EcommerceBytes-NewsFlash, Number 1605 - August 22, 2007     1 of 4

eBay Discusses Seller Crackdown in Podcast Interview

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AuctionBytes interviewed eBay Vice President of Trust & Safety Matt Halprin about the new enforcement around the Seller Non-Performance policy. Halprin explained the new way eBay looks at its feedback system to evaluate sellers - a radical change since the company first instituted its reputation system - and why eBay initiated the seller crackdown more than 2 months ago.

The audio interview is available through the Ecommerce Industry SoundBytes podcast, and the fulltext of the transcript follows.

Transcript of "eBay Responds on Seller Non-Performance Policy" podcast dated 8/18/07.

Ina: This is Ina Steiner from AuctionBytes and I'm joined by eBay Vice President of Trust and Safety Matt Halprin and the Senior Director of Global Marketplace Policy at eBay Lynda Talgo. Matt and Lynda are joining me to talk about eBay's new enforcement around its seller non-performance policy. Thanks for joining me.

Matt: Thank you. Thanks for having us.

Ina: I wanted to give you the opportunity Matt to give a little background on what the Seller Non Performance policy and the enforcement issues are.

Matt: Sure thanks, I wanted to kind of run through a few of the reasons why we are doing this and they're similar to what we went through in the town hall the other day. In taking a big step back we see our role at eBay is to help ensure that the marketplace remains vibrant, remains growing and doing whatever we can to keep that happening. And as we study reasons for growth and what happens to buyers who don't buy as much as they used to, it turns out that some of those reasons are around having bad experiences. And as we did that analysis we learned that only 1% of our sellers actually end up driving about 35% of bad buyer experiences, and that was a little bit surprising to us, and I think was kind of a call to action for us.

And of course, if you think about that, the 1% of sellers that are doing this end up driving away buyers for the 99% of sellers that are doing a terrific job.

Ina: Right, and it's really a,... these are all part of eBay's kind of efforts to improve the buyers experience this year, is that right?

Matt: Exactly. I mean we think that improving the buyer experience is key to ensuring a healthy and growing marketplace. And really unfortunately, I think that the large majority of sellers do a fantastic job and they have been suffering a little bit more than maybe we knew as a result of the small minority who maybe haven't been doing as good a job.

Ina: Well I wanted to ask you about the rules. eBay actually change the rules about the impact of neutral feedback ratings, is that right?

Matt: Yeah, I'm not sure I'd say we've changed the rules as much as, - because we've always exercised judgment in when we take action on sellers. In the past a CSR will look at a seller's track record, they'll look at negs, they'll look at neutrals, they'll look at the positives, they'll look at volume, they'll look at how long they've been on the site - there is a lot of factors that have been taken into consideration in the past. They have even read feedback comments in the past. and that's more when we weren't taking as heavy a hand to intervene where now we think we have to take a heavier hand. And when we did the analysis -getting to your question around why do we consider neutrals, the analysis was pretty clear as well. And when I say analysis, we did quantitative research on hundreds of thousands of transactions and feedback comments, we did something called text mining. positive comments, neutral comments, negative comments, to see what was really being said. And of course we listen to the community. And the marketplace has changed, in the way the feedback system is used has actually changed over the years. And what we learned is that neutrals are increasingly and almost always used as a measure as a sign of dissatisfaction with some part of the transaction. Not 100% of the time, but almost always and far more so than has been the case in the past.

Ina: Well, when you're counting neutrals as negatives, are you taking away buyers' choices when they leave feedback? If they're not leaving a negative, why are they leaving a neutral?

Matt: Again I would say we're not counting neutrals as negatives. We are doing an analysis and looking at the total measure in all the transactions a seller has, what portion of them are positive and therefore an indication of a positive buyer experience, and what portion are an indication of something other than a positive experience.something less than satisfied or dissatisfied. And then we've said okay, now let's identify the population of those that fall below a certain level - you know 5% or 10% of neutrals plus negatives or items not received complaints - and said you know those are the ones that we know are driving a 35 times rate of dissatisfaction and those are the ones we need to take corrective action on.

