HEADLINE: ebay reins in anti-shilling 'posse'
By Mike Brunker Projects Team editor
msnbc.com

Much as citizens in the Old West once banded together to run desperadoes out of town, buyers and sellers concerned that eBay is being overrun by bandits formed their own “posse” to unmask the crooks. But when the “sheriff” — eBay — sought to rein in their investigations, the volunteer deputies rode out of town to pursue justice on their own terms.

The dispute between the small band of self-appointed “detectives” and the No. 1 Internet auction site centers around “shilling” — a deceptive and in most cases illegal practice in which sellers bid on their own items or persuade friends or associates to do so in order to drive up the price.

Shilling is a holdover from brick-and-mortar auctions, but it is far harder to detect on the Internet, where anonymity and easy-to-shed electronic identities make it easy for a seller to single-handedly orchestrate a shilling without tipping off a legitimate bidder.

The detectives — a loose-knit group that includes grandmothers, librarians and accountants — spend up to several hours a day compiling detailed reports on apparent cases of shilling, for the most part using the technological tools that eBay incorporated to allow buyers and sellers to trust the system.

They say they have been forced to mount their own investigations because eBay has failed to aggressively go after shilling and other fraudulent activity.

Problem seen as increasing
And despite their campaign, many say the problem remains widespread and is getting worse.

“I don’t know how prevalent it is, but in the last two months its increased noticeably,” said Peg, one of the detectives and an auditor in her other life. (Like many others interviewed by MSNBC.com for this article, she asked that her last name not be used to prevent potential retaliation by sellers that have been exposed through her efforts or those of her confederates.) “EBay will not do anything unless it’s spelled out and their back is against the wall ... and then they’ll either just warn them or suspend them for 30 days.”

Several of the detectives said the the problem apparently is even worse on other auction sites that don’t have all the auction-tracking tools that eBay does.

Though the stakes often amount to only a fistful of dollars, the cost to the unwary buyer can reach breathtaking proportions.

Vincent Cavo, a data processing manager for the state of Ohio who since 1997 has supplemented his income by buying and selling currency on eBay, says he recently appraised 181 coins and currency a neophyte collector had purchased on eBay and determined that they were worth only half the roughly $100,000 he paid for them.

“He was getting shilled and being sold intentionally overgraded items for months,” Cavo said of the buyer.

Some go so far as to suggest eBay ignores shilling because it involves some of the site’s biggest sellers, who generate substantial income for the San Jose, Calif.,-based company.

“EBay’s not going to do anything about it. As long as they’ve got their fees, they don’t care,” said Colleen, a detective who has been buying and selling on eBay since November 1998.

EBay espouses zero tolerance
Kevin Pursglove, a spokesman for eBay, denied the company tolerates shilling from anyone, no matter how much revenue they generate for the company.

He acknowledged that users sometimes receive only warnings for a first offense, but said a repeat offender is always dealt a minimum 30-day suspension.

CHART: Auction fraud
Pursglove declined to say how many users have been suspended this year, but added that the number of transactions where such behavior is detected is “very, very low.”

Consumer complaints about auction fraud provide some support for both views.

While auction remain the No. 1 source of complaints about Internet-related fraud — accounting for 80 percent of the reports received in the first six months of 2000 by the National Fraud Information Center — shilling still accounts for a relatively small percentage of the reports.

“The overwhelming majority of (auction fraud) complaints we receive have been for failure to deliver merchandise, but we are beginning to see a higher percentage of complaints about shill bidding,” said Delores Gardner, an attorney with the Federal Trade Commission specializing in Net auction fraud.

But the relatively small number of shilling complaints is likely due in part to the fact that it’s harder to detect, she said.

Hard to detect
“It’s definitely not the kind of thing that consumers should be expected to have to detect,” Gardner said. “That’s why it’s important fo the Internet auction houses to do whatever they can to protect their customers.”

Pursglove and some industry observers say eBay has acted agressively to curtail shilling, including developing proprietary software that allows investigators to analyze bidding patterns after the fact for indications of wrongdoing. He said the company plans to introduce the next generation version of the software by early next year, which will allow such analysis to be conducted while auctions are in progress.

