- eBay, Ever Anxious To Up Profits, Bends Over
Provide Data To Law Enforcement Officials
- "I don't know another Web site that has a privacy
policy as flexible as eBay's," says Joseph Sullivan. A little bit
later, Sullivan explains what he means by the term "flexible."
Sullivan is director of the "law enforcement and compliance"
department at eBay.com, the largest retailer in the world.
- Sullivan was speaking to senior representatives of numerous
law-enforcement agencies in the United States on the occasion of "Cyber
Crime 2003," a conference that was held last week in Connecticut.
His lecture was closed to reporters, and for good reason. Haaretz has obtained
a recording of the lecture, in which Sullivan tells the audience that eBay
is willing to hand over everything it knows about visitors to its Web site
that might be of interest to an investigator. All they have to do is ask.
"There's no need for a court order," Sullivan said, and related
how the company has half a dozen investigators under contract, who scrutinize
"suspicious users" and "suspicious behavior." The spirit
of cooperation is a function of the patriotism that has surged in the wake
of September 11.
- eBay is the world's largest auction site. Some 62 million
registered users buy and sell a variety of merchandise through the site,
which charges commissions for every item sold. Sullivan claims that 150,000
Internet users earn their livelihood from the site, some having left their
old jobs to become buyers or sellers on eBay.
- The sales method on the site is simple: An individual
registers as a user, types in his particulars, and affirms that he accepts
sold, the buyer fills out an evaluation form, telling other users about
the treatment he received, whether the merchandise was sent on time, etc.
Other eBay users can then avoid buying from sellers who have received poor
- Sullivan says eBay has recorded and documented every
iota of data that has come through the Web site since it first went online
in 1995. Every time someone makes a bid, sells an item, writes about someone
else, even when the company cancels a sale for whatever reason - it documents
all of the pertinent information.
- One would think that preserving privacy of the users,
whose moves are so meticulously recorded, would be keenly observed at eBay,
whose good name in the Internet community is one of its prime assets. But
in the U.S. of the post 9/11 and pre-Gulf War II era, helping the "security
forces" is considered a supreme act of patriotism.
- Who needs a subpoena?
- "We don't make you show a subpoena, except in exceptional
cases," Sullivan told his listeners. "When someone uses our site
and clicks on the `I Agree' button, it is as if he agrees to let us submit
all of his data to the legal authorities. Which means that if you are a
law-enforcement officer, all you have to do is send us a fax with a request
for information, and ask about the person behind the seller's identity
number, and we will provide you with his name, address, sales history and
other details - all without having to produce a court order. We want law
enforcement people to spend time on our site," he adds. He says he
receives about 200 such requests a month, most of them unofficial requests
in the form of an email or fax.
- The meaning is clear. One fax to eBay from a lawman -
police investigator, NSA, FBI or CIA employee, National Park ranger - and
eBay sends back the user's full name, email address, home address, mailing
address, home telephone number, name of company where seller is employed
and user nickname. What's more, eBay will send the history of items he
has browsed, feedbacks received, bids he has made, prices he has paid,
and even messages sent in the site's various discussion groups.
- Attorney Nimrod Kozlovski, author of "The Computer
and the Legal Process" (in Hebrew), heard the lecture, and could not
believe his ears. "The consent given in the user contract should be
seen as `coerced consent,' in the absence of any opportunity to exercise
free choice, with no real alternative but to agree. This is most certainly
not conscious consent."
- Kozlovski is part of the Information Society Project
group at Yale Law School, in which he and his colleagues consider the effects
of the new media on the structure of society. American law does not authorize
searches of a person's home or body, he says, except in exceptional cases
such as when the court authorizes a search, or when the individual gives
his consent to a search.
- "In the case before us, the Web site signs the user
to a document that says it can do whatever it wants with his information.
The eBay contract signed by the user concedes his or her rights to protection
from the government; in essence, as soon as the contract is signed, eBay
can invite the government to do whatever it wants with the information,
- A brief visit to the company's Web site reveals that
the "user contract" that visitors are supposed to read before
agreeing to the conditions is 4,023 words long. One paragraph makes reference
and is diverted to another document that is some 3,750 words long. It then
takes another 2,390 words to reach the section about which Sullivan told
the legal authorities: The user's privacy is solely up to eBay.
- "The users are asked to read and agree to the site
policy before they can make use of it," eBay spokesman Kevin Pursglove
page of our site, and provide summaries of this policy, all so that users
will be familiar with our policy."
- We will work for you
- Nevertheless, eBay does not make do with simply sharing
its data with the legal authorities. Sullivan says the company employs
six investigators, all of whom have experience in police investigations.
Their job is "to track down suspicious people and suspicious behavior."
To that end, they scan for patterns that are atypical - different from
"normal patterns." For example, if a person sold baseball tickets
for two months and suddenly switches to selling a car, the eBay system
will "wave a red flag" and signal the seller as someone behaving
unusually. Who asks eBay to do it? No one. eBay volunteers.
- eBay goes even further. In his lecture, Sullivan spoke
about how he helped investigators locate a user who had been suspected
of selling stolen cars through the site. "We tried to buy the car
from the thief and in that way incriminate him. But the bad guy was smart.
