eBay 1999 Annual Report Download - page 13

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numbers with the user names of their trading partners. This information is recorded in a feedback profile that
includes a feedback rating for the person and indicates comments from other eBay users who have interacted
with that person over the past seven days, the past month, the past six months and beyond. A user who has
developed positive reputations over time will have a color coded star symbol displayed next to his or her user
name to indicate the amount of positive feedback received by the user. eBay users may review a person’s
feedback profile to check on the person’s reputation within the eBay community before deciding to bid on an
item listed by that person or in determining how to complete the payment for and delivery of the item.
The terms of the Company’s user agreement prohibit actions that would undermine the integrity of the
Feedback Forum, such as a person’s leaving positive feedback about himself or herself through other accounts or
leaving multiple negative feedback for others through other accounts. The Feedback Forum system has several
automated features designed to detect and prevent some forms of abuse. For example, feedback posting from the
same account, positive or negative, cannot affect a user’s net feedback rating (i.e., the number of positive
postings, less the number of negative postings) by more than one point, no matter how many comments an
individual makes. Furthermore, a user can only give feedback to his or her trading partners in completed
transactions. Users who receive a sufficiently negative net feedback rating have their registrations suspended and
are unable to bid on or list items for sale. The Company believes its Feedback Forum is extremely useful in
overcoming initial user hesitancy when trading over the Internet, as it reduces the anonymity and uncertainty of
dealing with an unknown trading partner. See ‘‘Risk Factors—We are subject to risks associated with information
disseminated through our service.’’
Trust and Safety Initiatives. The Company developed a number of programs designed to make users more
comfortable with dealing with an unknown trading partner over the Web. In addition to the Feedback Forum, the
Company offers the SafeHarboreprogram, which provides guidelines for trading, helps provide information to
resolve user disputes and responds to reports of misuses of the eBay service. The Company’s SafeHarborestaff
of 182 persons, including regular employees and contractors, investigates users’ complaints of possible misuse
of eBay and take appropriate action, including issuing warnings to users or suspending users from bidding on or
listing items for sale. Some of the complaints the SafeHarborestaff investigates include various forms of bid
manipulation, malicious posting of negative feedback and posting illegal items for sale. The SafeHarboregroup
is organized into three areas; investigations, community watch and fraud prevention. The investigations group
investigates reported trading infractions and misuse of eBay. The fraud prevention department provides
information to assist users with disputes over the quality of the goods sold or potentially fraudulent transactions
and, upon receipt of an officially filed, written claim of fraud from a user, will generally suspend the offending
user from eBay. The community watch department investigates the listing of illegal, infringing or inappropriate
items on the eBay site and violations of certain eBay policies. Upon receipt of a written claim of intellectual
property infringement by the owner of the intellectual property, the Company will remove the offending item
from eBay. Users who repeatedly infringe intellectual property rights are suspended. In addition, the Company
has increased the number of personnel reviewing potentially illegal items. The Company’s trust and safety
initiatives, including user identity verification, insurance, integrated escrow and authentication, are intended to
bolster eBay’s reputation as a safe place to trade. See ‘‘Risk Factors—Our business may be harmed by fraudulent
activities on our website.’’ eBay has also recently partnered with Infoglide, a leading provider of similarity search
technology, to help keep previously suspended users from re-registering on eBay. The Company has introduced
a requirement that new sellers must provide a credit card or pass an identity verification check before being
allowed to sell. The identify verification process is performed by Equifax.
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