Memorandum by eBay UK Ltd
1. eBay welcomes this opportunity to comment
on the House of Lords Science and Technology Committee's Inquiry
into Personal Internet Security. eBay.co.uk was launched in the
UK in October 1999 and is now the UK's largest online marketplace
with over 15 million registered users.
2. PayPal Inc. was acquired by eBay in October
2002. PayPal (Europe) Ltd is a private limited company incorporated
in the UK, and authorised by the Financial Services Authority
as an electronic money institution.
3. The eBay group of companies operate 33
websites around the world. In total these websites have over 212
million registered users, with over 15 million in the UK alone.
At any one time there are approximately 105 million items listed
for sale on these websites globally, and over 10 million of these
are listed by UK registrants on the UK website.
4. eBay is a key enabler and driver of UK
e-commerce, providing a means for tens of thousands of UK small
businesses to get online and trade within the UK and globally.
A survey conducted for eBay in February 2006 by AC Nielsen International
Research for eBay found that over 68,000 people in the UK and
over 170,000 people in the EU depend on eBay for at least one
quarter of their income. eBay users range from private individuals,
through sole traders all the way up to some of the largest companies
in the world, such as IBM, HP and Vodafone.
5. eBay is often referred to as an online
auction house, but this term can be misleading and is actually
inaccurate. In fact, eBay is neither an auction house, nor an
online retailer in the traditional sense.
6. For example, eBay is not:
involved in the actual transaction
between buyers and sellers;
in control of the quality, safety
or legality of the items advertised;
in control of the truth or accuracy
of the listings or the ability of sellers to sell items or the
ability of buyers to buy items;
at any time in possession of the
able to inspect the goods listed.
7. eBay instead provides an online marketplace
where practically anyone can buy or sell practically anything.
And as a marketplace of buyers and sellers, eBay has an interest
in ensuring both strong consumer protection and light touch, proportionate
regulation for our sellers.
8. eBay empowers consumers by:
increasing choice in terms of the
wide selection of goods available in over 50,000 categories;
providing a safe environment in which
buyers and sellers can trade as well as advice on how to trade
providing detailed information about
the reputation of the seller through its unique Feedback Forum
making the comparison of price and
services easier for the consumer through greater price transparency;
making inefficient markets more efficient,
in many cases reducing prices; and
by empowering SMEs to access global
markets and compete with larger, more established companies and
traditional "bricks and mortar" businesses.
9. Feedback remains a key driver of both
trust and safety on eBay by establishing a virtual reputation
that can help protect buyers and sellers alike. Based on each
unique trading experience, buyers and sellers leave feedback on
other members. Members are then able to view in a member's profile
their overall rating and positive, negative and neutral feedback
left by both buyers and sellers. As of September 2005, eBay members
worldwide had left more than five billion feedback comments for
one another regarding their eBay transactions. If buyers have
a question about a particular item, they can also email the seller
and all other buyers will be able to see their answer.
10. A recent Ofcom survey on Online Protection
cited eBay's Feedback System as "an example of an innovation
to address potential consumer fears about inadequate protection"
and as "an example of successful consumer action in tackling
rogue traders on the internet".
11. The vast majority of eBay users enjoy
a perfectly safe trading experience. eBay uses leading edge technology
and employs more than 2,000 employeeswith backgrounds in
law enforcement, customer support, advanced computer engineering
and analysisto help ensure a safe online trading environment
for our users.
12. eBay.co.uk's commitment to "Trust
and Safety" can be divided into three main areas: education;
prevention and detection; and protection and resolution.
13. eBay is committed to educating our users
on how they can trade safely on eBay and elsewhere. Tips on safe
trading can be found on eBay's Safety Centre, where users can
also contact our 24/7 Customer Support representatives and receive
advice on any problems they may encounter. Our Safety Centre can
be accessed from every single page on the websiteas can
our Help pages. More interactive tips, advice and tutorials are
available on "eBay Explained".
14. In addition to being a member of the
Government's Internet Crime Forum, eBay is also a major sponsor
of "Get Safe Online"the UK's first national internet
security awareness campaign for the general public and small business.
