AuctionBytes Blog
Covering auctions, collectibles and marketplace selling.

AuctionBytes Blog The AuctionBytes Blog has been giving a voice to online merchants since its launch in 2005. Named one of the world's top 30 blogs in 2008 by "Blogging Heroes." Weigh in with your thoughts on the joys and pitfalls of selling online.
Sun Oct 16 2011 23:50:55

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

By: Ina Steiner

Sponsored Link

In 2002, the Justice Department green-lighted eBay's acquisition of PayPal. By allowing the transaction to sail through, it signaled its belief that there were no antitrust issues with the deal.

Fast forward 9 years and you'll find eBay has been engaged in a campaign to get buyers and sellers to use PayPal exclusively to conduct transactions on its marketplace. Its new shopping cart is the latest move to push eBay shoppers into using its own PayPal service to pay for purchases.

Did the Justice Department fail to anticipate how eBay would wield its power to get its merchants to use the online payment service?

When eBay announced plans to acquire PayPal in 2002, the U.S. Department of Justice had 30 days to evaluate the acquisition and, according to rules set out by the Hart-Scott-Rodino Act, determine whether it would investigate further. Despite the fact that PayPal itself had complained to the DOJ about alleged anti-competitive practices at eBay, and to the surprise of many observers, the DOJ let the waiting period expire.

Here's what's happened since then:

eBay launched a policy in which it would only protect buyers who paid for their purchases with PayPal.

All new sellers are required to offer PayPal (or a merchant credit card) as a payment option.

eBay moved to an online-payments only platform - "Checks, money orders, and bank wire transfers aren't allowed for most eBay purchase," according to this eBay help page.

While requiring eBay users to use only electronic payments, it excluded domestic competitors such as Google Checkout and Amazon Payments and only allowed payment services with little visibility in the U.S. (the UK's Moneybookers and Australia's Paymate) of for larger sellers (ProPay).

eBay required all sellers in certain countries such as UK to accept PayPal on all listings.

eBay attempted to make its Australian marketplace PayPal only and ban all other forms of payment - until the Australian government stepped in and squashed the plan.

And now, eBay's latest PayPal push on the marketplace platform: its new shopping cart works only with listings in which PayPal is offered exclusively. Listings that accept another payment method - even if they also accept PayPal - are excluded from the shopping cart feature.

We asked eBay if there was any timeline on when the shopping cart would work with other payment methods, and a spokesperson said there was no timeline that she knew of at this time.

By excluding other payment services from its shopping cart, eBay once again favors its own payment service ahead of competitors. Consumers can shop elsewhere - though many of eBay's competitors accept PayPal too - but eBay sellers have little choice but to follow the marketplace's rules.




Comments (50) | Permalink

Readers Comments

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: Ming the Merciless

Mon Oct 17 01:01:01 2011

As I recall, the Justice Department issued a strong warning to ebay regarding any monopolistic practices. Ebay behaved itself for a while, and then began its anti comeptitive campaign any any other form of payment.

As long corporations like ebay spend big bucks annually buying members of Congress, presidents, and possibly civil servants, there will be no enforcement of the Sherman Anti Trust Act.

If there were, ebafia itself would come to a screeching halt as the PayPal travesty is simply the most blatant of many, many, many monopolistic and/or anti competitive practices ebafia engages in.

Ebay management is, IMO, nothing less than a mafia like criminal syndicate that engages in a breathtaking panorama of criminal activities not the least of which involves PayPal.

The ONLY way any of this will change is to get ebay udner a power light in the media.

OCCUPY SAN JOSE.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: another side of the coin

Mon Oct 17 01:15:08 2011

Not only are eBay sellers required to accept Paypal, Paypal looks for every way possible to hold sellers money for at least 21 days. These holds may be released earlier if buyer leaves feedback. Also, the feedback is suppose to be only an opinion but those same opinions are used against the seller with the holds and lower visibility. Due to the lower visibility from negative feedback or low DSRs, the holds could continue if buyer opens a case and wants a refund.  A vicious cycle that started with the DOJ in allowing eBay's acquisition of Paypal.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: Ric

Mon Oct 17 02:07:47 2011

Sellers hoping to break the back of this obvious monopoly would be well advised to send their each of their states' members of Congress a copy of Ina's blog post as part of a letter requesting a review.

