Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Mon June 18 2018 20:52:55

Do New Penalty Fees Create Conflict of Interest for eBay?

By: Ina Steiner

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eBay must adjudicate SNAD claims, but when eBay sides with buyers, it benefits in more ways than one thanks to a new policy it announced last month as part of the Summer Seller Update. This creates a conflict of interest, one seller asserted in a question submitted to eBay executive Bob Kupbens for an upcoming Q&A video chat.

The issue is more important than ever as sellers feel squeezed by eBay practices around returns - some sellers say eBay is doing less to protect them from buyers who file false SNAD claims (Item Not as Described) to avoid paying return shipping in cases of buyers' remorse.

According to eBay's new policy that takes effect in September, sellers who have high rates of after-sale requests (SNADs and INRs - Item Not Received claims) will face a penalty: eBay will charge them 40% more in Final Value fees. You can read more in June's Update editorial.

A seller said that policy creates a conflict of interest: eBay will receive greater revenue by siding with buyers against sellers in SNAD claims.

She described what she saw as the problem and asked Kupbens in her submission if there was anything in the works to correct it - here is the fulltext of her question for the eBay executive, who will be answering questions next week:

Increased FVF's for SNAD cases creates a huge conflict of interest
The upcoming change to collect an additional 4% in FVF's for sellers that eBay has deemed to have too high of a SNAD rate has created an environment where it is financially adventageous for eBay to allow buyers to abuse the Money Back Guarantee. Simply put, the more bogus SNAD cases that are filed the more sellers that eBay is able to collect an additional 40% in FVF's from.

As an honest clothing seller, a large chunk of the SNAD cases I have received have literally given "doesn't fit" for the reason. These cases are the definition of remorse as I provide many measurements and eBay actually gives "doesn't fit" in the options of remorse return reasons. 

To be clear I am not asking for these cases to be decided in sellers favor or to receive money or credits from eBay. The buyers do not want the item and it is bad business to force them to keep that item. All I am asking for is for an easy option to have obviously bogus SNAD cases changed to remorse after the case has been CLOSED. I understand that it is impossible to make this determination in many cases, but in cases where the reason typed out by the buyer is literally a remorse reason the seller should not be dinged for a SNAD return.

The problem is eBay will soon be financially rewarded for leaving these cases as SNAD. It seems that a neutral 3rd party reviewing return reasons is the only way to remedy this situation. Is anything in the works to correct this massive conflict of interest that eBay has created?

Update 6/21/18: We had a seller ask, "the article mentions both a 4% and 40% increase in FVF. Is that a typo?"

No, that's not a typo. eBay will charge an additional 4% in FVFs. When you do the math, it turns out to be a 40% increase in what you pay in FVFs - here's how we explained it in the editorial in the last issue of Update:

"A savvy seller pointed out that the additional 4% fee is not a 4% increase in fees, but rather, a 40% increase. For example, on a $100 item, sellers would pay an average 10% in Final Value Fees ($10) – with the 4% penalty, they'd pay 14% in Final Values ($14). Sure enough, going from $10 to $14 is a 40% increase in fees."

Thanks for the great question.

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Readers Comments

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: val2525 This user has validated their user name.

Tue Jun 19 18:18:04 2018

YOU can help make eBay back down on this. For EVERY buyer you get who files a false SNAD claim, you NEED to do the following:

1. Report the buyer via the listing.

2. Call eBay and report the buyer again.

3. Contact eBay thru the eBay for Business Facebook page and message them with the facts of the case. At the end of your explanation, remind the CSR that this is critical because in the new seller metrics these false SNAD cases will be tracked and will cost sellers more $$ and restrictions.

4. Email Ina AND Griff at eBay. Again, calmly and logically present the facts. Give the item number and buyer name.  Griff will need that info to forward your email to the proper department. Don't send separate emails, you want Griff knowing that Ina has been contacted (trust me, it WORKS).

Be professional, logical and calm. Don't use phrases like ''it's not fair'' or call the buyer names. Just be factual. Emotional angry emails tend to be ignored. It's hard to ignore calm, factual information.

If enough sellers report the scamming buyers, we CAN make eBay change this policy. We've made eBay back down before, we can do it again.

We can't remove SNAD as a return option since it's required by the FTC, but we CAN get eBay to arbitrate more fairly and increase the % of SNADs we can have before we are penalized with additional fees and lowered in search (yes, eBay will be penalizing you with fees, read the update).