Get Safe Online is a joint initiative between the Government,
the Serious Organised Crime Agency (SOCA) and private sector sponsors
from the worlds of technology, retail and financeincluding
BT, Dell, eBay, HSBC, Microsoft, and SecureTrading. Get Safe Online
(GSOL) provides free, simple, clear advice to encourage the general
public to protect themselves and their electronic devices when
15. A recent GSOL survey found that:
21% of people rated internet crime
the type of crime they most feared, compared to 17% last year;
24%, 21% and 18% of respondents have
been deterred from internet banking, online financial management
activities like arranging a loan and shopping on the web respectively,
while 17% say safety concerns have stopped them logging on altogether;
72% of people said they would like
further information about internet safety, compared to 78% last
when looking for internet safety
advice, 35% would go to friends or family, a quarter would go
to an internet safety website such as www.getsafeonline.org and
a fifth would turn to their ISP;
40% are still not sure where to go
for this advice, an improvement from 48% last year;
51% of people use the same password
for more than one website and 17% use personal information about
themselves in passwords, leaving themselves more at risk from
83% of people now have anti-virus
protection on their PCs, but a fifth haven't updated it in the
last three months;
Less than one quarter (24%) of people
think it's their own responsibility to safeguard themselves online.
Forty one per cent think the big online companies should insure
their customers against fraud;
52% of internet users questioned
do their banking online, nearly a third (32%) pay their utility
bills online and almost a quarter (23%) buy their groceries online.
16. An industry wide safety concern which
affects not just eBay but the financial sector relates to identity
theft or account takeovers where fraudsters attempt to gain access
to eBay and PayPal members' accounts. Our systems detect and remove
most account takeover listings before any harm is done, and we
now offer a Live Chat facility to provide urgent assistance for
users who suspect that their account has been taken over.
17. eBay regularly runs "Spoof Protection"
campaigns on how to avoid spoof emails and offers online tutorials
to help users identify spoof.
18. We have also developed a groundbreaking
new Toolbarwhich users can download for free from the eBay
sitewith an Account Guard which warns eBay members when
they are on a potentially fraudulent (spoof) website. This feature
also enables members to report a spoof website. Once a site has
been verified by eBay to be fraudulent, that information is then
automatically distributed to all other eBay Toolbar users, warning
them about the spoof website.
19. eBay also led the way in adopting the
Sender Policy Framework (SPF) industry standard which helps spam
filters detect forged email more reliably. This not only increased
members' actual level of protection, but also helped the standard
achieve rapid penetration in the industry. SPF is now adopted
by most prominent Internet sites and anti spam products.
20. Finally, we have introduced "My
Messages"a means for eBay users to send and receive
eBay-related communications inside "My eBay", similar
to a web-based email inbox. In contrast to regular email systems
where many users find it difficult to recognise forged email,
users can be assured that any information found in My Messages
21. Safe online payment mechanisms are essential
for consumers in an online environment. Offering online users
the ability to send and receive payments securely, easily, and
cost-effectively is essential to the development of e-commerce.
eBay members can pay for items using a variety of different options
such as PayPal, credit cards, debit card, personal or bank cheques,
postal orders, and other methods. However, it is now eBay policy
that sellers may not ask buyers to send cash through instant money
transfer services (non-bank, point-to-point cash transfers) such
as Western Union or Moneygram. This is because of concerns about
the safety of this type of payment mechanism.
22. PayPal can be considered a secure online
payment system for a number of reasons:
PayPal never shares buyers' bank
account, debit card or credit card information with sellers;
PayPal maintains the world's leading
fraud prevention system and the industry's most advanced detection
techniques to minimise losses, protect members' accounts and preserve
customer satisfaction. As a result, PayPal maintains a very low
loss rate due to fraud0.33%;
PayPal offers Buyer Protection of
up to £500 for qualified purchases plus Seller Protection
which gives protection from chargebacks due to fraud on qualified
transactions (see below);
PayPal is safer than money orders,
because money order companies do not offer fraud protection services
or recourse when fraud occurs;
PayPal allows buyers and sellers
to send and receive money quickly and allows merchants to receive
payments almost immediately;
it is always free to send money via
PayPaland for sellers, PayPal has lower transaction fees
than most credit card merchant accounts;
PayPal is also cost effective in
cross-border and multiple currency transactions, enabling buyers
in 103 markets to easily pay for items and services and allowing
customers to send, receive and hold funds in a total of 17 currencies
regulated by the FSA as an e-money
institution, PayPal complies with UK and EU regulations governing
its business and relation with its customers;
PayPal users can avail themselves
of the Financial Ombudsman Service.
23. PayPal is available as a payment option
on eBay as well as on other e-commerce sites.
24. Where things do go wrong, credit card
companies typically provide identity and purchase protection,
whether buyers are paying with your credit card through PayPal
or directly to the seller.