While Congress may be busy worrying about keeping their jobs in the upcoming elections, if a large volume of email is received by multiple congressional members on the same topic it might just be enough to start a review.

eBay's army of lawyers and gaggle of lobbyists would be very distressed to have to face Congressional scrutiny of eBay and PayPal's business practices.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: Philip Cohen
Web Site

Mon Oct 17 02:11:14 2011

You bet the DoJ erred! Still eBay and the Ho will eventually get their comeuppance …

John Donahoe and Scott Thompson are simply delusional if they think that PayPal can continue to underpin the faltering eBay “house of cards” by becoming even a minor threat to the existing banks/Visa/MasterCard payments systems at traditional Point-of-Sale—the idea is pure science fiction. (Beam me up Scotty!)

The real question is, when are the world’s various ''banking'' regulators going to finally do something about over-sighting this most amoral, unprofessional, unregulated and clunky financial operator that not only acts like a bank, an unlicensed bank, but is in reality an unethical money gouging arm of the Ho’s “eBafia”?

Even though PayPal clearly offers banking-type services (ie, holding users’ funds in non-prudentially regulated and non-FDIC insured banking-type accounts), PayPal is mostly registered in some places not as a bank nor as a provider of credit but only as a “money transmitter” (like Western Union), and indeed PayPal itself has claimed that they “are not a payment network”, and there is a grain of truth in that claim because most (but not all) of their activities facilitate the transmission of funds simply by riding on the back of the banks’ existing payments processing systems.

In fact, the only thing creative about PreyPal has been their founding use of users’ unique email addresses as identifiers for online payment transactions. PreyPal is otherwise no more than a blood-sucking parasite riding on the back of, and in the main cannot function except via, Visa/MasterCard and the banks’ existing payments processing systems.

Regardless, outside of PreyPal’s mandated use on whatever will ultimately be left of the Donahoe-stagnated eBay Marketplace, PreyPal (and any other third-party payments processors) will eventually be consigned to the history books by the retail banks/Visa/Mastercard once those players get their “online” act together. There is nothing surer than the sun will rise in the morning.

Both eBay and its ugly daughter PayPal are most amoral, unprofessional organisations: they have become the most despised commercial entities on the planet—even more hated than “the banks”.  eBay, among other things, has for ever knowing and criminally, facilitated shill bidding fraud on eBay’s trusting auction buyers. And what else can be said about PreyPal that many PreyPal merchants do not already know? Repeat: It’s a most “clunky,” unprofessional operation.

Having said that, it’s possible that PreyPal can survive by becoming the merchant account provider “of last resort” for those very small or unscrupulous merchants unable to get a real merchant account from their own bank—Oh, hang on, hasn’t PreyPal always been just that, and charged all their users accordingly?

eBay, a Knowing Criminal Facilitator of Auction Shill Bidding Fraud: Case Study #4:  
http://forums.auctionbytes.com/vbulletin/showthread.php?t=23
540


PayPal Claims that PayPal Is Not a Payments Processor!
http://forums.auctionbytes.com/vbulletin/showthread.php?t=24148

And, from along the way, a compilation of (mostly inane) quotes from eBay executives:
http://forums.auctionbytes.com/vbulletin/showthread.php?t=24159  

Enron / WorldCom / eBay / PayPal / Donahoe: Dead Men Walking.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: Ric

Mon Oct 17 02:12:15 2011

I should have also mentioned it is easy to contact your elected officials starting here: http://www.usa.gov/Contact/Elected.shtml

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: Anonymous

Mon Oct 17 02:52:19 2011

What about Amazon and Amazon payments?