Ina: Some long time sellers, who have kept their positive feedback high are getting suspended for performance over the past 90 days. Do you think it's fair to limit or suspend these sellers based on a short period without taking the entire body of their work into account?

Matt: That's a good question. Actually, fairness is an interesting thing. The question I have is, what's fair for buyers in that situation as well. Because we have to take, as you know, in the marketplace a balanced perspective looking at sellers and buyers. And if we find that a seller, over a 90 day period, has performed in the bottom 1% of the sellers in how buyers are treated, that's a pretty severe situation that we do believe necessitates corrective action. We hope that seller if they were a terrific seller for a long time, can modify their practices, and change their behaviors to result in back in positive buying experiences. But we do think that if someone over a 90 day period, has landed in that 1% that we need to do something to take care of the buyers and to take care of the other 99% of sellers who are losing bids because buyers are going away from having bad buyer experiences.

Ina: I've been reading a lot on the boards and on our blog post comments about this issue and some people are saying you know, I met the terms that are outlined in my listing description. The buyer gave me a neutral because they thought it took too long even though it was clearly indicated in the listing, or they said they paid too much even though it was clearly indicated that that's the amount that this item would be would cost for shipping. So I guess I would ask what is eBay doing to educate buyers who really may think well I don't think that this seller does deserve a negative, but you know I'm just a little frustrated that it took me a long time to get my item. What are you doing to educate buyers?

Matt: I'd say right now we are not changing the way we educate buyers. I think actually allowing buyers to express their levels and degree of satisfaction or dissatisfaction, is appropriate. I'm not sure I want to tell buyers or silence buyers by prescribing how they do it. Now, Detailed Seller Ratings we do a little bit of anchoring on what's a one, what's a two, what's a three, what's a four, what's a five, there is a little bit of language that's there to try to guide buyers. and with Detailed Seller Ratings we're very pleased with how those have worked out. I would say they have met our very high expectations for what was a very significant change to the feedback system, and you will see us move towards using DSRs in the Seller Non Performance policy when we're sure that we can get it right in terms of doing all the analysis. But using DSRs we want buyers to express themselves, we want them to tell us how happy they are, how not happy they are on the marketplace, because they have plenty of alternatives on the Internet these days.

Ina: Do you have any sense of how Detailed Seller Ratings might be used, would you go by some kind of percentage or any thoughts on how that might work?

Matt: So, we haven't made any decisions on that is the straight answer. I can speculate a little bit with you about how we might approach it. Which is that it would be similar to what we've done with item not received and conventional feedback which is we look for a very small portion of the population in terms of the ratings given by buyers that's driving a highly disproportionate amount of bad buyer experiences. Like a 1% kind of a number. And then I can imagine we might actually put out that number and say here's what it is.

Ina: Would you ever consider doing that by category since shipping really can be quite a hot topic in one, a hot area in one category versus another. Some things are very easy to ship, some things are not.

Matt: That's a really good question, that's the kind of thing we struggle with all the time. I'd say we would consider it, and what we'd probably be balancing that against is the simplicity and complexity of messaging. Because I think analytically you are right, there are differences by category, and yet we don't want to go out with 25,000 different thresholds for people to reach. So that's what we would debate, and I'm not sure where we would land. That's a good question.

Ina: Let me ask you, one reason a buyer may give a seller a neutral is because they are afraid to leave a negative in fear of retaliatory feedback

Matt: Yes, that's' definitely true.

Ina: If eBay now considers neutrals as negs in enforcing this policy - because the way I read the math, that's what's happening - then woudn't buyers start to fear leaving a neutral. Why doesn't eBay just eliminate the neutral rating choice?

Matt: I'd come back, Ina, and say it's not that eBay is considering a neutral a neg, it's that we're looking at the quantitative research which shows that as you measure buyer satisfaction or dissatisfaction, a positive feedback is really the only measure of buyer satisfaction that's out there. Neutrals and negs, the vast majority of the time, are expressions of something other than buyer satisfaction. And so I wouldn't see a reason to eliminate neutral feedback. It's actually quite valuable for eBay to be able to listen to the buyer and see something other than positive feedback.

