April 26, 2000 3:25 PM PDT

eBay slammed with sports auction suit

A group of sports collectors is suing eBay, claiming that the company knew about auctions of fake sports memorabilia but did little to stop them.

The lawsuit alleges that at least two large-scale dealers sold thousands of shoes, jerseys, baseballs and trading cards with faked autographs from sports stars through eBay.

The group also says that eBay violated a California law that requires dealers and auctioneers to provide autograph buyers with a certificate of authenticity. eBay failed to provide the certificates and did not force dealers to provide them, the suit claims.

The class-action lawsuit, filed last week in California Superior Court in San Diego County, says that the collectors were defrauded of $10 million and are entitled to 10 times that amount in a penalty fee under California law.

An eBay representative said the company has not yet received the suit and could not comment on it. Previously, the company has said it is just the venue for a sale and therefore cannot be held responsible for transactions made through its site.

The lawsuit is the latest in a string of problems for the online auction industry.

Last month, federal and local authorities launched an investigation into an alleged fraud on eBay after the company received hundreds of complaints from people who claimed that they never received items they paid for.

Earlier this year, the Federal Trade Commission, which investigates consumer fraud, reported that the number of complaints it received about online auctions skyrocketed from 107 in 1997 to 11,000 in 1999.

In addition, auction See special report:
The high price of auctionssites have been under fire for everything from illegal weapons sales to the auctioning of items promoting hate groups such as the Ku Klux Klan.

eBay has tried to insulate itself from lawsuits by claiming to be a venue with no control over the items sold on its site. Members must agree to the company's policies before bidding on or selling items.

"Because we are not involved in the actual transaction between buyers and sellers, in the event that you have a dispute with one or more users, you release eBay from claims, demands and damages...arising out of such disputes," the company says in its user agreement.

Despite the company's moves to protect itself, attorney Maureen Dorney of Gray Cary Ware & Freidenrich said that eBay may be at risk. Although the company is likely to prevail, Dorney said that no law generally protects Internet "venues" from lawsuits, and there's little case law that would argue either way.

"I don't think this will go away immediately for eBay," she said.

The lawsuit is the second in two months to be filed against an online auction house. Three leading video game makers sued Yahoo last month, accusing the company of allowing the sale of illegal copies of games through its auction site.

 

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