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: Philip Cohen
Web Site

Mon Oct 17 03:36:49 2011

@Anonymous,

What about Amazon? As a buyer on Amazon, Amazon holds my credit card details, just like PreyPal does.

Are you then suggesting that Amazon treats their sellers any where as arbitrarily or as unethically as the clunky PreyPal does? Surely not.

Enron / WorldCom / eBay / PayPal / Donahoe: Dead Men Walking.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: pete

Mon Oct 17 03:54:36 2011

The big difference with eBay & Amazon is that everyone knows that Amazon process the payment, with eBay Paypal was forced upon sellers and buyers alike; after years of many sellers’ only accepting money orders etc…plus eBays tends to side with fraudulent buyers and you as a seller have very little recourse especially when Paypal cancels payments due to some whacked out reason that you never get to know on  the day you have mailed the item  

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: DOJdidWhatTheyWerePaidTo

Mon Oct 17 05:21:23 2011

Justice is what the law says it is and those passing the laws are being paid by ebay. Did the DOJ error in allowing ebay to purchase paypal? No, the DOJ did exactly what they were paid to do!! Do an internet search for''

ebay buys Congress

and you will find a list showing every congressman and representative in Washington DC took money from ebay and how much even though by law most are not allowed to represent ebay.

Before paypal ebay had Billpoint. 11 years ago the DOJ should have been investigating ebay and its payment service  ''Billpoint'' which constantly double billed and over-billed. When ebay closed billpoint and switched to paypal ebay STOLE money users had in their billpoint accounts, if you asked about your money you got an email saying ''sorry billpoint no longer exist''. In the early days ebay had no published phone number or was constantly changing it. None of the illegal activity going on at the time prevented ebay from getting DOJ approval.

Does the fact ebay who owns paypal gives your elected officials money have anything to do with what they get by with? That is the real error and it needs to be corrected

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Charlie W. This user has validated their user name.
Web Site

Mon Oct 17 09:38:49 2011

(Love the graphic! ''MONOPAYPALY''... ha! :-)

I think that reasonable people would expect (and perhaps accept) some degree of subtle favoritism when it comes to how eBay handles PayPal. Benign things, such as a having PayPal be the ''default'' payment option when creating a listing... or having PayPal's logo always appear first among other payment options.

It now appears that eBay has grown over-confident in their aggressive and hostile approach toward other payment options. What they've been able to do with impunity for so long has emboldened them to take bigger steps that go beyond a mere show of favoritism, and instead begin to punish, or deny services/capabilities to, those who don't go along with the scheme.

I think that eBay has now drawn too much attention to its actions and policies, and the result of this boldness may end up backfiring.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Umm...

Mon Oct 17 09:39:26 2011

As noted in other comments, Amazon does the exact same thing...

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Jenny B

Mon Oct 17 10:31:42 2011

This is one for the occupy WS movement, a huge scam and monopoly here. Paypal changed their contract 53 times in one day alone when they started the rolling reserve scam, 700 million on hold and growing, but only in USA and UK because this is very illegal and only these 2 are run by mega-crooks, ebay will never allow to take other payments, always giving errors. The rolling reserve is a scam and is killing small businesses, Occupy Paypal & eBay should start anytime!

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Fruity This user has validated their user name.

Mon Oct 17 10:57:43 2011

I'm not sure they erred... there was alot of benefits from the combination. Where the DOJ has been a complete and total failure is their inability to see Ebays restraint of trade activities and lawmakers refusal to regulated this company.

I imagine there's an incentive for turning a blind eye.. but I dont believe its a banking issue

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Fruity This user has validated their user name.

Mon Oct 17 11:06:27 2011

So now that they have their super new checkout system... I supposed they finally got their PCI DSS certifications right? LMAO... yeah right. Go look it up!

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Rich(y)

Mon Oct 17 11:13:19 2011

It's obvious that every possible iota of e-commerce news has now been fully-covered. Move along---nothing to see here...