I would like to comment, if I may, on part of your question, which is spot on, which is that more buyers are leaving neutrals out of fear of retaliation from sellers. And if you remember in the opening, I said that it turns out that the use of the feedback system has changed over time, and this is actually a rather important part of this. The sellers have always left negative feedback after a buyer has left negative feedback more than buyers have. In other words, you could call it retaliatory feedback, it's not always retaliatory, it might just be that the buyer left the feedback second or at the seller left the feedback second. But sellers have always left it more often than buyers, but what's happened over the last few years is that it's increased from being a little more to many times more that sellers leave retaliatory feedback versus when buyers do. And so buyers more and more have felt uncomfortable leaving negative feedback and they have moved to neutrals and that's what the analytics say and that's what the text mining of the feedback comments say about when you read about the neutrals.

Ina: Well it's ironic because I think that this very policy would encourage sellers to hold off on leaving feedback until the buyer leaves the seller the feedback.

Matt: I think you're right in that we've always taken action on sellers for their rate of dissatisfaction as we have measured it, and that has led sellers over the years to increasingly leave feedback second and leave negative feedback second, or threaten to, or even some have it in their listing and they say they will, which is obviously not something that is good for the marketplace to see that there. That is another reason why you will see us move to DSRs, I'm sorry, Detailed Seller Ratings. Because Detailed Seller Ratings can be left in a way that the seller doesn't see them, so we're hoping that will get us even more honest feedback, which again will help the vast majority of our sellers.

I think it's a bit unfortunate that in the conversation, we're talking so much about the one percent. And we have to remind ourselves that 99 out of 100 sellers are doing a great job, and they are actually suffering from the 1%. Buyers have been leaving the marketplace we study, as the result of the actions primarily of the bottom 1% who eBay has allowed to, kind of sell in this way on our marketplace and we need to stop that. And as we stop that, I gotta tell you, that means two things. Number one, it means more bids for the 99% of sellers, because those buyers are now going to bid on sellers items, sellers who provide good buying experiences instead of bad ones. And number two, 99% of sellers are going to benefit from more buyer retention in the marketplace. Fewer buyers leaving or telling their friends don't go to eBay because I had a bad experience. They're going to be having great experiences and telling their friends that they had a great experience, and guess who wins from that? I mean the marketplace wins, the sellers win, because they are going to have more demand. I gotta say, I've gotten a lot of emails from sellers who have said thank you so much, it is about time, we have been waiting for eBay to take actions like this for a long time. You've been letting it go on too long but it's about time and were glad you're doing it.

Ina: Right, and I think that feedback has always been extremely controversial whenever it comes up. And one thing that was highlighted for me was a recent survey that AuctionBytes did, where 30% of respondents thought that the crackdown was the best policy implemented by eBay in the last two years. But another 9% believed it was the worst policy implemented by eBay in the last two years. I think often with eBay policies and changes on the site, it's often recognized that the incentives behind it, the reasoning behind it may be good, but the implementation isn't always there. Now one thing I wanted to ask you, many sellers say they are given a negative or neutral feedback that is undeserved. Someone suggested that buyers should have to show some credence in order to be allowed to leave a neg. What's your opinion on that?

Matt: That's a tough question. That's a good question. And you're right, feedback is always controversial. I'm sitting here pondering because it's such a tough question and it's one that we grapple with. We believe we need to address the problem of retaliatory feedback on the site more generally. And that is for both buyers and sellers. So definitely, we don't like it when sellers who are driving good experiences get left negative feedback from a buyer that maybe came into the marketplace and left and had no business doing it. And that's one of the reasons why we changed policy a couple of years ago, and said that anyone who comes to the site and is suspended within 90 days, any feedback that they've left will be removed automatically. Because we felt that. I think that was a good thing and I don't think it went far enough. I think we need to go further, and included in the further would be, is there something we need to do , I'll throw out some examples for you and for your listeners. Should we - if we know a seller has had a long track record of doing a fantastic job - and a new buyer comes in and doesn't pay for an item and leaves a neg, should we allow that neg to be left. That's something that we would think we have to address. and we think about retaliatory feedback, or what we'd do with what we call unfair or undeserved feedback. it's really hard because eBay doesn't always have all the information or what went on off the site it could've been the seller changed the terms after the transactions, and e-mail with the buyer and therefore the buyer backed out of the transaction, and appropriately didn't pay and then left a negative feedback. But that's one way or geez maybe at some points if the seller has a certain track record over a long period of time, maybe we ought to be thinking about that differently.

