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Big Brother is watching you - and documenting (and EBAY is helping them BIG time)
Haaretz ^ | Yuval Dror

Posted on 02/26/2003 5:40:26 AM PST by HalfFull

"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 the user conditions and the site's privacy policy. Whenever an item is 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 grades.

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, he says.

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 to the site's "privacy policy." The user has to click on a link 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 told Haaretz. "We provide a link to our privacy policy on every single 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 us."

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," says Pursglove.

"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 financial data.

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 use PayPal.

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 million.)

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.


TOPICS: Front Page News; News/Current Events
KEYWORDS: bigbrother; constitution; ebay; rights
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To: CobaltBlue
And insurance companies checking to see if disabled people are truly disabled, etc.
21 posted on 02/26/2003 7:22:06 AM PST by I still care
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To: MarkL
I certainly never said that you have the right to use Free Republic as a forum.

However, Free Republic's User Agreement promises to maintain our confidentiality. It states as follows:

>>Confidentiality: Free Republic agrees to use its best efforts to maintain security over personal information submitted by user in confidence on this form and agrees not to disclose e-mail address, password or any personal information about user to any third party.

User Account Confidentiality: User agrees to protect user's account and password and not to disclose account information to any third party.<<

Having dealt with this issue in several legal matters, I know that a court can issue a subpoena to obtain this information, and that the user can challenge the subpoena in order to retain anonymity. Whether or not the court will enforce the subpoena depends on the reason for it.

22 posted on 02/26/2003 7:28:45 AM PST by CobaltBlue
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To: HalfFull
I will review my membership in eBay, but prior consent is better than a court order, in my opinion. I personally don't think eBay could survive without a bit of fear. It's the most free and open marketplace in the history of the world. Real Wild West stuff. But I don't want my personal possessions being sold without my permission. Nor do I want people who have no intention of delivering being able to manipulate the court system.

Prior consent. think about it and make your own decision. There are other ways to buy and sell.

23 posted on 02/26/2003 7:29:09 AM PST by js1138
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To: HalfFull
That's circular reasoning.

Illegal searches are illegal.

Legal searches are legal.

Whether a search is legal is actually rather complicated. But if you voluntarily consent to a search, it's always legal.
24 posted on 02/26/2003 7:33:17 AM PST by CobaltBlue
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To: HalfFull
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.

Why would that be suspicious? Baseball ticket dealers can't own cars?

25 posted on 02/26/2003 7:42:23 AM PST by Sloth (I feel like I'm taking crazy pills!)
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To: js1138; HalfFull
I'm all for the fight on terror, but this invasion on my constitutional rights is depressing.....HalfFull

When you enter into a voluntary agreement with eBay you sign away some privcy right. Take it or leave it. No one will stop breathing becuse they can't use eBay.....js1138.

Exactly, js1138.

What you have to remember, HalfFull, is that this lack of privacy is part of the eBay "war game".......

You see an item that you really want but someone else has already bid on it. How should you deal with this "enemy"? You do a "bidder search" on him to gather intelligence.

Is he a newbie or a veteran? Does he usually bid on this category of item? How much has he been willing to pay in the past for a similar item? Does he put in strong bids or is he a low bidding bottom-feeder? Does he like to come in at the last 10 seconds with a strong "sniping" bid? If so, keep him in mind for future auctions where you will not see him until the last second.

After that search, you end up knowing more about your "enemy's" eBay habits than his wife does.

It's all part of the game and it is part of what makes eBay fun. People who object to how the game is played shouldn't sign up to play it.

P.S. The latest version of the eBay TV commercial is hillarious with the George Costanza look-alike doing a Broadway musical dance number to the tune of "I Did It My Way" with rapidly changing scenes. One of the last lines: ....."the feedback shows -- you won't get hosed"....as three firemen in full gear turn on their firehoses. :-)

26 posted on 02/26/2003 7:50:11 AM PST by Polybius
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To: ez
My husband buys a lot of stuff on eBay, and sells it, too. Well, not a lot, once a week or so. He collects wargames. I don't know what they cost but can't be much.

Wonder what the income tax implications are? Seems like selling games = income.

Is there a de minimus limit that is too minor to count? I've occasionally sold used text books. Sold them for less than I paid for them, after I used them. Think I've made about $30. Is that income?

My guess is yes.

27 posted on 02/26/2003 7:55:37 AM PST by CobaltBlue
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To: HalfFull
Oh yes EBAY..the worlds largest flea/junk market...
28 posted on 02/26/2003 8:02:10 AM PST by MD_Willington_1976
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To: Polybius
I did buy some stuff from a professional dealer that sold used computer crap "as is" -- perfectly legal, but 90 percent of it "wasn't". After being hosed three times I left a "neutral" feedback saying that three out of three products were unusable.

Some months later I got an email from an organization of irate eBayers informing me they were filing a formal protest with eBay about this junk dealer. They're probably still in business, but their name and their 3000 feedbacks are gone.

29 posted on 02/26/2003 8:02:35 AM PST by js1138
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To: CobaltBlue
My husband buys a lot of stuff on eBay, and sells it, too. Well, not a lot, once a week or so. He collects wargames. I don't know what they cost but can't be much.

As I noted in my Post 26, when you play the eBay game, you end up knowing more about a competing bidder than his wife does. ;-)

Wonder what the income tax implications are? Seems like selling games = income. Is there a de minimus limit that is too minor to count? I've occasionally sold used text books. Sold them for less than I paid for them, after I used them. Think I've made about $30. Is that income? My guess is yes.

The IRS won't go after small potatoes but, if you start to earn more than minor money, you really need to keep records to protect yourself should the IRS want it's cut of the pie.

