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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by: Silver Ice King This user has validated their user name.

Mon Jun 18 21:14:00 2018

Actually I read that Ebay is counting all claims filed even if they are determined to be false or rectified by the seller.  Going forward the minute a SNAD is filed it is now counted as a return against the seller in calculating the additional 4% FVF.

This entire scheme is nothing but a money grab by Ebay in a desperate attempt to finally start showing some growth.  What they always seem to forget is all the business they will lose because of it which will probably more than offset the gains as sellers are sick and tired of all the Ebay Quick Money Grab Games.  This is nothing more than another attempt by Ebay to hide a fee increase and of course it is scheduled to come into effect in the busiest quarter of the year - the Holiday Season.

Nice try Ebay !!

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This user has validated their user name. by: toolguy

Mon Jun 18 21:51:33 2018

We need to get a 9th circuit court judge to buy something on eBay and do a false SNAD return to see for himself what is happening.

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by: Carol Is Here This user has validated their user name.

Mon Jun 18 23:07:12 2018

Ebay wanted to raise final value fees, but blame the sellers for it.

So they put them in a situation where they are punished by higher fees based on nothing that sellers do. It is out of their hands, but they get told they are at fault.

Wenig is trying to cover up his failure

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by: pace306 This user has validated their user name.

Mon Jun 18 23:16:09 2018

Ive said it 10000x times and it bears repeating - eBay is nothing less then the San Jose Mafia.

They arent a tech company and they arent an ecommerce company (anymore).

They have their finger on the scale - and punish those they dont like - smaller sellers who dont have eBay reps to erase negatives and/or brush them aside.

Its a crooked card game that makes the Yakuza, the Triads and the Mafia look like choir boys.

Why break peoples legs with aluminum bats, shoot them with Tec 9's, or cut off appendages with sharp knives, when you can financially bleed them to death SLOWLY.

Sellers cant control the lunatics that eBay lets on as buyers. Theres ZERO vetting going on - and eBay doesnt care.

OK now that I vented, Im off to sleep - its late here on the east coast - I cant stop the criminals from San Jose - but I hope that some day some will will have big enough stones to step up and say ENOUGH.

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This user has validated their user name. by: Marie

Tue Jun 19 02:39:16 2018

What a GREAT article.  That is certainly a good observation.  I wish I had of thought of it.  It sure is appropriate.  Just the thing that lawsuits are made of.

@Silver Ice King

Yes, that is as of September.  That is when it goes into effect and it will be using retroactive numbers.  No matter the outcome of a SNAD or INR Ebay plans to hold them against us in the eval stats come Sept.

We all need to stop calling this a 4% increase in FVF if we are eval'd to be below standard.  It is NOT a 4% increase, it is a FORTY PERCENT / 40% increase.  Just for round numbers is moves from a 10% FVF to a 14% FVF that is NOT a 4% increase, it is a 40% increase over what we are currently paying.

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by: angryllama This user has validated their user name.

Tue Jun 19 04:26:57 2018

@Marie   BLESS YOU.   NIce to see SOLID LOGIC and discussing these 10 20 40 percent MONEY GRABS in PERCENTAGES of increase vs. percentages of San Jose Patois.  The folks in San Jose have GOT to be FRANTIC and PANICKED over the FOUNDERING of this Leaky Boat.  By this late date, I think the 2nd quarter ( IF HONESTLY PREPARED ) report will actually show DECINE, not just "slow, single-digit increase." By the Way...   I intend to "vote" for YOU, Marie, as the new CEO of eBay.

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This user has validated their user name. by: Rexford

Tue Jun 19 06:50:20 2018

Not only that, returns have skyrocketed, because eBay does everything that they can to encourage returns.  I am surprised that they don't require sellers to put a return label in the shipping box. Clothing sellers will be walloped.

They buyer's question to Kupbens points out every flaw in eBay's policy.  Conflict of interest?  It's criminal.   If Kupbens can't see this, and the rest of the management can't or won't see it, they are simply obtuse.  They don't want to see it.  Money grab.

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

by: maxmad This user has validated their user name.

Tue Jun 19 07:13:28 2018

yes conflict of interest for sure, ebay sells a service on one hand, but does the total opposite on the other hand, but still makes a profit, they probably do more advertising on returning an item then selling one, it all makes sense since they profit on both, all at the expense of the seller  

I hope they have some good cross cut shredders .....

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This user has validated their user name. by: Ric

Tue Jun 19 07:44:45 2018

eBay is a publicly traded company driven by Wall Street.  As such corporate profit drives every move this company makes.

eBay has proven to be wholly and completely incapable of growing sales at rates consistent with the rest of the ecommerce industry, and as such does not generate the profits necessary to make eBay a powerhouse stock on the exchange.

By instituting this penalty fee, eBay is looking to generate the kind of profit margins Wall Street demands while turning eBay into a zero sum - no, make that negative sum game for many sellers.  

eBay already maintains a highly antagonistic relationship with their sellers.  This new penalty fee revenue grab ratchets that antagonism up to a significantly higher level and will surely decimate the number of sellers who remain on the platform.

eBay profits from sales, and shipping costs.  eBay generates additional revenue by encouraging buyers at every turn to return products as it keeps final value fees and earns more revenue from return shipping labels generated.  Now eBay is taking their profiteering to a new level and seeks to impose additional fees on sellers who experience high rates of returns.

