eBay In The Hot Seat: Two Major Lawsuits Threaten eBay's Market Dominance
San Jose, California -- eBay and PayPal are in deep trouble. Currently, eBay, PayPal's parent company is battling two high profile, expensive class action lawsuits. One lawsuit could cost eBay billions of dollars in cash damages -- the other lawsuit could cost PayPal its #1 spot in the online ecommerce market. Lawsuit Number 1 was filed in April of 2007 (it started off as two class action lawsuits but were combined into one). Lawsuit #2 was filed in July of 2007. Both cases are in the preliminary stages. As time goes on, we will be able to see where both cases are going. However, if both cases go badly for eBay, it could signal the end of PayPal's market dominance and substantially weaken eBay's bottom line.
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Such weakness could leave eBay ripe for a hostile take over bid by another company or force eBay to begin selling off assets to accumulate much needed cash. If eBay is able to settle the claims, it could cost eBay a lot of cash in the short term, while allowing eBay and PayPal to continue their current business practices.
NOTE TO OUR READERS: Hopefully the lawyers involved in these cases will not let their greed get the best of them. eBay will be desperate to settle with the Plaintiffs -- a trial by jury would almost certainly lead to some very damaging results regarding eBay and PayPal. If the lawyers stick to their guns and go for the big money later (along with a guilty verdict for eBay and PayPal) instead of going for a few million now (along with eBay's denial it did anything wrong), these lawsuits could change the entire landscape of the auction and online payments world. For more information, read this website's PAYPAL LAWSUITS section to find out why the first lawsuit against PayPal failed (and how the lawyers caused it to fail).
eBay Class Action Lawsuit Number 1:
Date Filed: April 23, 2007
Court: U.S. District Court
Location: San Jose
NOTE: This class action started off a TWO class action lawsuits. By order of California Judge Fogel, the cases were combined into one large class action lawsuit.
Hagens Berman Sobol Shapiro has filed a class action complaint against online auction giant eBay, claiming the company has acted through abusive methods to maintain its monopoly in the online auction market.
The suit focuses on a violation of the Sherman Act alleging eBay has used illegal tie-in and steering practices to remain the number one online auction site. It is estimated that eBay controls in excess of 90 percent of the online auction market to date.
According to the complaint the named plaintiffs and other users of eBay are forced to pay higher fees as a result of eBay's practices. Both plaintiffs, who are active sellers on the site, claim eBay's tie-ins with PayPal and Verisign have led to higher credit card fees that must be paid to eBay or PayPal. These fees are artificially inflated and used to help eBay maintain its dominance over the online auction business.
If you believe you have been affected by eBay's billing and anti competitive actions please click here to sign-up for this case. HBSS will treat all information as confidential.
May 7, 2007 - Today U.S. District Court Judge Jeremy Fogel granted HBSS co-lead counsel in the case against eBay, Inc.
eBay Class Action Number 2:
Date Filed: July 7, 2007
Court: U.S. District Court
Location: San Jose
A class action lawsuit has been filed against Ebay For “unlawful, unfair, fraudulent and unconscionable tactics”. The lawsuit alleges that Ebay claims that auctions will begin when an item is submitted. However, in reality, the lawsuit alleges that auctions do not fully begin when the an item is submitted. Thus, the lawsuit alleges that customers pay for more auction time then they actually get. The lawsuit alleges that Ebay violated a number of laws, including the California Auction Act by making misrepresentations in conducting its auctioneer business. The lawsuit seeks a number of remedies, including a “$1,000 per Class member civil penalty”.
The lawsuit seeks a number of remedies, including a “$1,000 per Class member civil penalty”, which comes out to over 1 billion dollars in damages if one does the math. –that’s a lot, even for Ebay.
The lawsuit (Ewert v. Ebay, 2007-cv-2198) was filed in the Northern District of California, San Jose Division, July 2007.