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Analysis: EBay deputizes users to combat cheaters

By Eric Young

(IDG) -- As eBay grows in popularity, it increasingly finds members are attempting to sidestep its rules. Now, the online auction giant is turning to its members to find the cheaters.

The latest example will come at the end of this month when eBay bans sellers who use hyperlinks from their online auctions to direct buyers to other sites. This practice allows buyers and sellers to meet at eBay but conclude a transaction elsewhere, preventing eBay from collecting the commission fee it charges when an auction ends. Even though eBay insists this activity occurs only occasionally, the money it loses from such practices can quickly add up.

EBay spokesman Kevin Pursglove said that enforcing the anti-hyperlink policy will "involve a large dependency on eBay users" since there is no technology that can scan the 5 million auctions taking place at any one time.

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EBay also relies heavily on users to police against "shill" bidding, which is the practice of entering phony bids to drive up the price of an item. While eBay has installed software to detect such activity, it still needs users to help the company stop the illegal practice.

EBay's dependence on users to help it succeed means the San Jose, Calif.-based company must find a delicate balance between protecting against e-commerce transgressions and fostering an environment where customers feel comfortable interacting with one another.

Pursglove and other eBay observers said that the majority of transactions on the site follow the company's rules. But as the site has grown to include some 30 million registered users, eBay has found that some instances of mischief have increased. "Some sellers were using eBay as an advertising mechanism to drive eBay members to other sites," Pursglove said, explaining the need to implement the latest crackdown on hyperlinks.

Some eBay users said they were disturbed by eBay's move to prohibit hyperlinks. "It just floors me that they think they can do this and have a happy bunch of sellers on their site who are content to put up with it," said Rosalinda Baldwin, an occasional seller on eBay and editor of the Auction Guild, an online newsletter that follows Web auctions.

But as long as eBay remains one of the biggest online marketplaces for consumers, it likely will remain an attractive site for buyers and sellers, even if they are called upon to help police others.