Income = Profit = Selling Price - Cost Basis.

If you bought a book for $50 and sold it for $30, you "lost" $20 and made no profit. If you bought it for $30 and sold it for $50, you made a $20 profit that is considered income.

However, income and losses can be added up together so those two separate books sales, taken together, end up as a break even combination where there is no income because there is no profit.

If your husband is earning enough money (ask your CPA what "enough" is), he should be keeping records of his cost basis, losses and profits.

30 posted on 02/26/2003 8:15:48 AM PST by Polybius
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Comment #31 Removed by Moderator

To: Polybius
Thanks. I guess you're a CPA.

I had a couple of classes in income tax in law school, and do my own taxes, but don't really know all the ins and outs.

When you think of all the money that sloshes through eBay, not just Uncle Sam but all the states probably would love to have their cut, although collecting it wouldn't be cost-effective for most people, probably.

Like not going after people who have garage sales every couple of years or cut their neighbor's hair once in a while.

I handle a lot of divorces, and have learned that income tax fraud is extremely common. The spouses always rat each other out.
32 posted on 02/26/2003 8:32:33 AM PST by CobaltBlue
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To: CobaltBlue
Thanks. I guess you're a CPA.

No. I'm an M.D. I just know a lot about taxes from paying them. ;-)

33 posted on 02/26/2003 8:55:21 AM PST by Polybius
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To: CobaltBlue
Another thing to keep in mind is that while political speech, e.g., your opinions on Free Republic, are protected by the First Amendment, financial transactions are not.

I certainly never said that you have the right to use Free Republic as a forum.

My apologies: I missed the intent. I mistakenly thought that you meant that the using a forum like FR was a right.

Mark

34 posted on 02/26/2003 9:02:50 AM PST by MarkL (42)
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To: MarkL
No problem.

Actually I could have some fun coming up with an argument that one had a right to post on Free Republic because it is a public forum, just as you have the right to picket on a public sidewalk. That argument will probably get made someday. But I think it would get shot down.
35 posted on 02/26/2003 9:06:41 AM PST by CobaltBlue
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To: HalfFull
But, would you feel the same if Law enforcement stormed your house without a court order simply because they suspected (without proof) that fraud was occurring? I don't see the differnce(sp).

I do. E-bay is not your house. E-bay is like being on a public street. Different rules apply. Every time you venture out in public, you expose yourself to any number of requests for personal information that are then stored and can be easily obtained by law enforcement. Going out onto the internet is like going out in public - except you probably aren't showing your face so it's far easier to misrepresent yourself.

Anyone who thinks that there is any true privacy on the internet is an idiot. You can limit your vulnerability one of two ways - by limiting the information you provide and whom you provide it to or by not participating at all. It's your choice.

I see nothing wrong with what E-bay is doing. It's in their best interests to run a clean business and assisting law enforcement to root out the scammers is protecting their own interests as well as their legitimate customers.

36 posted on 02/26/2003 9:26:26 AM PST by Tall_Texan (Where liberals lead, misery follows.)
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To: Sloth

You are assuming that people are generally good and that everyone is acting in good faith. eBay cannot assume that. They are operating a platform that by its nature is an attractive venue for scam artists. To the extent that eBay becomes known as a nest of thieves, eBay becomes less useful to everyone, and less profitable for eBay itself. They therefore rightly err on the side of watching like a hawk for crooks.

eBay has a vendor rating system. A vendor who ships promptly, whose goods are as described, etc., gets favorable feedback from buyers and acquires positive rating points. It is an obvious ploy, in the presence of that system, to acquire a reputation as an honest vendor while dealing in nickel-and-dime items, and then offer some big-ticket item with the intent of disappearing with the money. That is why such behavior gets flagged as suspicious. In the eBay environment, it is suspicious. It may indicate nothing more than you suggest -- a baseball card dealer with a car to sell. But they've learned the hard way that it might also mean something else.

This is essentially the same technology that has been used for years to spot credit card fraud... a machine builds a pattern of your behavior over time, and if you wander very far outside that pattern, it raises a red flag. That's when you get called to the phone and have to talk to Mr. Credit Card Authorizer. It may be that you really are on vacation in the Bahamas. But if you are not one who ordinarily travels a lot, and a $600 charge is being made on your card in the Bahamas, it's probably better that somebody make sure it's you. Call it Big Brother if you like, but that's the world we live in.

37 posted on 02/26/2003 9:28:45 AM PST by Nick Danger (Freeps Ahoy! Caribbean cruise May 31... from $610 http://www.freeper.org)
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To: CobaltBlue
My guess is yes.

I don't think you have to claim income from a hobby unless it's over $600.

I know a guy who resells beanie babies on Ebay. I forwarded him the article, but I have no idea how much he makes.

38 posted on 02/26/2003 10:31:43 AM PST by ez (Advise and Consent=Debate and VOTE!!)
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To: Nick Danger
It is an obvious ploy, in the presence of that system, to acquire a reputation as an honest vendor while dealing in nickel-and-dime items, and then offer some big-ticket item with the intent of disappearing with the money.

Aaaahhh, that makes a lot of sense. Thanks.

39 posted on 02/26/2003 11:04:52 AM PST by Sloth (I feel like I'm taking crazy pills!)
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To: Rebelbase
What is FR policy regarding dissemination of registered poster's IP address/email address should Gov. Agencies "request" (no court order) them from you?

JimRob cooperates with the Secret Service when some dips**t threatens the President. This happened during impeachment.

40 posted on 02/26/2003 11:08:27 AM PST by Poohbah (Beware the fury of a patient man -- John Dryden)
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