eBay Targeted By Class Action Suit Over Automatic Bidding

    January 11, 2012
    Chris Crum

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.