Wimo Labs is suing eBay over the way it handles reports of counterfeits. Many sellers are familiar with the VeRO process in which brands report listings to eBay for real or supposed trademark or copyright infringement. But if eBay makes certain changes in response to criticism over its VeRO program, might it have a negative impact on legitimate sellers?
Wimo Labs, which sells the Lunatik product line, sued eBay and some of its sellers, accusing them of racketeering. (eBay said counterfeits were not welcome on its site and said it has a number of sophisticated tools, policies and other measures in place to keep them off.) More information with eBay's full statement is available in Friday's Newsflash
One point of interest is its description of how eBay handles claims - basically it says eBay should not instruct buyers to return disputed items to sellers:
"Though eBay's policy is not to return counterfeit products, upon information and belief, this is exactly what eBay requires for a consumer to receive a refund. Fake Products are evidence of a crime. See 18 U.S.C.A. 2320. Contrary to law, upon reporting a purchased item as counterfeit, the eBay customer is refunded and instructed to return the product. Instead of taking any action against the Unauthorized Seller, eBay facilitates the Seller's receipt back of the Fake Products, which are likely then resold to another unsuspecting eBay customer."
But eBay is in a difficult position - how does it ensure buyers who say they received a counterfeit don't destroy an authentic item in error? And how does eBay protect sellers from buyers who intentionally say they received a counterfeit item when they've actually received an authentic item?
Back in 2009, eBay struggled with this issue. It instituted a policy
instructing buyers to destroy counterfeits rather than returning them to the seller - but that left sellers completely unprotected from bad buyers.
Here's an excerpt from the original 2009 provision: "When buyers file a claim alleging that the item is not authentic, we require the buyer to destroy the item. Once a buyer confirms destruction of the item, we will reimburse the buyer or provide an eBay coupon."
And one year prior, PayPal had also been called out by sellers for its policy in which it requested buyers return counterfeit items to its partner for destruction - from our July 2008 news article
"Why does PayPal ask buyers to send counterfeit merchandise purchased on eBay to a warehouse in Texas belonging to a liquidator? That's the question some eBay members are asking, and some are questioning whether PayPal is directing the liquidator to resell counterfeit items rather than destroying them."
eBay quickly backed away
from its 2009 policy change in recognition that it had to protect sellers from buyers who reported authentic items as counterfeit whether by mistake or intentionally.
The real issue with the current lawsuit over the Lunatik counterfeits seems to be the fact that eBay won't work with the maker - it's taking a hands-off approach. Lunatik's maker says that's in contrast to Amazon, which is working with it to try and prevent counterfeits from displaying in search results.
Let us know what your experience has been as a seller, buyer, and brand (if applicable), and if you have any advice for eBay on how to handle the problem of counterfeits and counterfeit claims.