Seeing Fakes, Angry Traders Confront EBay - New York Times

This article demonstrates that it's getting harder and harder for eBay to argue that they have no responsibility to protect their users from the various scams and fraud being perpetrated all over the site.

While eBay claims that these scams account for only a tiny fraction of transactions on the site, their estimates wildly under represent the extent of the problem becuase many users never bother pursuing rip-offs when they've lost less than $50. In most cases, it's simply not worth the time or effort and users only recover a fraction of their losses.

While these scams may represent a small fraction of the total transactions on eBay, they amount to thousands upon thousands of questionable auctions on the site at any given time. Just do a search for Xbox 360 or iPod Nano to get a quick idea of how pervasive the problem is. A large percentage of these auctions are either misleading or outright fraudulent. But eBay collects listing and closing fees on these auctions, so they are presented with a very strong conflict of interest.

eBay's conflict of interest has opened an opportunity for sites like gumshoo.com to provide eBay shoppers with in-depth risk analysis of eBay auctions. With a third-party site, there is no conflict of interest in telling buyers that an item presents higher than normal risk because the site is focused on helping buyers make more informed decisions when shopping eBay.