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: Fruity This user has validated their user name.

Mon Oct 17 11:17:44 2011

the FDIC and each of your states banking divisions should be where you OCCUPY. Its the states who are failing at regulating paypal and it was the FDIC who had no authority to determine whether Paypal was a bank or not. Its the states who have oversight over deposit accounts and your paypal balance is a deposit account according to the FDIC. And when Paypal took your money and held it, they broke the FDIC protection that was associated with the funds, plain and simple.


We need an OCCUPY Paypal movement and get them regulated. Then we know all consumers and merchants money is protected.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: MR ME

Mon Oct 17 11:27:29 2011

I loved the good old days with Money Orders, Cashiers Checks, Western Union wire / bidpay.

Never a problem in either direction and no Paypal fee on item cost and shipping.

The "honor system" was in place and worked.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: JB

Mon Oct 17 11:55:18 2011

Big corporations own and run this country. The government officials no longer have it under control. It is because of this type of structure that the young people are occupying wall st and other places in the country.

They are attempting to get their country back for them. Nothing is going to change until the demonstrating goes to the next step. You have the corps. waiting out the peaceful demonstrating.Sadly at some point the peaceful equation will have to move to the next step in order for government to take notice.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

This user has validated their user name. by: permacrisis

Mon Oct 17 12:23:07 2011

It's a start, but I say the 2007 YahooAuctions-killer deal is the real antitrust dirt ball swept under the monopoly rug. They KNEW... they knew, and they PLANNED IT ALL ALONG... To exterminate a people, first seal all the exits.

RESTART YAHOO AUCTIONS!

To me that deal  characterizes the difference between callous moneymaking, and pure evil. Its intent: destroy the auction community. Closing down Yahoo Auctions was the mother of all barriers to entry. And 'barrier to entry' is the litmus test of all monopoly claims.

The government should NOT tax online activity since they won't prtect the participants and  police it with the same tenacity as say, college football or wireless companies, both of which recently fell into the FTC's sights as possible monopolies.

Ina you are 100% right in bringing this to light.

Did Justice Dept Err in Allowing eBay Acquisition of PayPal?   Did Justice Dept Err in Allowing eBay Acquisition of PayPal?

by: buck efay

Mon Oct 17 12:39:13 2011

Amazon does not do the same thing. Amazon has HUMAN investigators in cases of SNAD and will review the facts. The one SNAD claim I had was resolved in my favor as the seller on Amazon, after they reviewed all the info & emails thru their system, even when I did not have ONLINE tracking info. Amazon dispute resolution is excellent, fully staffed & proactive
Paypal has twice given away my money on SNAD claims with no investigation & I received back a different item in one case. Paypal is slanted that the seller is a crook & favors the buyer in every case. Paypal aids & abets criminal behavior. From both sides.
Amazon pays every 2 weeks like a clock for every item sold NO MATTER WHAT.
Paypal pays you sometimes in 1 day, sometimes 21 days, sometimes in 180. There is no rhyme or reason & they MAY hold your funds at any moment for any reason.
If I ever have any problem on Amazon, I have 3 phone numbers to actual humans in America at Amazon.
If you even have a problem with Paypal, first you have to try & find their number, then you will reach someone in a third world nation that will not even know the policies & will hang up on you.
Amazon kicks off bootleg sellers.
Paypal aids & abets bootleggers, then steals their funds when enough complaints are filed.
Amazon payments work as stated.
PAYPAL IS A RACKET!

Click to view more comments
1 2 3  [Next Page]


Login is required to post comments.
To sign in to leave a comment using your AB Verify User Name, fill in the form below. If you have not yet signed up for AB Verify, or if you'd like more information, go to the Registration Page
.

Login for AB Verify
Be sure and use your email address and password to log in.

 
Email:
Password:
 
 Forgot Your Password?
 Even though you are signed in with the AuctionBytes Blog, you will have to sign in to the EcommerceBytes blog. But you can sign in with your existing AB Verify info.