July 19, 2005 1:54 PM PDT

eBay tightens rules for sellers

eBay has tightened rules governing credit card acceptance and clarified its prohibition of a type of fraud known as shill bidding.

eBay said Monday that sellers could no longer accept PayPal payments from buyers without accepting credit card transactions, thereby avoiding PayPal fees. eBay acquired PayPal in 2002.

Sellers' practice of restricting PayPal payment methods "was creating a bad buyer experience," said PayPal spokeswoman Amanda Pires. "It would be like walking into the grocery store and filling up your cart, getting to the check stand with your credit card and being told sorry, even after you saw the credit card logo outside the store."

Under PayPal rules, sellers can accept payment through bank transfers or PayPal balances for free. But sellers in the United States who accept credit card payments are charged between 1.9 percent and 2.9 percent of the value of the transaction, based on volume.

Pires sought to quell concerns that eBay was tightening the restrictions merely to boost PayPal's fee collections.

"We got a lot of community feedback, which is why we're changing this," Pires said. "And it was a very small percentage of sellers who were doing this."

Previously, only sellers who displayed the PayPal logo were disallowed from restricting credit card payment. Now all sellers who accept PayPal must accept credit cards.

eBay also spelled out to sellers what it said had been a gray area in its policy forbidding shill bidding, or bidding intended to artificially inflate the price of an auction.

Under the clarified policy, a seller's family members, roommates and employees are forbidden from bidding on the seller's items.

"Because a seller's family members, roommates and employees have a level of access to information about the seller's items which is not available to the general community, they are not permitted to bid on items offered by the seller--even if their sole intent is to purchase the item," reads the clarification. "Family members, roommates and employees may purchase items from a seller without violating this policy simply by using fixed price purchase options that do not involve bidding. These fixed price purchase options include Buy It Now or purchasing from the seller's eBay Stores."

The rules clarifications came the same day eBay announced it was canceling its Anything Points incentive program.

Company spokesman Hani Durzy denied any connection between the trio of changes.

"There isn't any specific tie-in," Durzy said. "Everything we do is done with the community in mind, taking into account what we've heard from them and what we've seen on the site in an effort to make eBay a better, safer, more advantageous place for buyers and selling."

9 comments

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eBay demands credit card fees of sellers
When eBay purchased PayPal a few years back, the path was clear: develop dependancy and then go in for the kill. At first eBay limited the amount of cash transactions and incessantly demanded sellers to "upgrade" to credit card acceptance. This was to increase revenues for eBay in terms of fees for the credit card use by buyers. As if that were not good enough for eBay, they are now not allowing cash transactions and are taking fees on every PayPal transaction. eBay has recently raised posting fees. It's time for an independant online paying service to come in. Watch for eBay to restrict any new online payment services. I will now refuse to use PayPal. I bet eBay won't let me, and I will have to get a new seller's account. One last word: Craig (of craigslist.com), please don't let eBay take a bigger stake in your company!

-AL
Posted by (2 comments )
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Rome burned in a day
Is that a violin on sale at eBay? Oh no it's just someone playing while eBay burns. And it will.

I guess I will no longer accept PayPal payments. I sell maybe a couple of times a year on eBay and I only accept the cash transactions because there is no reason to have to eat another 2.9% fee when I only do it a couple of times a year. Now, I guess I'll only accept checks or money orders and both have to clear before I ship. Or better yet, I'll just put my auctions on Yahoo now for free.

eBay, your at the top but so where the Baltimore Orioles. You will be burned by a competitor. It's just a matter of time.
Posted by ballssalty (219 comments )
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No more Pay-pal for me!!
If ebay somehow thinks that thier community has asked for this then they are dead wrong! I know very few individual sellers that actually accept credit card payments. I know I for one will stop accepting pay-pal as payment or stop using ebay for my selling altogether. There are too many alternative sites and forums that can be used free of charge.
Posted by RichemXX (7 comments )
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Fees Charged on ALL Transactions
I have a PayPal account. I receive several payments a month from clients that are not related to any auction. However, if I want to be able to accept credit cards for ANY transactions, PayPal requires that I upgrade my account to one where I must pay the transaction fee on ALL money recieved in the account, including receipts that do not involve any credit card.

I would not object to paying a transaction fee where the payor does use a credit card to pay, but it is not fair to also require that I pay the same percentage on my other non-credit card receipts in that account.

Chuck Humphrey
Posted by cehjr431 (3 comments )
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I'll follow the European Example
In Europe, many smaller stores and non-franchise restaurants, add 1% to 5% if you want to use your credit card. Same with this PayPal fees crap. I sell about four things a year, mostly used electronics when I upgrade (like when I get a new laptop or PDA I'll sell my old one). If someone wants to pay me with a credit card, it's a 3% convenience fee. To avoid it, just pay with your bank account.

It's my sale and I can do what I want to.
Posted by sanenazok (3449 comments )
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Credit card surcharge is against the rules
Sorry, Sanen, I understand how you feel but adding a credit card surcharge is against eBay rules and as a buyer I would report any seller who tried to do that to me, as I've done in the past.

I suppose we have to take eBay's word for it when they say that few of their sellers don't accept credit card transactions, but my experience has been that most mom-and-pop sellers or homeowners who are just selling odd household goods don't accept these, and surely won't in the future. Maybe eBay doesn't care because most of their transaction fees are coming from big players who sell stuff like electronics, but surely this policy will drive all their small sellers out of paypal. Given how shady and semi-legal Paypal is (banks won't allow transfers from their accounts to Paypal accounts because it isn't an FDIC-approved banking arrangement) maybe that isn't a bad thing...
Posted by Razzl (1318 comments )
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What's the big deal?
Seriously, what's the big deal? I've had Premiere account for as long as I can remember and it's very convenient even if you don't sell a lot.

While some people may complain about the 2.9% cut that Paypal would take from them, it's most likely the case that your selling price would increase by at least that much if you allowed people to pay using credit/debit card. America is a very a credit-card happy country :)

With regards to charging fees on any transaction. People must realize that a certain computer trail has to be created for any transaction, computer resources have to be used, etc.
Posted by Rusdude (170 comments )
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