25. Users may also benefit from eBay or
PayPal's Buyer Protection Programmes. eBay Standard Protection
covers items that are not delivered or that are "significantly
not as described" for up to £120 (minus a £15 administration
fee). PayPal Buyer Protection also covers non-delivery of tangible
items that are received "significantly not as described"
for up to £500, and sellers can enjoy PayPal Seller Protection
to protect themselves against chargebacks.
26. Where there are disputes between buyers
and sellers, eBay also provides an online dispute resolution facility
through third party mediators like Square Trade.
27. Finally, both eBay and PayPal have a
specific fraud investigations team who work extensively with official
online fraud experts such as SOCA e-crime, and liaise closely
with the Police to fight internet fraud. eBay.co.uk also has a
dedicated police liaison officer with over 30 years experience
at Scotland Yard who works closely with the police in their efforts
to apprehend any perpetrators.
28. eBay only permits legal items to be
sold on the site. Items that infringe legal regulations or eBay
rules and policies may not be offered for sale on eBay.
29. In many areas, eBay guidelines exceed
UK or international legal regulations. For example, it is permissible
to buy airguns in the UK subject to certain legal restrictions,
but eBay prohibits any kind of trade in these weapons. Similarly,
the trade in live animals is basically permitted by lawbut,
with very limited exceptions, eBay prohibits any kind of trade
in live animals on the market place.
30. eBay complies with all laws related
to notice and takedown and we provide intellectual property rights
owners, users, law enforcement and other interested third parties
with the means to report items of concern to eBay. But with over
six million new items listed for sale every day, it is not possible
for eBay to monitor and check every item on our site either because
of the volume or the expertise required for each and every item.
In fact, under the E-Commerce Regulations 2002, companies like
eBay who are "information society service providers"
generally do not have a legal obligation to independently screen
the content hosted on their sites for legality.
31. However, as a responsible corporate
citizen, we invest heavily in reviewing reports from third parties
and in proactively searching through itemsto the extent
that we can do so. Because we are not an expert on the many hundreds
of thousands of different items offered for sale, we cannot search
based upon item specifics.
32. When searching through items, eBay uses
leading-edge technology to assist in finding references to certain
prohibited items such as firearms, drugs, pornographic material
or blatantly counterfeit material (such as items which state that
they are counterfeit or replica). As soon as these are identified
they are promptly removed from the site.
33. Items that are prohibited may appear
on the site on occasion because no searching technology can be
100% effective when run against six million new items a day. It
is not feasible to manually review every item and no technological
searching process can work instantaneously when these millions
of new items that appear on eBay the instant they are listed by
sellers24 hours a day, seven days a week.
34. It has not proved possible to pre-search
through items or to automatically end items (without manual review)
because of the overwhelming and debilitating cost and the large
number of wrongly ended items ("false-positives") which
will result. Reporting parties should not expect items to be removed
from eBay immediately after they are reported.
35. eBay follows industry best practices
when investing in search technology and developing actual filter
rules. However, searching technologies are not perfectthey
need to be reviewed and modified regularly. It is much easier
to identify an individual problem item than it is to convert the
item specifics to a rule that excludes false positives. eBay will
continue to invest heavily in improvements in this area.
36. eBay is strongly committed to help protecting
the intellectual property rights of rights owners and to providing
our users with a safe and enjoyable place to trade. For this reason,
eBay has created the Verified Rights Owner (VeRO) Programme so
rights owners can report listings that infringe their rights.
Any person or company who holds intellectual property rights (such
as a copyright, trademark or patent) which may be infringed by
listings or items sold on eBay is encouraged to participate in
the VeRO Programme. Currently, the VeRO programme has over 17,000
participants and every week eBay removes thousands of listings
at their request. eBay is also a member of the UK Anti-Counterfeiting
37. eBay recently partnered with the National
Mobile Phone Crime Unit (NMPCU) to ban listings for "blocked"
or "barred" mobile phone handsets on the site, clamping
down on the sale of stolen phones. The partnership follows a successful
joint-operation in Greater London to identify and arrest eBay
users trying to sell blocked or barred phones. The joint investigation
by NMPCU and eBay's Fraud Investigations Team led to the execution
of 20 warrants and 13 arrests in the Greater London area. Forty-five
stolen mobile handsets were seized as part of NMPCU raids carried
out on the basis of information supplied by eBay.