A few weeks back, insiders predicted a five year expiration date for eBay.  eBay's latest desperate move to appease their Wall Street masters will only serve to expedite the demise of the marketplace.  

It is likely that Devin Wenig will be the last CEO of eBay as he greases the skids of the company's final run.

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by: Snapped This user has validated their user name.

Tue Jun 19 07:58:50 2018

Defects.

You remember those, right.  No matter the facts, every sale that didn't consumate and close without some contention, warranted or not, would be 'charged' against the seller.  Enough 'defects', and eBay's representation of that seller's public personna regarding their 'quality' would be displayed as lacking, with accompanying site disadvantags tacked on.  More significantly, any related fee discounts otherwise carrotted as an 'performance incentive' would be eliminated.  

And that doesn't even touch upon the level of hypocrisy that such measurement of alleged performance quality was tatooed to a seller's face compared to the steadilly decline actually occurring sitewide itself.

Conflict of interest indeed.  But not just with this latest and simply most blatant underhanded 'invisible' fee suck.  Such has been an endemic and fundamental framework of their 'growth plan' for years now.

Sellers are defective?  No, this latest 'penality' is defective. The whole SITE is defective, from the boardroom to the most newly hired.  

 

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by: leathermermaid8 This user has validated their user name.

Tue Jun 19 09:02:58 2018

This is the kind of thing that NEW sellers should  be made aware of and should be on the eBay's landing page, before they ever get someone started selling there.  It would certainly make people consider very carefully where they can afford to sell.  I'm pretty sure it won't be mentioned in any of those "start selling now!" emails eBay sends.   It's just too bad not enough sellers find their way here to at least get a sense of what's going on.

It might be eBay's house, their rules but there is somethig really wrong with these "fines".  If a buyer has already been made whole by getting their refund or AND returning the items, why does there need to be punitive action against the seller?

What if an emergency has come up and the buyer just needs the money back?  Nothing wrong with widget, just can't keep it.  What if the thing doesn't match their eyes or tattoos?   It's not a brick and mortar experience and you can't expect it to be.

How is this an online seller fault?  

Last time I checked, most are in business to make a profit and REMAIN in business, which in turn, keeps others working.  Or am I misguided in this?

The fines should be reserved for sellers of counterfeits, faux bullion,  jewelry and pirated goods and reproductions sold as originals.  That's where it would do the most good.



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This user has validated their user name. by: iheartjacksparrow

Tue Jun 19 10:18:50 2018

Since the questions to Mr. Kupbens are pre-screened, I doubt seriously that he will answer this question. I wouldn't be surprised if her question magically disappeared from the list of questions submitted (don't want the other sellers to wake up to what's going on).

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by: maxmad This user has validated their user name.

Tue Jun 19 10:25:16 2018

ebay can put whatever restrictions, fees, policies they want, on sellers,  but it's way too late for ebay, at the end of the day most of eBay's profits is now based from china, and with the new tariffs on china, they will soon be crying they put all their eggs in one Chinese basket.

Things should start to unfold for eBay's mindless decisions, I am truly hoping for the worst possible outcome for ebay. because they deserve it.  

   

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by: mcposty This user has validated their user name.

Tue Jun 19 11:27:46 2018

If this insane policy doesnt start a boycott i dont know what could.

Ebay cant continue to do budiness like this! They must answer for their crimes

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This user has validated their user name. by: The End

Tue Jun 19 11:34:15 2018

This is the Textbook definition of a Cluster FQ.
Erase Ebay and start over.

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by: captainzombie This user has validated their user name.

Tue Jun 19 14:20:02 2018

I just received an email from ebay to test their Terapeak feature. Oh boy, why do I feel they are just going to try to nickel/dime us for data that they should be giving us for free, especially with anchor stores.

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by: gutspiller This user has validated their user name.

Tue Jun 19 16:08:05 2018

This strongly resembles a policy update Ebay did a couple of years ago. At that time it was the feedbacksystem. A 3 star feedback would become a defect, a neutral feedback would become a defect. 2% of defects = bye bye top rated seller status. Meaning less visibilty and higher fees.

Ebay would use a look back period based on your number of transactions you ditd the last 3 month. If you had minimum 400 transactions you would be evaluated based on the feedback from the last 3 months. No 400 transactions > evaluated for your feedbacks from the last 12 months.

My Ebay business had fallen from a cliff so fell back on the 12 months. Meaning ebay would change the rules that day and I would be punished for a feedback that I would have gotten 12 months ago.

My response??? I don't only close my shop, I closed my sellers account.

I'd just had it. Turnover had gone down 70%, profit even more. The own website started to do better an better at a point that Ebay had become dead luggage.

So I invite every seller in the same situation as I was to do the very same thing: the day the new policy goes live, close your shop and close your Ebayaccount.

Not treaten to do it , but effectively do it is the only way Ebay will ever listen.

I've been Ebay free for years now. Live is a lot better without Ebay. I couldn only dream of my current turnover when I was still selling on Ebay.

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

Tue Jun 19 16:37:47 2018

Take it to arbitration. I believe the odds are reasonably good that ebafia would lose.

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This user has validated their user name. by: Rexford

Tue Jun 19 17:27:43 2018

Every announcement that eBay makes should be followed by italicized text that reads "Brought to you by the a-holes at eBay".

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 18:08:46 2018

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

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