Auction Blocks: Criminals Unload Counterfeit and Stolen Goods on eBay

Criminals use online auctions as a place to unload stolen, diverted and counterfeit products. EBay does little to stop them, creating more work for CSOs. Here's what smart companies do.

"Rather than having a large staff spending time looking at this, it makes more sense from an economy-of-scale standpoint to outsource," Saenz says. "Then we're looking at it with a rifle shot as opposed to a shotgun approach."

More Left to Do

Companies would like eBay to do more to help, of course. EBay regularly shuts down sellers who are reported for either multiple or egregious instances of copyright infringement. (Although the company is often reported to have a "three strikes you're out" policy for ousting sellers that offer counterfeit goods, Durzy says the policy is not that formal.) But reviews are mixed on how well the company keeps those users from returning to the site under a new seller name.

Durzy declined to comment on eBay's processes for keeping "previously suspended users" from opening new accounts, citing concerns that it would help those persons circumvent the policies. It's a valid concern: One website sells an e-book called eBay Again, which promises to help the reader "get past the harsh and unforgiving eBay suspension."

Some companies would like to see stricter controls around the volume of goods that a single seller can offersimilar to the $500 limit on gift cards. Others want eBay to shut down auctions of products they believe have been stolen, without the need to involve law enforcement. The most optimistic ones even want eBay to employ a large staff of people who are trained to identify counterfeit merchandise, and who would spend their daysas the brand owners do nowtaking down problematic auctions, or even blocking them before they are posted in the first place. There are also spot solutions that might help certain brand owners patrol the site, such as requiring sellers to list a serial number on Rolex watches.

Durzy says that eBay already employs a team of people who monitor the site for banned items. He also says a fraud investigation team does nothing but work with law enforcement on suspicious activities, and that that's the way it should be. "The logical and very commonsense threshold is that if you feel something is stolen from you and you see it on eBay, go to law enforcement, and please tell them to contact us," he says. Otherwise, he asks, how could eBay know that the product had really been stolen?

Besides, further stepping up the efforts would not be cheap, and right now, the company has little incentive to do so. The people who eBay really wants to please are its customers, and many buyers simply don't care if they end up with stolen or counterfeit goods. "It's just like people buy the knockoff on the sidewalk, and they know they aren't getting a real Kate Spade handbag, but they don't appreciate the harm that that does," says Susan Grant, director of the National Consumers League Internet Fraud Watch.