RealTime IT News

eBay Faces Libel Lawsuit

eBay was named in a federal lawsuit filed this week claiming the online auctioneer allowed libelous statements to be posted on its popular site targeting a Washington, D.C.-based car reseller.

Attorneys for James Glynn, regional manager for FedTrust in Popano Beach, Fla., a reseller of seized and forfeited vehicles, said Glynn has suffered major losses as a result of damaging statements appearing on eBay, allegedly posted by a FedTrust competitor.

"Rather than trying to compete with my client fair and square, the defendants decided to use the Web to try to ruin their reputation," said lead attorney Franklin Blackstone III, of Arter & Hadden, L.L.P.

The suit, filed late Tuesday, said that eBay's online merchant feedback forum messages categorized FedTrust as "dishonest about the origin of (the) cars" and a "low life liar," and that eBay users should "stay away," from the resller during the first two weeks it listed cars for sale on the site.

As a result, lawyers said new customers stopped contacting FedTrust and many existing customers cancelled contracts when the messages were publicly posted.

FedTrust contends that the messages were sent by people who had never conducted business with the reseller. The suit charges the posts were sent by FedTrust rival, Miami's Specialty Car Sales Inc.

"It's pretty obvious what's going on here," Blackstone says. "One of the messages said 'I see why you have so many bad feedbacks,' before any of the negative messages were even posted in the feedback section."

Blackstone was told eBay's policy is to not change or remove feedback messages once they have been posted. Blackstone said he unsuccessfully tried to get eBay and the defendants to remove the messages.

"The Internet is a powerful source of information for consumers. Unfortunately, my client's competitors are trying to use it in the wrong way," Blackstone said.

"We're aware of the online commerce and free speech issues in this case, but we still plan to prove that you can't lie about someone publicly and get away with it," said Blackstone.

eBay officials could not be reached for comment.