eBay 2000 Annual Report Download - page 14

shipping. Under the terms of eBay's user agreement, if a seller receives one or more bids above the stated
minimum or reserve price, whichever is higher, the seller is obligated to complete a transaction, although eBay
has no power to force the seller or buyer to complete the transaction other than to suspend them from using
the eBay service. In the event the buyer and seller are unable to complete the transaction and the seller notiÑes
eBay, eBay credits the seller the amount of the success fee. When items that have a reserve price sell, sellers
are credited the $1.00 reserve fee. Invoices for placement fees, additional listing fees and success fees are sent
via email to sellers on a monthly basis. All new sellers are required to have a credit card account on Ñle with
eBay. Sellers who pay by credit card are charged shortly after the invoice is sent.
Feedback Forum. eBay pioneered a feature to facilitate the establishment of reputations within its
community by encouraging individuals to record comments about their trading partners on each transaction.
Every registered eBay user has a feedback proÑle containing compliments, criticisms and other comments by
users who have conducted business or interacted with the person. The Feedback Forum requires feedback to
be related to speciÑc transactions and provides an easy tool for them to match up transaction numbers with the
user names of their trading partners. This information is recorded in a feedback proÑle that includes a
feedback rating for the person and indicates comments from other eBay users who have interacted with that
person over the past seven days, the past month, the past six months and beyond. A user who has developed
positive reputations over time will have a color-coded star symbol displayed next to his or her user name to
indicate the amount of positive feedback received by the user. eBay users may review a person's feedback
proÑle to check on the person's reputation within the eBay community before deciding to bid on an item listed
by that person or in determining how to complete the payment for and delivery of the item.
The terms of eBay's user agreement prohibit actions that would undermine the integrity of the Feedback
Forum, such as a person's leaving positive feedback about himself or herself through other accounts or leaving
multiple negative feedback for others through other accounts. The Feedback Forum system has several
automated features designed to detect and prevent some forms of abuse. For example, feedback posting from
the same account, positive or negative, cannot aÅect a user's net feedback rating (i.e., the number of positive
postings, less the number of negative postings) by more than one point, no matter how many comments an
individual makes. Furthermore, a user can only give feedback to his or her trading partners in completed
transactions. Users who receive a suÇciently negative net feedback rating have their registrations suspended
and are unable to bid on or list items for sale. eBay believes its Feedback Forum is extremely useful in
overcoming initial user hesitancy when trading over the Internet, as it reduces the anonymity and uncertainty
of dealing with an unknown trading partner. See ""Risk Factors Ì We are subject to risks associated with
information disseminated through our service.''
Trust and Safety Initiatives. eBay developed a number of programs designed to make users more
comfortable with dealing with an unknown trading partner over the Web. In addition to the Feedback Forum,
eBay oÅers the SafeHarborTM program, which provides guidelines for trading, helps provide information to
resolve user disputes and responds to reports of misuses of the eBay service. eBay's SafeHarborTM staÅ
investigates users' complaints of possible misuse of eBay and take appropriate action, including issuing
warnings to users or suspending users from bidding on or listing items for sale. Some of the complaints the
SafeHarborTM staÅ investigates include various forms of bid manipulation, malicious posting of negative
feedback and posting illegal items for sale. The SafeHarborTM group is organized into three areas;
investigations, community watch and fraud prevention. The investigations group investigates reported trading
infractions and misuse of eBay. The fraud prevention department provides information to assist users with
disputes over the quality of the goods sold or potentially fraudulent transactions and, upon receipt of an
oÇcially Ñled, written claim of fraud from a user, will generally suspend the oÅending user from eBay. The
community watch department investigates the listing of illegal, infringing or inappropriate items on the eBay
site and violations of certain eBay policies. Upon receipt of a written claim of intellectual property
infringement by the owner of the intellectual property, eBay will remove the oÅending item from eBay. Users
who repeatedly infringe intellectual property rights are suspended. In addition, eBay has increased the number
of personnel reviewing potentially illegal items. eBay's trust and safety initiatives, including user identity
veriÑcation, insurance, integrated escrow and authentication, are intended to bolster eBay's reputation as a
safe place to trade. See ""Risk Factors Ì Our business may be harmed by fraudulent activities on our
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