eBay Targeted By Class Action Suit Over Automatic Bidding

    January 11, 2012
    Chris Crum
    Comments are off for this post.

eBay is the target of a new class action lawsuit over its automatic bidding (also referred to as “proxy bidding”) feature.

The suit, led by a seller from Phoenix, alleges breach of contract on eBay’s part, as well as violations of California’s Unfair Competition Law and “tortious interference with the sellers’ prospective economic advantage”.

eBay explains how automatic bidding works:

1. When you place a bid, you enter the maximum amount you’re willing to pay for the item. The seller and other bidders don’t know your maximum bid.

2. We’ll place bids on your behalf using the automatic bid increment amount, which is based on the current high bid. We’ll bid only as much as necessary to make sure that you remain the high bidder, or to meet the reserve price, up to your maximum amount.

3. If another bidder places the same maximum bid or higher, we’ll notify you so you can place another bid. Your maximum bid is kept confidential until it is exceeded by another bidder.

To illustrate this, eBay also shares the following example:

1. The current bid for an item is $10.00. Tom is the high bidder, and has placed a maximum bid of $12.00 on the item. His maximum bid is kept confidential from other members.

2. Laura views the item and places a maximum bid of $15.00. Laura becomes the high bidder.

3. Tom’s bid is incremented to his maximum of $12.00. Laura’s bid is now $12.50.

4. We send Tom an email that he has been outbid. If he doesn’t raise his maximum bid, Laura wins the item.

Under a section on eBay’s help center labeled “The Fine Print,” eBay says, “In reserve price auctions, if your maximum bid is at least the reserve price, we’ll automatically increase your bid to meet the reserve, and bidding will continue from there.”

Those who have further questions are directed to contact customer support.

Here’s the complaint in its entirety (via AuctionBytes):

Block v eBay Complaint

The suit was filed on December 30 in the U.S. District Court for California’s Northern District.

  • Cheryl

    That is ridiculously stupid. If the guy has a problem with their proxy bidding system, he can go somewhere else to sell his stuff.

    We have a bunch of whiny crybabies for citizens these days.

    Anyway, as far as SAVING/BUYING $ and eBay goes:

    If you send the seller a question about an item, find another of their listings, and send the question from that item page, rather than from the one that you actually want. This will add a little bit of work for the seller, if they want to add your question and their answer to the item description page that you are actually interested in.

    If you see an item that you want listed in auction format, send the seller a message asking if they will accept $x to end the auction early and sell the item to you. May be telling them that they would not have to wait as long to get their money (they would probably know that, but it still might help). If that does not work, use a sniping service such as Bidball.com to bid for you. It’ll bid in the last few seconds, helping you to save money and avoid shill bidding.

    Use a site like Ebuyersedge.com to set up saved searches. You’d get an e-mail whenever a match is listed. Especially good for “Buy It Now”s that are priced right.

    If the item that you are looking for is a long word or a bit difficult to spell, try a misspelling search site like Typojoe.com to hopefully find some deals with items that have main keywords misspelled in the title. Other interested buyers might not ever see them. Then, if the item is listed an auction format, after a few days of no bids (hopefully anyway) send the seller and offer to end the auction early and sell the item to you. After a few days of no bids, they may worry that no one is interested, and take whatever they can get.

  • harveyot

    thank goodness someone has filed suit! this automatic bidding really is a scam – a lot of people put up ridiculous amounts for maximum bidding – just now i tried to buy a useless item that was worth 10 bucks, and it turns out another person put their maximum bid at 20dollars so I just kept bidding for a half hour trying to out bid them and ended up paying more than 20 bucks because of some jerk – this also allows sellers to pretend to be a bidder and set a maximum price high so other bidders would have to keep trying to match the price – ITS RIDICULOUS! you should just win the bid fair and square instead of driving up the price. It’s a scam for sellers, and an annoyance for buyers and only drives the price up and allows for one buyer to win all the time

  • Steve Stav

    This suit may require some mind-clearing for some to grasp, and admittedly the “proxy bidding” angle is ingenious. The essence: eBay does not claim to be an auctioneer. It does not have an auctioneer’s license. In fact, its legal claim as a hands-off “online bulletin board” that merely “facilitates” auctions has allowed them to circumvent various regulations, including the Internet Communications Act. This has been the biggest elephant in one room of a house of cards for more than a decade, and eBay has thumbed their nose at the lagging legal system while inventing and cornering a huge market share. PayPal shenanigans, facilitating libel via feedback, acting as an arbitrator/return center with sellers’ funds… and David’s “proxy bid” case comes along with a slingshot. We’ll see if anyone pays attention to his aim.