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Sellers sue eBay over double-billing

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Matt Hines CNET News

Published: 06 Jul 2004 16:45 BST

A pair of eBay members have initiated a class-action-suit against the online auctioneer over a problem with the company's latest billing system.

The two eBay members filed a claim against the company on Friday, alleging that eBay failed to address problems with a billing tool that overcharged individuals selling items on its site. In the suit brought in California Superior Court, eBay members Robert Cerreta and Nancy Spaulding contend that the online auction host double-billed their user accounts after launching a new payment processing system in February.

According to the complaint, Cerreta and Spaulding, who hail from Florida and Ohio respectively, were charged twice the amount they actually owed eBay for handling auctions of goods they sold using the site. The eBay users assert that the funds were then inappropriately drawn from bank accounts and credit cards they had registered with the company. In addition, the two customers said that eBay threatened to suspend their user accounts over the disputed charges.

eBay representatives did not immediately return calls regarding the lawsuit, but company executives have already apologised publicly for the billing issue. In mid-June, eBay General Manager Jeff Jordan told attendees at its user conference that the company had discovered the double-billing issue, fixed the problem and was in the process of addressing credit issues that resulted from the gaffe. Jordan acknowledged in a speech that eBay had let its customers down and promised that the company would be more careful in launching one of its next technological improvements, a new search tool.

The billing problem was first aired in the company's own online user forums. eBay's billing team eventually posted to the discussion area, pledging to fix the issue and help its customers address any mistakes.

While neither Cerreta nor Spaulding was charged large amounts of money as a result of the glitch -- each was overcharged about $20 (£10.86) -- the customers maintain that eBay's payment system also rounds up its totals for sellers without telling them it does so. For instance, they said, eBay now rounds a bill of $30.78 up to $30.80. Despite the fact that the system tacks on only a few cents to each transaction, the customers said the additional charges add up over time.

In the suit, Spaulding also said she was threatened with jail when she attempted to protest outside the user conference, which was held in New Orleans. A copy of the lawsuit has been published on the Web site of the law firm that the two eBay members are using, Fazio & Micheletti of San Mateo, California.

eBay's PayPal payment processing business recently reached a settlement with customers who accused the company of illegally freezing their funds. As a result, PayPal said it would pay a total of $9.25m to settle the federal class-action suit, $3.4m of which would go to paying its customers' legal fees. PayPal admitted no wrongdoing in settling the claims, which were filed in 2002 as part of two federal class-action suits that also alleged other customer-service deficiencies.