How Ebay Sellers are Getting Screwed

As someone who has been working for multiple ebay stores for the past several years, with people who have been selling on the site for decades, I’ve experienced and heard several horror stories. I wish I could say these were rare and not the norm, however, from what I have observed, Ebay continues to make business decisions which mean more profit for the suits and less profit and protection for sellers (the backbone of the company). In recent years, there has also been a massive amount of freedom given to buyers, who can no longer even receive negative feedback from sellers. During the course of this article, I will be listing some grievances I have with Ebay and, while doing so, exposing some scams which are being run at the expense of sellers, with total freedom under Ebay’s nose.

My day job for the past 6 years has been listing things for people on Ebay. If you have a lot of things you want to sell, I take care of the listings and the shipping for a rate. It’s a fairly simple business, although that’s not to say that things often run as smoothly as they used to. Ebay and Paypal have long had a complex relationship and Ebay’s most recent money-making scheme was to drop Paypal entirely and instead create their own “managed payments” infrastructure. While this new system has finally been rolled out and seems to be working so far, it does give Ebay several advantages over sellers that they did not have before. Instead of having their fingers in the proverbial honey pot, they actually now own the pot and will parse out your payments as is convenient for them.

Since Ebay switched to using Managed Payments, it means they are now holding the money from their transactions, until they pay out. Can you say “Sweet, sweet, interest?” Because, that’s exactly what it means to them. So, if there is any dispute the dollar amount for the purchase will be withheld from your payouts, unless it is resolved in your favor. Some of these deductions will be on payouts for items which are not in question. This adds up while Ebay gets to hold onto the money of that purchase (and all the other purchases which have any dispute in their system) and continue to draw in the interest a little bit longer, until things get resolved. For buyers, this is great because it means they will automatically have their return requests approved. The seller, however, is required to accept the outcome as decided by Ebay, regardless of fairness, and to do the work on the back end to inspect, refund, and relist the item, provided something has not gone horribly wrong.

This ends up costing sellers a tremendous amount of time and, ergo, money for which ebay does very little to ease. They do offer credits of the final value fee (their own cut), but only under some return circumstances. Since the buyer gets to select the return reason and are free to choose those which do not apply, this does not bode well for sellers. Ebay does offer to automatically relist items which have completed returns, but their system rarely, if ever follows through. This leads to some backtracking and more lost time for buyers.

The truth is that a purchase on Ebay is not a simple transaction, but an uneven exchange during which the buyer has more control than the seller, and the buyer even stands to make a zero-sum profit against the seller, if they are willing to abuse Ebay’s system. What’s more, it is well known that many crimes are borne of opportunity. When people discover a way that they can abuse the system, they often do. There are really two big ways that I see people being given the opportunity to scam sellers out of their items and even their profit, in some cases, at no eventual charge to the buyer. The first has already been mentioned; Ebay’s own system is set up to allow buyers to have more power than sellers and this is a built-in flaw of which people often take advantage. The second most popular opportunity to pull an Ebay scam as a buyer has to do with shipping.

It is well known that shipping delays continue all across the country, given by how backed up the United States Postal Service (USPS) has been for several months. Packages are frequently delayed, can go days without shipping updates, and are sometimes updated as arriving late and further tracking is never added, though the items sometimes arrive weeks later, with or without a confirmation on the tracking. Then there is damage during shipping to consider, actual or claimed. It’s simply too easy for people to find a way to get their items for free these days. While these details no doubt sound inconvenient, it can be difficult to understand the actual consequences when things play out. For this reason, I will share two horror stories about sales that went wrong on Ebay, to illustrate the vulnerabilities on both fronts.

The Classic Switcheroo

Our first tale is one way buyers can take advantage of Ebay’s system to scam buyers. In this instance, someone ordered a brand new and expensive thermostat, with its control unit and all the necessary hardware. It was from a very well-known and high-quality brand. We shipped it out, brand new in box, and the buyer started a return about a week later. They selected the reason that the item was “not as described” complaining that the item did not work. Since they didn’t select the reason as “does not work” we were forced to pay the return shipping. When the return arrived, I found that the buyer had put their old item in the box, the exact model, outdated by one part number, and returned that instead.