Ina: I read a post from someone who said the policy is going to lead to an increase in mutual feedback removal. Do you agree, and if so, is that a bad thing?

Matt: So, that's a good question too. I think it is likely that we will see an increased use of the Mutual Feedback Withdrawal system. Because we are asking sellers to work out their problems with buyers. If the buyer has expressed dissatisfaction or anything less than full satisfaction, if there is a way a seller can make that good for the buyer, that's a good thing. Right? That's the kind of thing that actually keeps that buyer in the marketplace. And so we like that. I think that proper use of the Mutual Feedback Withdrawal system kind of what I just described, hey maybe they offer a refund, or maybe they do in exchange, or who knows what it is, that's good. Improper use of the Mutual Feedback Withdrawal system actually compounds what is already a bad problem. I'll give you an example of that. That we've seen from some of our top sellers. And that is, a seller ships an item that's defective, the buyer gets the item, leaves a negative feedback because it's defective after trying to communicate with the seller, the seller is unresponsive. When the buyer leaves a negative feedback, the seller leaves a negative in retaliation even though they actually shipped a defective product, and immediately follows with a Mutual Feedback Withdrawal request, to try to get the appropriate negative removed. That is actually inappropriate use of the system and we do have abuse of Mutual Feedback Withdrawal policies in place. If we see that we will take actually more serious corrective action than the seller nonperformance policy because the feedback system is so important. It's important that it be used properly for the credibility. So again I think you're right, I think we'll see greater use of the system, and appropriate use of the system is a good thing, and we will be watching for the other kind of abuse.

Ina: So, sellers who do sell items very cheaply on an "as is" basis, is eBay basically eliminating sellers of bargain-basement items from the site, do you think?

Matt: That's a good question too, and the short answer is no. We're definitely not doing that. We consider that part of eBay, I would say, that kind of inventory. However, what we are saying is that it's very important that the sellers of those items make it very difficult for the buyer to be surprised by what they get, by how they list the items, listing it with an appropriate item condition, not way down in the terms and conditions, not in the fine print, but front and center and as close to the top of the description as is possible. Don't use a stock photo of a new item when it's actually used or refurbished. There's a number of steps that a liquidator or someone selling "as is" items can take to ensure that the winning buyer knows exactly what they're getting and therefore is going to be satisfied when they get it. What happens often, and I've seen lots of cases of this, is that sellers will describe but they'll do it in a way that it's easy for the buyer to miss, and then the buyer is dissatisfied when they get it, and they don't come back to eBay, which isn't good for the rest of the marketplace. So there is a number of steps that sellers of these kind of items can take to help keep the experiences positive enough.

Ina: Okay, so it's about managing expectations?

Matt: Exactly.

Ina: eBay announced the policy enforcement three months after the crackdown began. Why was that?

Matt: I'll take a step back on this one too, if I can. First of all, we should have done better. Phillip Justus the head of the auction business in North America said as much in his post and I'll say as much right now, and apologize to any sellers who feel that that unfairly impacted them or impacted them adversely. We stepped up our enforcement of policy and in, I think, a well-intentioned desire to stem bad buyer experiences, and we would have done it differently in hindsight. We did before Phillip's public announcement we did reach out to almost all may be all impacted what we call top sellers the ones with account managers, we reached out to all of them by phone or by e-mail. That's obviously not all sellers in the marketplace but we did do that in terms of targeted communications we didn't do broad communication. And you know, we learn from our mistakes. We also have taken steps beyond Phillip's posts to improve that communication, not just improve the amount of it but the clarity of what's in there. It's much more specific about what we're doing, why were doing it, if there's any restriction in place, when the restrictions will be lifted, etc. what has to happen for the restrictions to be lifted. I think it's enough, but we are listening closely to what we're hearing, and we'll take additional steps around communication if we need to

Ina: Right and I read Philip's post and he did say, is talking about doing a better job of communicating with sellers. One of the things he talked about is helping sellers resolve problems after they occurred. How exactly will eBay do a better job in these areas?

