How to Solve eBay’s Efencing Problem
Written By Tarik
On Wednesday night, CNBC aired a segment on “efencing,” the practice of selling stolen goods on eBay (aff). According to CNBC, efencing is a $37 billion business where thieves lift goods from retail stores and list them as items on the world’s largest marketplace. Because many of these items are factory sealed, they reap large profits totaling around 70 cents to the dollar.
Should eBay crack down on fraudulent sales?
Although I agree that “efencing” is a major problem, it isn’t eBay’s job to monitor where a merchant’s items come from. Retailers should implement theft & loss protection divisions to control in-store theft. I think it’s ridiculous for eBay to perform the grunt work on the behalf of unfortunate corporations.
Could you imagine having to show proof of ownership before listing an item on eBay? I’m sure forcing members to mail in sales receipts would really motivate more people to use eBay’s services. (I’m only kidding.)
How could merchants solve the “efencing” problem?
eBay’s Vice President of Trust & Safety Rob Chesnut said it best: increase theft protection at the retail level. It’s the job of these major retailers to prevent criminals from lifting their products. If retailers like Home Depot (HD) installed more security cameras and metal detectors in their stores, this would deter criminals and prevent the items from being stolen in the first place.
I guess it’s easier said than done. What do you think? Should eBay be held responsible for the “efencing” practices?
Note: I own shares of eBay.
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Post/Read Comments
January 28th, 2007 at 11:40 pm
e-Fencing Is Only One Of The Problems Faced By eBay
We’ve been buying and selling on eBay since 1997. During this time we’ve seen eBay move steadily towards maximizing profits, while paying only lip service to site security and fraud prevention.
e-Fencing and many other problems on eBay could be vastly reduced, by requiring sellers to be verified prior to listing items for sale. Sellers who wish to sell more than half a dozen items per month or 50 items per year should be required to provide a valid business sales certificate that matches their address info on file.
January 28th, 2007 at 11:49 pm
Proper verification would reduce fraud, but we all know that eBay is great for selling things on the fly. A lot of members, like myself, do not have a business license, thus the average lister would have another obstacle to climb over just to sell a couple widgets.
And I’ve liquidated entire collections on eBay before, which took over 30 transactions to sell everything. If I had to obtain a business license, I would have gone elsewhere.
But I agree, there should be a threshold as to how much you can sell without providing proper business identification.
I’m considering an eBay business in the near future, and would appreciate some insight on how to become successful at selling goods.
January 30th, 2007 at 5:43 am
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August 13th, 2007 at 6:47 am
eBay SHOULD know what is going on in many instances involving hot merchandise, but they elect to look the other way. How many years were they allowing the sale of high dollar retail gift cards(Pier One, Lowes, etc) obviously purchased with stolen credit cards? Only after the heat was turned up in 2006 did eBay place restrictions on these items, vs advising consumers to take precautions to prevent their credit card numbers from being stolen.
August 15th, 2007 at 6:50 pm
@ Pete
How is eBay supposed to know that the gift cards were purchased fraduently? People need to protect their information, and closely watch their statements, passwords, personal information, etc.
Currently, there is no legimate way to single out a criminal from an average seller. Each eBay member registers, enters their information, then begins selling.
Do you suggest a more complicated seller registration process?
September 16th, 2007 at 7:12 pm
How should they have known? Maybe when a seller has a dozen listings for $500 cards from various merchants? Duhhhh. In the aftermath of the crackdown they were somehow able to devise some COMMON SENSE safeguards, which limit the number of listings permitted for this type of product.
eBay has shown time and time again they care nothing about fraud, which is evident from the pirated software which has been abundant at the site for years.
EBay does not monitor its website for fake goods, but it will remove infringing items once they have been brought to its attention by the rights owner or its representative.
MAYBE WHEN A FEW OF THEIR WHITE COLLAR CRIMINAL EXECS ARE CUFFED they will take a proactive approach.
You need more proof of their larcenous nature? They STOLE the buy it now technology from the patent holder when negotiations broke down. Like many white collar criminals they determined it would be profitable to STEAL, and then pay the vicim from the profits of their THEFT. They should have been banned from using STOLEN technology, but they correctly assumed some buffoon-in-black would rule in their favor in this regard. They paid 25 mill to the patent holder, and no doubt have profited many times that amount.
October 31st, 2007 at 1:14 pm
[…] E-fencing will get you about $.70 on the dollar, and it’s less risky because there is a certain degree of anonymity. Bottom line, it’s become a big problem for the retail industry. So much so that retailers are taking it to the Hill. Several retail execs recently testified before the House Judiciary Committee’s Subcommittee on Crime, Terrorism and Homeland Security about the problems of ORC and e-fencing. […]
November 2nd, 2007 at 12:08 pm
[…] from Infoglide Software] The Internet: Treat or Trick? E-fencing will get you about $.70 on the dollar, and it’s less risky because there is a certain degree of anonymity. Bottom line, it’s become a […]
November 10th, 2007 at 8:19 pm
Hi, I don’t know if it is possible to be successful on e-bay unless you can power sell right from the start - Honestly - only about 1/3 of the items on e-bay get sold - the costs incurred for the other 2/3 cut right in the profit of the items that sell - It seems e-bayers are only ready to pay 10 to 20 % of msrp - Do the math - e-bay is a buyers market - Is it any wonder there is so much “fencing”
December 3rd, 2007 at 1:32 pm
I agree that the only reasonable answer is to crack down on retail theft. As both a buyer and seller at eBay, I think its ridiculous to expect eBay executives to track down stolen merchandise. EBay is simply a portal through which the public can buy and sell, so why should they be held responsible for the actions of the public?!
Complicating the selling process on eBay is only going to punish thousands of sellers who don’t sell stolen merchandise - why punish the masses for a crime being committed by a few?
The bottom line is that retailers need to take action to reduce theft, and individuals need to take precaution to make sure their credit cards/passwords aren’t stolen - don’t expect other people (or the law) to protect you, you have to take steps to protect yorself.
December 6th, 2007 at 8:40 pm
HOW IS EBAY TO KNOW IF A GIFT CARD IS PURCHASED FRAUDENTLY???????? DUH
Do you know any where else a gift card can be purchased for less than 100% of the face value?????
When I purchase a bank gift card legitimately is costs $5.00 over and above the card value ////////
I would not purchase a gift card on ebay - as the saying goes - if it sounds too good to be true - let the buyer beware the next time he purchases a gift card for less than face value of the card -
December 6th, 2007 at 8:46 pm
Doesn’t it make you wonder - how can someone sell something for 10% of retail and still pay ebay listing and final fees and also pay pal fees? Where is the profit?
June 16th, 2008 at 1:31 pm
[…] about who is to blame and who’s responsibility it is. One I would like to highlight is, Investor Trip’s They point out the fact that eBay seem to be passing the buck. Quoting eBay’s Vice President […]