By this point, Ebay had already seen that the return was delivered and had refunded the buyer. This meant that they had installed a brand new thermostat, free of charge, while we had been out the item and the cost for the item, its original shipping price, and the return shipping. Since sellers cannot leave bad feedback on buyers, we could only report the buyer. In order for Ebay to agree to reverse their decision and refund us our money, they required that we prove the legitimacy of our issue by filing a police report with the local station and providing them with a copy. This sounds perfectly reasonable, in theory. The reality however, was much worse.

I went to the local sheriff’s office and explained the situation. After probably 20 minutes they end up telling me that they are not allowed to file the report due to the circumstances. They referred me to the local police station. I made the journey there and again, spent another 20 minutes explaining the situation to the police. They too declined to file a report, stating that the report must be filed in the place where the crime was committed. In this case, it happened to be in California, a brisk 2,200 mile walk away. Unfortunately, after another attempt, it was clear that the local law enforcement were not going to file a simple report for this cause. Since Ebay refused to make the situation right without a report, the buyer got away with the switcheroo.

It’s simply a shame that Ebay has requirements for sellers that are destined to go unfulfilled, because they require something which cannot be obtained. It’s the perfect catch-22. Since we all agree to Ebay’s EULA when we sign up, we are required to follow their procedures. They have made certain procedures impossible, though, since they still offer a theoretical means to appeal a decision, they are technically within their legal rights. This is true regardless of if the answer is always no, and it’s totally acceptable that sellers have unfair requirements imposed upon them, because by the time anyone makes a sale, they have already signed a legally binding contract that is subject to future changes, as Ebay sees fit. This is legal.

The Late-Delivery Double Order Freebie

Our second chilling tale is an opportunistic theft as a result of delays from USPS. It goes a little something like this. The buyer orders something on Ebay and the shipping ends up being delayed. With no shipping updates, the buyer starts a case on Ebay for the item not being delivered. Seven days pass and the item is still not delivered and so Ebay refunds the buyer. The buyer then orders another of the item from us, the same seller. While the second item is on its way, the first item arrives to the buyer. So, what the buyer does in this case is to start a return on their new purchase and return this second order when it arrives, while keeping the original item, at no cost.

While this sounds like something that might be a rare occurrence and nothing to worry much about, it’s actually become all too common since 2020. When the pandemic hit, shipping delays became the norm, then the Government slowed down the mail intentionally for months and we are only just now starting to reach some sort of normality, but the delayed deliveries are still more common than they ever were before. The worst part is that, in response, USPS has had to make their claim process more difficult, causing even further time loss for Ebay sellers who use USPS and it also results in more denied claims on lost and damaged items than ever. The past year has been especially kind to those who abuse Ebay’s system through shipping specifically.

How Do We Respond?

These are some pretty harsh criticisms, but nonetheless true. With these serious blind spots in mind, one ought to be questioning whether or not to use Ebay at all. So, what’s the recommendation from someone who must use Ebay for a living, such as myself? Well, my judgments is really dependent upon what you use, or are planning to use Ebay for. Those who have to use Ebay to sell for a living will keep using Ebay. Sure, we may try to use other competitors, but when you get right down to it, Ebay is really the only game in town when it comes to selling your stuff online.

Ebay is a powerhouse. They are THE name when it comes to selling your old stuff. It’s the first place many people still think of to make their purchases online. Yes, even in the world of Amazon. So, if you are making a living as a seller on Ebay, it would be incredibly difficult to try to transition into selling elsewhere, if not impossible. Sadly, these are the people that I would like to recommend use Ebay less, but they cannot because it’s their livelihood.

What about if you just want to sell one or two things online? I would say, sure, Ebay is probably the most obvious choice and, no doubt, if you list your items well and at a fair price, they will sell faster on Ebay than anywhere else. But, if you just want to sell a few things and you aren’t attached to getting them out quickly, find somewhere else, be that Mercari or Facebook Marketplace. I would not advise anyone to use Ebay as a seller, unless absolutely necessary.

As a buyer, however, I say go for it. Ebay is nothing if not all-giving to the almighty buyer. No matter what they do, they never want anything to come between them and your money, so they will take actions that actively put their sellers at risk, just to get their profits. The days of “buyer beware” are over. As far as Ebay is concerned, we have just entered a new era; the era of “seller beware.” With this in mind, choose wisely who you select to broker your online sales.