Matt: So, I think mostly through tips. I mean at the end of the day, it's the sellers' responsibility to resolve their problems and make their business be one that is good for the marketplace and is good for buyers. We are studying the bad buyer experience significantly. We know what they are, and we're putting together in the FAQs and in a lot of the communication specific education about what steps sellers can take to try to improve their practices. And I mentioned some of them here just about the "as is" or the liquidator stuff. But we're trying to take steps to improve the education that's available to sellers so they can learn from that.

Ina: And,... because I have been reading the posts where some people affected by this policy whether they've had limits put on their accounts or have actually been suspended. They're actually paying attention to what you're telling them and they're trying to resolve these things. You know I've read a few where they've said they have gone ahead and contacted buyers made them whole, made them happy, but they can't get through to eBay to get eBay to actually do anything so that those limits are lifted, or they're able to sell again on the site. That they have to wait another 30, 60, or 90 days. What would you say to those sellers who are really trying to make it right?

Matt: It depends on which type of correction action we've taken. But in most cases the restrictions lift within 14 or 30 days, depending on what the volume of the seller is and our systems are automatically looking for the time to pass and for the rates to have changed. And when that happens the restrictions will be lifted, so if someone gets buyers to close an item not received dispute or a significantly not as described dispute or something like that our system will see that but we're not going to immediately lift it at that time. We have policies in place that say it's going to be 30 days or if it's a very small seller it's going to be 15, 14 days or whatever.

Ina: Do you think the policy impacts lower volumes sellers more than high-volume sellers?

Matt: No, we don't. We've actually designed to very carefully to make sure that are covering the marketplace appropriately. We have different sanctions for low volume than we do for high volume.

Ina: This may be a question for Lynda, I'm not sure. This policy, I'm very aware of it in the United States. Is this sitewide?

Matt: It is a global policy. Each country is handling communication on their own, but yes, it's Asia, it's Europe, it's everywhere.

Ina: Okay. I just wanted to give you an opportunity to say any last words to our listeners.

Matt: Sure, thank you. I mean, again, the steps that we're taking with the launching of feedback 2.0, with launching further enforcement of this policy, with doing the things we did around counterfeits late last year, they are all focused on trying to help the vibrancy of the marketplace. We've done a lot of work to figure out what prevents faster growth for the marketplace, and found that by stepping in and kind of raising the expectations for what we expect from our sellers so that we ensure our buyers have a good experience that we know this is going to help the marketplace. It's going to help the marketplace as a whole, which means it's going to help the vast majority of all sellers. And while the communication around this one wasn't what we would have wanted to have been, and we're trying to up our game on that one, we hope all the terrific sellers out there will take comfort in knowing that by taking these steps, they're going to get more bids, and they're going to have fewer buyers leaving and more buyers staying and telling their friends to come and and actually improve their overall business. And finally, we have FAQs on the site, if you go to the AB (Announcement Board) posts and look at the FAQs and click the links on those , the community page on the site and read those, if there are more questions that I wasn't able here, there's a lot that are addressed in what we've put up on the site.

Ina: Well, I guess I should just ask one more question that comes to mind. We are rapidly approaching the holiday shopping season. Should we expect any other trust and safety initiatives?

Matt: We are trying to launch as many Trust and Safety initiatives in December as we can. No. (laughter) Just joking. Trust and safety tries very hard to follow the quiet period approach that the product teams take as well, which is whywe don't want to do anything new to disrupts sellers or any members of the community during the holiday selling season. We know how important that is. Occasionally, there are things, steps we have to take given a new trend, a new fraud trend or something where we have to step in. but we have the exact same goals and guidelines as everybody else, that we want to not touch the marketplace during that period

Ina: Well it makes the summer interesting.

Matt, Lynda, thank you for joining us. That was Matt Halprin and Lynda Talgo from eBay's Trust and Safety. Thanks.

(c) 2007 Copyright Steiner Associates LLC, publisher of

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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