eBay sellers received an email over the course of the last several days informing them that eBay is expanding its PayPal holds policy (which it calls the Funds Availability program) to include "sellers who sell an item that has a sales price that is significantly higher than the average sales price of items previously sold by that seller."
PayPal's holds policy was investigated by the New York Times "Haggler" column on behalf of a seller, and eBay Vice President Christopher Payne told The Haggler that it would "tinker with its filter so that people like Mr. Ferrall wouldn't be flagged in the future. We're constantly refining these models, and we're going to learn from this experience."
eBay has also been sued over its PayPal holds policy and the parties have tentatively agreed to settle - plaintiffs are working up final settlement papers - see today's Newsflash article for details.
It will be interesting to see if plaintiffs were able to get PayPal to change its policy, but given eBay's letter to sellers this week, it seems unlikely they won many - if any - concessions.
Sellers detest the holds, since it puts severe cash flow pressure on their businesses - they must still pay shipping costs and other bills, but during the holds, their money is tied up in PayPal's coffers. While commonly referred to as "21-day holds," some sellers have reported holds as long as 6 months.
What's also interesting is eBay's claims about the flexibility sellers have in the payment methods they can accept. In its response to a motion in Dunkel v. eBay, a lawsuit filed against eBay in March, eBay writes about the plaintiffs claims, "Contrary to the Dunkel Plaintiffs' assertion, eBay's Accepted Payments Policy expressly provides that PayPal is only one of several different payment options for eBay sellers."
And eBay backs up that statement in a footnote that reads as follows:
"General payment options include ProPay, Skrill, Paymate, credit card or debit card, payment upon pickup and Bill Me Later. For many categories of sales, eBay will also accept wire transfers and bank cash transfers, checks, money orders and various on-line payment services. See Accepted Payments Policy, available at http://pages.ebay.com/help/policies/accepted-payments-policy.html."
So in the filing with the court, eBay said it accepts checks and wire transfers for "many" categories, but on the page it references, it states that for "most" categories, sellers can't ask buyers to send checks or wire transfers.
eBay is also making changes to its Buyer Protection Policy that has been greeted with concern from sellers. It began notifying buyers in April, and is notifying sellers in the same email that inform them of the expansion of its holds policy that's going out this week. Heraldo Botelho, Manager for eBay's Buyer Protection Policy, clarified the controversial partial refunds provision in this April 10th webcast of eBay Radio (Show 462 - Segment 5).
Here's the fulltext of the email eBay is sending sellers.
Updates to the eBay Buyer Protection Policy and Funds Availability Program
We're writing to let you know about updates to the eBay Buyer Protection Policy and the Funds Availability program.
The updated eBay Buyer Protection Policy goes into effect on June 19, 2012:
- A provision has been added stipulating that in some cases we may refund part of the cost of an item to the buyer, and receive reimbursement from the seller, to cover differences between the item described and the item actually received, such as items received with small parts missing or minor repairs needed. Buyers may be asked to provide written proof from an authorized third party detailing the cost of such repairs. In these cases, we will not require the buyer to return the item to the seller.
- A clarification has been included that delivery signature confirmation for items $250 or more is only required in order to protect sellers from losing a case where such service is offered by at least one shipping company. Similarly, when we ask a buyer to return a $250 or more item to the seller, delivery signature confirmation is required if it is offered by at least one shipping company.
- A clarification has been made that items purchased from the Businesses & Websites for Sale category will not be covered by eBay Buyer Protection.
- A provision has been added regarding the relationship between eBay Buyer Protection and the new managed return process. If a buyer uses the process to return an item purchased from an eligible transaction under that process, and the seller fails to provide a timely refund in accordance with the new process, the buyer may file a case under eBay Buyer Protection. If we resolve the case in the buyer's favor, we'll refund the buyer, the amount of which will depend on the terms and conditions of the process.
- As with earlier updates, other changes have been made to keep the eBay Buyer Protection Policy up-to-date with our product and service offerings
The update to the Funds Availability program goes into effect 30 days after delivery of this notice to you:
To better protect our consumers, eBay has at times requested, and may continue to request, that PayPal hold seller funds based on certain factors, including but not limited to, selling history, seller performance, riskiness of listing category, or the filing of an eBay Buyer Protection case. Currently, access to funds from buyer payments may be delayed to promote successful fulfillment for sellers who are new to selling on eBay or have a below standard seller rating. This program may be expanded to include:
- Sellers who sell an item in a high-risk category with no recent experience selling in that category; sell an item that has a sales price that is significantly higher than the average sales price of items previously sold by that seller; add a new PayPal account to their eBay account; were reinstated following an account restriction or suspension; or have recent account activity indicating risk, including but not limited to significant changes in listing activity or buyer dissatisfaction.
- Transactions where the buyer indicates a problem, including but not limited to messages or activity indicating that the item hasn't been received or that the item isn't as described in the listing.
Heraldo Botelho and Pawan Modani