He saw there wasn't a single feedback in the history of the person who
was making the purchase. He told us he didn't want to make a deal with
- Sullivan explained that the incident taught the company
a lesson, and that since then it has used pseudo buyers for which it constructs
comprehensive simulated histories, including simulated feedbacks, all for
the sake of incriminating those suspected of theft. "eBay is not willing
to tolerate acts of fraud carried out on its site," explains Pursglove.
"We believe that one of the ways to fight fraud is to cooperate with
the legal authorities at the various levels.
- Sullivan is even more forthcoming. Aware of how hard
the police work, he decided to help as much as possible. "Tell us
what you want to ask the bad guys. We'll send them a form, signed by us,
and ask them your questions. We will send their answers directly to your
e-mail." Essentially, by engaging in what seems like impersonation,
eBay is exploiting its relationship with customers to pass on information
to law enforcement authorities. Why? "We take various steps in order
to fight fraud and provide a safe buying environment for our numerous users,"
- "In order to prevent misuse of authority, the law
ensures that authorized impersonation will only be used with persons suspected
of carrying out illegal activity," says Pursglove. But eBay's practice
is to impersonate people on a regular basis, for law-enforcement objectives.
However, "there need not be a proven connection or well-founded suspicion
of a crime having been performed," claims Kozlovski.
- In July 2002, eBay bought PayPal, Inc. for $1.45 billion.
PayPal, which offers the most popular means of payment on eBay, provides
clearing services for the execution of online transactions. It enables
Internet users to open accounts on the company site, transferring money
from their credit card or bank account. When carrying out a transaction,
the seller receives a certificate with which money can be withdrawn from
the buyer's account in cash. The system obviates the need to reveal personal
- When Paypal was acquired, the company reported 16 million
users, as well as 3 million business accounts and 28,000 new visitors to
the site each day. About 60 percent of PayPal's income derives from commissions
received from users buying goods on eBay. About 70 percent of eBay buyers
- Two years earlier, eBay bought Half.com, a site that
specializes in sales of CDs and books. Sullivan explained that these acquisitions
help eBay to provide lawmen with a full picture. "Every book or CD
comes with a bar code. So we know who bought what. The acquisition of PayPal
helps us to locate people more precisely. In the old days, we had to trace
IP addresses (unique address given to computers linked to the Internet),
to locate the buyer, but now Paypal supplies us with the money trail.
- PayPal has about 20 million customers, which means that
we have 20 millions files on its users," Sullivan proudly relates.
"If you contact me, I will hook you up with the Paypal people. They
will help you get the information you're looking for," he tells his
listeners. "In order to give you details about credit card transactions,
I have to see a court order. I suggest that you get one, if that's what
you're looking for." It isn't certain that visitors to the site are
aware of the thick hints eBay gives the lawmen.
- "By buying PayPal, eBay is merging the information
about the goods trail with the money trail," explains Kozlovski. "Thus,
in spite of the protective mechanisms of the law against disclosure of
details on transactions, eBay is in a position to analyze the full set
of data and `advise' investigators when it might be `worthwhile' for them
to ask for a subpoena to disclose the details of a financial transaction.
Essentially, this bypasses the rules on non-disclosure of details of financial
transactions and the confidentiality of the banker-client relationship."
- Kozlovski mentions how special investigator Kenneth Starr
issued a court order that ordered the bookstore where Monica Lewinsky bought
her books to report to him the names of the books she bought. "Then,
there was a huge fuss. Now you don't need a special order - eBay does the
work for the investigators."
- Kozlovski feels that eBay's practice should be seen as
part of a worrisome trend in the West to curtail protection of individual
rights. In communist regimes, he says, the state would assign watchers
to follow every citizen, who would pass incriminating information on to
the authorities. Now the state doesn't have to do a thing. People come
to it of their own free will. This is also the case for eBay, which exploits
its stature in the market to have users accept contracts that strip them
of their privacy. Perhaps the regime is different, but the outcome is most
assuredly the same.
- A million new items a day
- eBay has no operations in Israel. But in the U.S., Europe
and even the Far East, the name eBay is uttered in the same breath with
names like Yahoo, Google and Amazon. The company created an electronic
business arena where sellers offer their wares and buyers purchase them.
eBay's trick is that both the sellers and the buyers are ordinary citizens.
On eBay, you can find people selling used chewing gum (and there are buyers),
torn soccer balls, 18th century forks, sunflower seeds and luxury cars
(in 2002 alone, some 3,000 cars were sold on the site, at a total of $30
- eBay is one of the few Internet companies that shows
huge profits quarter after quarter. The company completed the fourth quarter
of 2002 with revenues of $414 million and net profits of $87 million. The
company had overall income in 2002 of $1.2 billion, and net profits of
$250 million. It is traded on Nasdaq at a company value of $23.4 billion
- three times that of Amazon, twice that of Yahoo and eight times that
of the Israeli security behemoth, Checkpoint.
- At any given moment, eBay is conducting some 12 million
auctions, divided into about 18,000 different categories. About two million
new items are offered for sale every day, and 62 million registered users
scour the site to find them. These users have given eBay the monopoly on
online auctions in America. Companies such as Yahoo and Amazon tried to
get into the auction market, but were forced to give up. An estimated 150,000
people earn their livelihoods solely from buying and selling items by Internet.
The company maintains local sites in Britain, Germany, Italy, South Korea,
Ireland, Australia, Spain, Singapore and Sweden.
- eBay is a monster that churns out money 24 hours a day,
365 days a year - for itself and for its millions of users.
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