Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
A baseball autographed by Mother Theresa? Cyber pirates continue to fly a black flag over online auctions, and victims have begun fighting back by suing auction sites for failing to root out fraud.
In a suit filed in April against eBay, sports memorabilia collectors allege the site knew about auctions of fake goods but failed to act. And game makers Nintendo of America, Electronic Arts and Sega of America have sued Yahoo! for allowing the sale of bootleg video games and illegal devices used to copy them.
Both sites claim limited responsibility over the content of their auctions. But that may change, says Julian Chu, director of retail and consumer goods for Mainspring Communications. “They will start to care if they are found liable and the continued bad publicity deters buyers from coming onto their sites and doing business.”
In fact, the bad publicity is already spreading. The $1 billion memorabilia market recently was tarred by a report from the FBI and other agencies that 50 to 90% is bogus merchandise. And the Federal Trade Commission says complaints about online auctions hit 11,000 last year, up from 107 in 1997.
Few remedies exist for online auctions. Currently, there are no online appraisers who authenticate memorabilia. As for software and video games, it’s almost impossible for auctioneers to know whether the goods are legit. Some auction sites have turned to the physical world for help. Amazon.com has teamed with appraisers from Sotheby’s to check out high-end items. And eBay has a similar agreement with auction houses for antiques and other items sold on its “great collections” page.
Run-of-the-mill sports memorabilia is a tougher target. Even if such services were available, it’s doubtful that auction sites would use them. Authenticators, says Chu, “entail extra cost and time.”
Microsoft Corp. keeps piracy in check by deploying automated search tools to monitor Web auctions. The company shuts down thousands of auctions a month, says Tim Cranton, a Microsoft corporate attorney. Its search tools scan the descriptions of software being sold; a plain CD, Cranton explains, is usually bootleg. Microsoft then submits a list of pirated software to the auction site. “The majority of postings are counterfeit,” says Cranton. “And the buyer is normally unaware.”
Beyond turning to search tools and other technology, Cranton recommends that auction sites toughen their registration process and check for sellers with a history of trafficking counterfeit goods. Skeptical buyers are perhaps the best defense, he adds: “The buyer needs to be informed and needs to know what steps to take.”