August 2, 2010, 5:32 PM

An eBay antitrust suit lands back in federal court

A judge has set aside a default judgment in the class action suit over PayPal.

Allison Enright

Senior Editor

Lead Photo

EBay Inc. will get a chance to defend itself in federal court against a lawsuit by sellers complaining that eBay effectively requires eBay merchants to use PayPal, the online payment service eBay owns.

U.S. District Judge John Corbett O’Meara set aside a default judgement in favor of the eBay merchants he issued June 16 after eBay and PayPal had failed to respond to the suit. EBay requested that judgment be set aside, and O’Meara agreed last week.

“Federal policy strongly favors allowing parties to resolve their disputes at trial rather than by default,” O’Meara wrote in his ruling. He added there was no indication that the defendants had ignored the complaint.


“The company is pleased with the ruling,” says Michelle Fang, associate general counsel at eBay. Peter Macuga, lead attorney for the plaintiffs, did not respond to a request for comment.

Six eBay sellers in four states filed the class action lawsuit in April alleging that eBay “has implemented accepted payment policies which effectively limit sellers to accepting payments only through eBay owned PayPal.” The suit says that such policies restrain trade and violate the Sherman Antitrust Act.

The court filing, submitted in Detroit on behalf of the plaintiffs, details changes made to eBay’s payment policies during the last 10 years and alleges that other accepted forms of payment are not viable alternatives because of their higher costs and entry requirements that shut out new sellers. It states that the company has “prohibited the use of any forms of payment that are more favorable than PayPal.”

EBay’s web site lists acceptable forms of payments as PayPal, ProPay, Moneybookers, Paymate, merchant credit cards and payment upon pickup. PayPal charges sellers up to 3% of the sale price and 30 cents per transaction. EBay implemented a paperless payment policy in 2008 that stopped sellers from being able to accept cash, checks, money orders or other forms of non-electronic currency except for items sold in particular categories such as motor vehicles and real estate.

EBay reported $4.41 billion in revenue for the first half of 2010. PayPal, which eBay bought in 2002, represented more than 37% of eBay’s companywide revenue during the second quarter of 2010.  

Comments | 2 Responses

  • Class action suits against Paypal reflect the abysmal state of affairs at this company. It's one trainwreck after another. has one of the latest in a long line of class action suits (posted online) and filed in US Federal Court. It is another suit that Paypal will have to settle. Read CAREFULLY between the lines of the 10Q's and GOOGLE "paypal problems" you will find a company that funds its business by improperly freezing tens of million$ of their customers fund$ and then uses those same funds to charge 19.9% interest at its other sub billmelater!!! This entire company is hollow and weak but propped up by poor advice by the major plyers "investors" on Wall Street. With constant investigations and complaints about its practices (as acknowledged in their SEC reports) there's lots of insider selling and its no wonder why. How will it play out for their $8 billion in "goodwill" when investors learn that Paypal customers have had to file bankruptcy and have their homes foreclosed on because Paypal "froze" their accounts for many months without prior notice?

  • Assisting German retailers from my point, using eBay for 9 years and having been involved in Paypal-consumer's complaints and arbitrary measurements severally, we all tracking that CAS with interests and (unfortunately) with concerns. After ruling German law we have no legal right for opening a class-suit, but single action only. If otherwise, you can be sure, eBAY/Paypal would would be covered with class actions like poison ivy, without cease. Thereof all single actions are very expensive for single plaintiffs and (how the past evides) the firm constantly is able for dictating new restrictions on behalf the users, exempt from punishment. How we say over here: They driving another swine through the village every day. An implement's appeal vs. Paypal at the German Antitrust Administration (Kartellamt) by the same reasons as yours was pending in 2009 and at last dismissed by not having serious evidence of mistrusting theirs market wealth. As they offer different payment methods as well, they wouldn't do wrong, leaving the desicion to the Buyers, finally. Basically the EC-members have a grandly developped and nearly costless bank transfer system (much different from the US one's) and this is what eBay/Paypal really disturbes. The latest "swine" was this year's accord for all eBay newcomers, must use Paypal up to 50 feedbacks, supported by such childish but infame events like these: Safety first. Sicherererer.......safafafafafafe After Paypal all mankind is soaked with theft and defraud and Paypal has the only serious solution for. This is 2010, but recovers the ancient Roman saying. Particulare et imperare. If the won't, disperse mistrust and earn. May your judges decide wisely! Good luck!

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