38. eBay has now introduced a ban on the
sale of blocked/barred mobile handsets on the site. Any reported
listings for blocked/barred mobile phones will be taken down as
they are in breach of eBay's policy on encouraging illegal activity.
eBay also works closely with the National Mobile Phone Crime Unit
to eliminate the sales of stolen mobile phones within its marketplace.
eBay has also launched an on-site campaign to communicate its
policy against the sale of blocked or barred mobile phones to
its users. The activity also includes a guide written jointly
by NMPCU and eBay to warn buyers of the dangers of buying stolen
handsets, as well as advice about how to ensure that a handset
is not stolen. eBay also provides links to the NMPCU website and
sites like immobilise.comhttp://www.immobilise.com/ and checkMEND.
39. eBay has also recently signed a Memorandum
of Understanding with the Metropolitcan Police, the British Museum
and the Museum Libraries and Archives to ensure that antiquities
found in the UK are being sold legally on its site.
40. In order to prevent illegal sales of
treasure, the Portable Antiquities Scheme (PAS, which is managed
by the British Museum on behalf of the MLA) has set up a team
to monitor antiquities sold on eBay and to ensure that sellers
have the right to trade them. Where the listing is illegal, PAS
will report it to the Art and Antiques Unit of the Metropolitan
Police and eBay, which has committed to end illegal listings.
eBay is the first website to reach an agreement with the British
Museum and the MLA banning the illegal sale of treasure over its
41. A key security issue for consumers when
shopping online is privacy. Since 2004, eBay has consistently
been ranked as one of the ten Most Trusted Companies for Privacy,
according to TRUSTe:
eBay has always been an industry
leader in providing appropriate privacy disclosures to members
and obtaining appropriate consent, including, among other things,
to use the website;
eBay does not share, rent or sell
personally identifiable information to third parties for their
marketing purposes without a member's explicit consent;
eBay continuously reviews its privacy
with best business practices and new legislation globally in close
co-ordination with its members and privacy authorities;
eBay also uses encryption, anti-fraud
tools, secure socket layers (SSL), and firewall technology to
protect consumer accounts and personal information.
Finally, eBay promotes its privacy
practices throughout the website via easy-to-read summaries, charts,
to members that all questions and discrepancies should be resolved
webpage or by contacting our Customer Support department.
UK REGULATORY FRAMEWORK
42. eBay fully complies with all relevant
legislation affecting e-commerce. In addition, we provide detailed
advice on relevant legislation affecting our buyers and sellers.
43. For example, we provide advice to business
sellers of their legal obligations to consumersfor example,
in relation to the Sale of Goods Act, Distance Selling Regulations
and the Trades Description Actand link to other sources
of advice on consumer rights offered by the Government and Trading
Standards Departments. We also provide advice to traders to help
them understand the implications of trading internationally and
the need to comply with laws in the country to which they are
shipping goods, in particular the various import and export restrictions
which are in place.
44. However, it is often difficult for small
sellers to deal with the compliance costs created by a patchwork
of legal rules in different EU jurisdictions. For example, the
Distance Selling Directive follows the minimum harmonisation approach,
giving all Member States the option of maintaining or introducing
a higher level of consumer protection. This approach means for
example that "cooling-off" period in which the consumer
can withdraw from the contract is seven working days in the UK
but 14 Days in Denmark, Finland, Germany, Portugal and Sweden.
Similarly, consumers bear the direct costs of the return of non-defective
cancelled goods in most Member States, but not in Germany and
Finland where sellers are liable for such costs.
45. Contracts concluded at an auction are
excluded from the Distance Selling Directive (97/7/EC). Although
online auctions on eBay have an auction style, they differ from
traditional auctions in a number of key respects. Unlike traditional
auctions, eBay does not conduct the bidding process using a human
agent, nor does it make an assessment of the value or condition
of the goods or take possession of any goods to be sold by eBay
sellers to buyers. Furthermore, eBay is merely a trading platform
for both sellers and consumers, and it is not involved in the
conclusion of the contract between the seller and the buyer. Accordingly,
eBay is not an "online auctioneer" contrary to what
is often assumed. This view has been confirmed by the Germany
Federal Supreme Court (BGH).
46. In many Member States however, it is
not clear whether online auctions are subject to the exception
of auctions in the Distance Selling Directive. This creates legal
uncertainty which needs to be resolved.
47. eBay welcomes the House of Lords Science
and Technology Committee's Inquiry into Personal Internet Security.
We are committed to ensuring a safe trading environment for all
our users and to supporting initiatives designed to promote online
17 October 2006