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: val2525 This user has validated their user name.

Tue Jun 19 18:19:53 2018

By the way, this comment by the OP is excellent and a good one to use when you file a complaint with the California Attorney General office AND your own state Attorney General office:

"Increased FVF's for SNAD cases creates a huge conflict of interest
The upcoming change to collect an additional 4% in FVF's for sellers that eBay has deemed to have too high of a SNAD rate has created an environment where it is financially adventageous for eBay to allow buyers to abuse the Money Back Guarantee. Simply put, the more bogus SNAD cases that are filed the more sellers that eBay is able to collect an additional 40% in FVF's from."

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: Dburn This user has validated their user name.

Tue Jun 19 19:47:05 2018

The only disagreement I have is with the slant of the article. While it's true it's a conflict of interest for a seller. It 's not for eBay. It was done this way by design. They won't just raise FVFs to Amazons level as they don't have the traffic to justify it. So they designed this return program as a vehicle to raise rates by putting it on the seller's shoulder. . It has nothing to do with the state of modern retailing. It's all about the continued squeeze on sellers to show growth  on lower and lower revenues.

It's too bad the the company is run by lawyers with little to no relevant experience in running an enterprise like eBay. Lawyers are trained in zero sum games, in winning by creating adversarial relationships and skating as close to the line as they can without going to jail.  

The bean counters have spoken . They need x to get to Y which is what Wall Street needs. Rather than build a solid framework up to get organic traffic increases to translate into increased sales and profits, the lawyers have a new game to play . They never would have gotten a decent job as a judge in their previous lives, but now they can judge for profits and the judgement will be against the sellers.

From eBay 's view, there is no conflict in interest when their interest is growing revenues in the only way they know; beating their opponents (sellers) over the head mercilessly until they capitulate.  

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: ebayout This user has validated their user name.

Tue Jun 19 20:13:40 2018

ebay execs seem to have the unique, singular ability to look at their bad metrics and conclude that the numbers are the fault of their sellers, not their own ineptitude.
So, using the time honored philosohy of "beat them until morale improves", they go after sellers, who provide the vast majority of ebay's income/profits, either as sellers OR buyers.
ebay is like a ship lost at sea...the captain can see the North Star, but has lost all faith in it.
And so it goes...

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: pace306 This user has validated their user name.

Tue Jun 19 21:34:30 2018

“We can't remove SNAD as a return option since it's required by the FTC“

Really? Can you please show us?


“While it's true it's a conflict of interest for a seller. It 's not for eBay.”

It is when you play judge jury and exocutioner and always find for the buyer. It’s the same thing as selling fruit and putting your finger on the scale.

Only they to decide everything and you always loose - it’s a crooked game, a rigged one

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: mcposty This user has validated their user name.

Wed Jun 20 00:31:20 2018

Since thee false claims now cost us money..it can easily be won in a court. Start suing these buyers forbfraus..because thats what itvis.

Sue ebay to

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: mcposty This user has validated their user name.

Wed Jun 20 00:36:38 2018

Of course it is a conflict..if a lawyer was representing a case where he is peosecuting a person who..day..does his finances..makes the lawyer millions..the lawyer suddenly isnt very aggressive for that case abd the person goes free.

Conflict of interest.

EBay has everything to gain by ruling in buyers favor..rhis is illehal in arbitration! Since clurts find ebay can arbitrate..they MUST attestvwenig immediately for this policy.

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This user has validated their user name. by: Marie

Wed Jun 20 02:04:35 2018

@ val2525

"IT'S 4% NOT 40%.  Read the update. It's in the metrics FAQ."

If you are currently paying 10% FVF fees and they are raised to 14%, YES you are correct that the FVF was INCREASED by 4%.  However you need to do the math.

Lets say you had a sale of $100.  Under the old FVF of 10% you'd pay $10 in FVF.  But if you fall into the penalty you will pay $14 FVF.  Does that look to you like it is a 4% increase???  Your paying almost half again as much before the penalty was added.

$10 Divided By $100 = 10%
$14 Divided By $100 = 14%

But if you look at it by just the differences that are being paid you see what is really going on.

4% increase divided by the above standard rate of 10% = 40%
$4 increase in FVF on $100 sale divided by the $10 you would have been charged if you were above standard = 40%

They did increase the FVF rate from 10% or 14%, but if you were only going to experience a 4% increase to the FVF you paid, then the new FVF for below standard would be 10.4%  That is 10% times 4% = 10.4%.  That decimal placement is important.

