zero interest in customer service.

  • Mark
    6 months ago

    About time eBay dealt with these listings, the buyers are being fleeced and so are the sellers having to fulfil the orders. We have just had two A to Z claims on our Amazon account because one of these parasites ordered the wrong item and then gave some lie about the parcels not arriving. 2 AtoZ’s as they used 2 accounts to order the products from us.
    The buyer phoned us as they wanted to know the address to return the items to and said they had had no reply from the parasite arbitrage seller.
    They also send a message saying don’t include an invoice – so now I purposely put an invoice in with the package –

    eBay just cut the feeds to these vile companies they are seriously damaging your reputation as being an over priced marketplace!!

  • Geoff Usherwood
    6 months ago

    Agree with Mark – large increase in a-z claims from these guys – we have identified as many of their Amazon “aliases” as possible and now just cancel their orders – luckily the % of orders we cancel does not affect our metrics on Amazon as we have a large number of orders to “hide” the numbers in. When we researched the a-z claims it was easy to identify the sellers as they had ordered numerous times from us with every delivery address being different.
    Parasites – ebay need to put them out of business , it’s not hard to identify them they are nearly all based in Israel although there a a growing number of copycat sellers now springing up,in the uk as they see easy money for no work and no ownership of the problems that come with online selling