eBay has settled a class action lawsuit alleging that it overcharged consumers who sold items in the "parts and accessories" section of the eBay Motors website.
According to the suit, filed in April 2009, the site charges "two basic fees" -- one for listing an item, and one in the event of a "successful first bid." The suit, filed in federal court in California, where eBay is headquartered, alleged that eBay "consistently and uniformly" failed to inform consumers of a third fee, charged once the item is actually sold.
"Final value fee" According to the complaint, once a consumer successfully sells an item, he must pay eBay both a "final value fee" and a "transaction services fee." Unlike the transaction service fees and the "insertion fee" -- which is automatically charged when a consumer first lists an item for sale -- the final value fee is not listed anywhere on the eBay Motors fee schedule.
Adding insult to injury, the suit alleges that the final value fee adds up quickly, since it "is based upon a percentage of the closing value, if the item sells." Thus, as the sale price goes up, the fees "are expressly 'stacked' or 'layered' upon each other such that the total fee is cumulative of each layer of fees," according to the complaint.
The plaintiffs alleged that eBay's failure to mention the final value fee on its fee schedule was "deliberate and intentional," citing as evidence the fact that the schedule was regularly updated but the final value fee was never mentioned until October 2008.
The plaintiffs alleged that, once eBay finally did publish the final value fee, it began calculating it "based upon a flat percentage rate applied to the entire sales price, rather than layered as in eBay.com Final Value Fees."
Additionally, according to the suit, "even after October 2008, eBay incorrectly ... calculated" the fees. An October 19, 2008 invoice charged lead plaintiff Alamo Autosports a "final value fee" of $19.41 on an item that sold for its fixed price of $199. According to the suit, "the successful listing fee should have been nine percent ... of $199.00, which is $17.91, meaning that eBay Motors overcharged Alamo by $1.50."
The plaintiffs said this discrepancy resulted from the fact that "eBay [used] a layered fee structure ... rather than the correct flat nine percent ... fee on the entire bid price."
According to the suit, while eBay's user agreement does state that "the eBay Motors Fee Schedule is subject to change," the website promises to first provide at least 14 days notice.
The settlement provides that eBay will pay out a total of $30 million to settle the suit. Class members will be paid an amount proportional to the total amount of final value fees they paid.