In Northern California, seven citizens have brought a class action suit against eBay and PayPal corporations. In April 2010, a group of eBay online auction sellers filed a complaint against eBay and PayPal with allegations that the two corporations committed abuses of monopoly power, attempted monopolization for online payment, improper collection of shipping fees, and improper tying of two corporations. The result of these alleged actions are unfair and unavoidable fees for both sellers and buyers who use eBay.
The plaintiffs allege that since eBay acquired PayPal in 2002, the online auction site has rendered it effectively impossible for buyers and sellers to purchase items using any format other than PayPal. This effective impossibility – combined with the fact that eBay currently holds 90% of the national online auction market – leads the plaintiffs to claim that eBay and PayPal hold an unfair monopoly over online payment for auctions. These alleged facts also contribute to the allegation that eBay attempted to tie the use of its online services to PayPal’s online payment services.
According to allegations, after eBay acquired PayPal in 2002 the company moved to tightly restrict other acceptable forms of payment by doubling PayPal buyer protection and instituting a policy of paperless payments in 2008. The sellers who brought the case say that increased buyer protection for PayPal effectively removes buyer protection for all other methods of online payment – such as Google checkout, which survived for only three days after offering lower fees than PayPal. The paperless policy rendered cash, checks, and other forms of non-online payment inappropriate for transactions on eBay.
Plaintiffs claim that a result of these effective monopoly policies is the institution of high transaction and shipping fees without any alternative. With no choice but to use PayPal, eBay sellers must continue to pay high costs to sustain their markets, while buyers are made to pay higher fees for services than they might if they were allowed to use other forms of payment. The plaintiff sellers allege that they were required to pay additional fees of up to 3% and 30 cents per transaction. The tying claim relates to the fact that the PayPal is a subsidiary of eBay.
The case is ongoing in the United States District Court Northern District of California, San Francisco division. The class action nature of this suit means that thousands of eBay users in California and across the nation could be affected by the outcome. The Evans Law Firm has recently been retained as local counsel in this action. If you live in California and want to talk to a lawyer about these or other issues with eBay and PayPal, contact The Evans Law Firm by email at email@example.com or call at 888-503-8267.