posted on April 24, 2003 08:07:58 AM new
In the online X-rated video and sex toy auction business, eBay was playing dirty, according to its competitor NaughtyBids.com, one of the companies owned by Houston-based Rick's Cabaret International.
Last month, Rick's subsidiary RCI Internet Services filed an antitrust suit against eBay because it was not allowing other "mature" auction sites to use online payment system PayPal, which eBay owns.
Late Tuesday, RCI withdrew the suit because eBay/PayPal changed its policy, even though it was not the change RCI desired.
Under the new policy, PayPal will not be available to any mature online auction sites, including eBay.
Adult auction sites would like to use PayPal because it is the most widely accepted currency on the Internet, is simple to use and enables the purchase of a racy item to show up on one's credit card bill only as "PayPal."
There are payment services similar to PayPal, but they are not as well-known.
EBay has by far the biggest share in the adult auction market. NaughtyBids.com ranks second.
"We would have preferred that eBay would have allowed PayPal to provide transactions for everyone," said Rick's spokesman Allan Priaulx, but the new policy is an improvement because it makes it less likely that eBay will monopolize the mature item online auction market, he said.
Kevin Pursglove, a spokesman for eBay, said PayPal's new policy was not made in response to the NaughtyBids.com lawsuit, and in fact, he said, it does the very opposite of what the suit sought: Instead of offering PayPal's services to all mature auction sites, it will offer them to none.
PayPal got out of the mature end of the online auction business, Pursglove said, because it was more costly to run due to so many fraudulent transactions and charge-backs. It was a business decision, he said.
"Absolutely it was because of the lawsuit," said Eric Langan, CEO of Rick's, who believes eBay changed its policy to avoid paying millions in damages to his company.
posted on April 24, 2003 08:26:01 AM new
I don't blame ebay. It is easy to set up a website selling strong sexual content and then take a bunch of orders having customers pay with paypal and then take the money out of the account and leave. I know that is not the case with the company suing ebay but the genre of online sex sites has to have a bad track record for fraud.
posted on April 24, 2003 09:15:17 AM newthen take a bunch of orders having customers pay with paypal and then take the money out of the account and leave
This happens on eBay all the time in nearly every category.
But this begs the question of why eBay has an adult category at all if all this fraud is going on. If the category is not worthy of using paypal, why is it on the site at all ?
posted on April 24, 2003 09:56:46 AM new
Reamond - Didn't PayPal ban the Adult sites before eBay bought them out?
AuctionAce - The problem with Adult Content sites was not unfulfilled merchandise. The hassles and chargebacks occur with subscriptions. The most frequesntly used gimick is to offer free trial subscriptions. If however a trial subscriber does not go thru a variety of convoluted steps to cancel that subscription, the trial rolls over into a full fledged subscription. The credit card or PayPal account is then automatically charged once a month. While it works better with traditional credit cards where the small charge is likely to be over looked, a lot of start ups or low budget sites where using PayPal where users are more likely to take note of the charge and dispute it.
On some of the more disreputable sites users encounter a "broken link" or "Database Error" that prevents them from canceling the subscription.
posted on April 24, 2003 10:56:48 AM new
I recall paypal considering an adult site ban pre-eBay, but there was an uproar and I think paypal just ejected problem sites and had the rest of the sites put up a bond/deposit with paypal.
posted on April 24, 2003 11:55:17 AM new
::But this begs the question of why eBay has an adult category at all if all this fraud is going on. If the category is not worthy of using paypal, why is it on the site at all ? ::
Money Money Money Money.... Money.....
Personally I think Ricks is right, the only reason eBay made the change is to negate their lawsuit. I'm curious as to how this new policy change is actually going to be implicated? I mean sure they can take the links of of the auction pages but wha is to stop someone from manually intering the info. Are they going to add an identify code to the auction IDs?
