WEDNESDAY 21 FEBRUARY 2007

MR GARRETH GRIFFITH, MR ALASDAIR MCGOWAN, MR MICHAEL BARRETT AND MR JEREMY BEALE

  Q640  Chairman: What has eBay done for the customers who have been scammed that way?

  Mr Griffith: One of the things we recommend in terms in payment is, when they pay with something like Western Union, it is incredibly difficult for us because, first, it has happened off our website—it has actually had nothing to do with us: it is just an email that was made to look like ours. Secondly, they have paid with Western Union. What we do then is try to work with the police. We ask them to work with the police and then work with us, to see if we can track down fraudsters through that mechanism. What we push quite strongly on the site is the use of PayPal as a payment mechanism. The reason for that is that there is a buyer protection programme, which covers you up to £500. The vast majority of our transactions are under £500. If you used PayPal to pay, therefore—there are certain criteria, like everything—you are then covered by the PayPal protection programme and you get your money back, which is the reason we push PayPal as a payment.

  Q641  Chairman: Is it not possible for you to go after, to attempt to prosecute, the people who have imitated your website?

  Mr Griffith: The example I gave you about being on the ground in Romania with the United States' secret service and the Romanian police, walking into Internet cafés and arresting people—we certainly do that. As Michael referenced earlier, we generally go after them for fraud. I forget how it is worded in the new Fraud Act, but basically identity theft with the idea of committing fraud. We find that is a better way to catch them than going after IP violation.

  Q642  Chairman: You expressed concern about the applicability of the Distance Selling Directive to your type of business and the complexity of selling items into other European countries. Should we not be looking to protect consumers and ensure that their online experience is the same as they are used to offline?

  Mr McGowan: We absolutely support strong consumer protection legislation. We are a marketplace of buyers and sellers and, probably more than any other Internet company, our business depends on trust. If there is strong consumer protection in place then trust is enhanced. We would therefore support that. What we would welcome, however, is greater harmonisation in consumer protection legislation. The problem we have encountered with the Distance Selling Directive is that it was implemented through a minimum harmonisation process. So you see that different Member States have implemented it differently. As a result, for example, there is a right of withdrawal in the UK for consumers which is seven working days; however, in Germany it is 14. There are also differing rules determining who bears the cost of return, depending upon the Member States. So we absolutely want to see strong consumer protection but, equally, from the sellers' standpoint we want to make sure that they are not faced with a patchwork of different legislation which then becomes hard for them to enforce. I think that it is worth making the point here that we have a very large number of small businesses who are trading on the site. We calculate it as something like 68,000 people who are dependent upon eBay sales for some or all of their income. You have a very large number of SMEs who are trading on the site, and many of them are sole traders and therefore do not have the resources to keep track of all the different types of consumer protection legislation which are there. In answer to your question, however, we very much do support strong consumer protection legislation.

  Chairman: Thank you very much. We have asked you a lot of questions and you have answered them patiently and in detail. We very much appreciate your coming to talk to us. If anything occurs to you subsequently, please write to us.