It is a 40% increase to those that pay a 10% FVF currently.

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: wilburnet This user has validated their user name.

Wed Jun 20 06:28:23 2018

@Marie

Thats interesting i looked at it as 4% increase, thanks for this info. Ebay crooks. I notice Etsy is going the same wayas Ebay charging fee's on shipping.

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: Part Time Seller This user has validated their user name.

Wed Jun 20 08:36:18 2018

If eBay increases the fvf from 10% to 14%, they are charging an additional 4% of the sales price, but that is a 40% increase.  

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: Grady This user has validated their user name.

Wed Jun 20 16:21:25 2018

Why is it that FeeBay reminds me of the Russian criminal justice mechanism?  There is a solution:  Leave FeeBay.  And that is the only thing that will work, unless you love the abuse and want more and more of it.  

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by: pace306 This user has validated their user name.

Wed Jun 20 16:42:06 2018

:) Grady

Personally - I would LOVE to leave but:

1) a lot of brands on Amazon are suppressed or blocked
2) eBay still does have traffic (though they play with who gets it - I know people who do 40-60K a week - Id like that amount myself!
3) I sometimes sell things that either do not have UPCs or split up from packages

Its not that I (personally) hate eBay - its the stupid anti seller rules, its the moronic employees, the lies, the deceit, etc.

Im not looking for eBay to go OOB - I just want it to change.

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: extremetm This user has validated their user name.

Wed Jun 20 17:15:40 2018

ebay's very platform by design is setting up sellers for high returns. By now allowing ALL SNADS no matter what the reason, this is not only a conflict of interest it is what class action suits live for.

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by: Grady This user has validated their user name.

Wed Jun 20 20:25:33 2018

Your concerns and specific governing dynamics with regards to your sales structure compel me to consider you an example of the classic seller who is stuck. I feel for you, and I know there are many others with no attractive "plan B" available. I only differ in my wishes regarding THAT venue's future (I wish all possible success for yours). I DO wish they would crash and burn in a very dramatic and public way. I am very surprised that there is so little publicity regarding their illegal and very abusive treatment of their own customers. I suppose that is just more evidence of how our media mechanism in this country is more of a profit center and political propaganda device than it is a method of providing unbiased news and information to the citizens. Tiempo han campiado !

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by: maxmad This user has validated their user name.

Thu Jun 21 00:15:51 2018

instead of ebay getting rid of these bad ripoff criminal sellers, that have high returns, ebay keeps them , because it's more money for ebay, seriously ? that can't be legal  


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This user has validated their user name. by: LasVagueness

Thu Jun 21 01:07:57 2018

Excellent post. Just as eBay persuaded me to stop selling bulky items and absorb 'free' shipping perhaps some will want to stop selling items with high-return potential. You can't beat the house.  

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by: ZZ This user has validated their user name.

Thu Jun 21 02:28:10 2018

Anybody curious what the threshold of Snad claimsis going to be before the FV fees go up another 4% of the sales price? It's sort of important.

Perminate Link for Do New Penalty Fees Create Conflict of Interest for eBay?   Do New Penalty Fees Create Conflict of Interest for eBay?

by: mcposty This user has validated their user name.

Thu Jun 21 09:15:42 2018

My guess the threshhold is less than a percent..they like .30

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by: BargainzBabylon This user has validated their user name.

Thu Jun 21 14:01:03 2018

This concept is a two-edged sword - the site needs cleaning up, but there is NO oversight or apparently any adjudication over the number of fake SNADS that this may result in. I fear that instead of getting rid of bad/lazy sellers, they'll end up just getting rid of too many good ones. Will the Unobtainium level China sellers and big boxes be included in this?

BTW, ''Fulltext'' isn't a word - it's 'full text'. I keep seeing this in the news briefs and blog so assume it's not a simple typo.  

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This user has validated their user name. by: bitbybit

Fri Jun 22 16:20:09 2018

I expect all remaining sellers will become Below Standard. All returns including SNADs will be retroactive to make this happen.  Then eBay will spin this to make 14% the standard Final Value Fee across the board and do away with B.S.S., A.S.S., and TRS.

If I had to find one word to describe eBay it would be caustic. Both apply as an adjective and a noun.

Ecommerce shouldn't be this difficult.  

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