Pursglove added that the people who file shilling complaints often aren’t able to take an unbiased view of the data they collect.

“The reality is we really have to have a strong case before we can suspend a user,” he said. “Lots of information that we get from users, suspicious though it may look on the surface, may not stand up under investigation.”

By way of example, he cited the case of a group of users who were named in a shilling complaint last summer.

“When we contacted these folks, we realized they were really a small universe of users who had a shared interest in a particular type of item, which is why they were bidding on one another’s items,” Pursglove said.

The detectives counter that for every false complaint submitted, they send in scores of well-documented reports showing bidding patterns that defy rational explanation, many of which are rejected as containing “insufficient evidence” or result in only a warning to the culprit.

And even if the user is suspended, they frequently resurface days later and begin shilling again, they say.

“There was one person who must have had 20 different IDs that have been suspended and when I finally sent in a huge report detailing all the shill names she was using, eBay suspended about half of these names but not the others,” said Vicki, another longtime detective. “Sometimes it seems like they just pick names out at random.”

Sample complaints
The detectives provided MSNBC.com with a half-dozen complaints that had been submitted to eBay’s Safe Harbor to make their point. Among them:

A report filed on Sept. 5 detailing the activities of an eBay coin dealer and a bidder showed that the bidder had bid on a total of 478 auctions — 477 of which were those of the coin dealer — and that items that were “won” by the bidder were soon relisted by the seller. EBay’s Safe Harbor investigator responded to the complaint by email, saying he had sent a warning to “the member” without specifying whether that meant the seller or the bidder.

A complaint filed in early October asking Safe Harbor to investigate four eBay users who were bidding only on one another’s auctions, selling the same type of items and engaging in “feedback padding” — manipulation of eBay’s system under which buyers and sellers earn an online “reputation” based on the level of satisfaction with their transactions. After Safe Harbor responded that there was insufficient evidence to show the four had violated eBay’s rules, the complainant resubmitted the report with one additional piece of evidence that should have been easily uncovered during an investigation: The domains in all four of the users’ email addresses were registered to a company marketing football collectibles. After the second submission, all four were suspended.

A report submitted in early October and twice since then detailed an apparent shilling ring involving five sellers and 12 bidders. To date, Safe Harbor has not responded to the complaint.

The detectives and others have long posted investigation progress reports and criticisms of Safe Harbor on eBay’s “Trust and Safety” billboard, which is where the dispute between the two camps finally boiled over earlier this month.

Dispute boils over
A member of the site’s “Community Support Team” ignited the firestorm by issuing an edict prohibiting the posting of user identification names (the pseudonyms that traders use) and auction numbers on the billboard.

Pursglove said the policy change was not an effort to silence Safe Harbor critics. Rather, he said, it was intended to halt the publicly airing of potentially unfounded accusations against eBay users and to ensure that shilling complaints posted on the board don’t tip off suspects before they can be investigated.

“We try to encourage our users to be a bit more civil and to use the feedback forum and the Safe Harbor complaint process to address those issues,” he said. “We have had some very well-meaning, well-intentioned users take things into their own hands and not only do damage to themselves but to innocent users.”

But the detectives saw the restriction as an attempt to thwart their investigations. EBay’s sudden suspension of Peg the detective without explanation didn’t help, and even though she was reinstated after a few days the volunteer crime fighters had seen enough.

Out on their own
Within days, the core group of investigators set up shop on a new password-protected Web site outside eBay’s domain, hanging up the shingle “eBay Detective Agency.” There, they can now compare notes on possible cases of shilling or other deceptive activities without worrying about running afoul of eBay posting policies, though they have had to set their own ground rules on what should and should not be aired on the billboard.

In the meantime, most of the detectives still buy and sell on eBay, though often under other non-gumshoe identities. They also post notes on eBay’s Trust and Safety board urging newcomers who believe they’ve been shilled or otherwise victimized to contact them privately.

But while they are now free to conduct their investigations as they see fit, many of them haven’t gotten over what they consider to be eBay’s misguided response to their effort to help.

“We’re just a bunch of honest people who want the site run honestly,” said Colleen. “And you can’t tell me that eBay can’t make money running it honest.”

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