Judge Issues Ruling on eBay and PayPal Antitrust Complaint

Several eBay sellers gathered together last year to file a class-action lawsuit against the online auction and shopping giant. Participants in the suit now have until January 27 to file an amended complaint. In a ruling addressing eBay´s motions to dismiss the case, the judge partially granted their request while simultaneously partially denying it. The lawsuit alleges the following, "While eBay lists purported alternative payment methods, eBay has through its intentional action made it so PayPal is the only viable option for sellers." In addition, the plaintiffs complained took issue with eBay´s policy of collecting commissions fees on the seller´s shipping costs.

Charlotte Smith is the eBay seller who filed the original lawsuit against eBay back in 2010. Smith´s filing was inspired by eBay´s policy that coerces sellers into using its affiliated online payment service PayPal.

As per Smith´s complaint, eBay sellers are alleged to "effectively have and will continue to have no choice but to accept payment using only eBay owned PayPal, and as a result sellers are and will continue to be required to pay eBay through PayPal an additional fee up to 3% and .30USD per transaction. Defendant´s actions constitute an unlawful tying arrangement resulting in an impermissible restraint of trade, in violation of federal law."

The federal law Smith is referring to is the antitrust law, which is in place in order to promote or maintain fair market competition by regulating all anti-competitive conduct demonstrated by companies.

Smith´s lawsuit made reference to several developments throughout eBay´s history that functioned to increasingly limit a seller´s ability to accept forms of payment other than PayPal. These include eBay´s ban on payments made via cash, money order and Google Checkout.

With the lawsuit, plaintiffs also sought relief from eBay charging "improper collection of shipping fees as part of final value fee." Said policy is a major sore point with sellers. However, according to the judge, the plaintiffs had not alleged to not having consented to pay a final value fee to eBay. "Although leave to amend should be freely granted, in light of the facts of this case, the Court concludes that Plaintiffs would not be able to state a claim for conversion," ruled the judge, as reported by the online news source eCommerce Bytes.

Bryant Park

Bryant Park is a financial consultant for one of the companies listed on Wall Street. He writes on a variety of topics ranging from credit cards to different loans that can be availed by consumers. He holds a bachelor degree in Financial Services from Dartmouth College.