EcommerceBytes-NewsFlash, Number 1511 - April 06, 2007     1 of 5

Antitrust Lawsuit Filed against eBay over PayPal, Payments Policies

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Michael Malone filed an antitrust class-action lawsuit against eBay this week under the Sherman Act, alleging eBay "utilizes its nationwide monopoly of the on-line auction market to monopolize the available forms of payment that sellers can use on eBay." eBay controls which payment methods sellers may advertise in their listings, and this year, it eliminated buyer-protection for non-PayPal transactions. eBay owns the PayPal payment service.

The lawsuit alleges that "Sellers who would otherwise accept only money transfers must also accept Payment Card transactions." Some sellers have expressed the desire to use PayPal with the ability to reject PayPal payments funded by credit cards, which they may not do under eBay's current policy.

Malone, who resides in Texas, sold a pair of Sansui SP-2000 speakers on eBay for $200 in December 2005. eBay charged him $10.38 in listing and final value fees, and PayPal charged a $5 processing fee. Malone's lawsuit states he had requested of eBay that he be able to use his personal PayPal account to receive the winner's payment, but says he was forced to use his Premier account, requiring him to accept PayPal payments funded by credit cards.

eBay instituted a "Safe Payments" policy, later renamed "Accepted Payments" policy, that prevents sellers from advertising certain payment methods in their auctions. One of the banned methods is Google Checkout.

The lawsuit also references PayPal management's alleged threat to file an antitrust lawsuit against eBay for engaging in an illegal bundling strategy when eBay owned a payment service called Billpoint, before it had acquired PayPal. And it cites the demise of PayPal competitors Citibank c2it, Yahoo PayDirect, and BidPay (now under new ownership with a different payment model).

Malone initially filed suit in Texas in March and refiled his lawsuit this week in California, where eBay is headquartered.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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