EBay feedback brings lawsuit

Sunday, August 20, 2006 It's another example of how user feedback can force ordinary people into time-consuming court proceedings. By ELISE ACKERMAN SAN JOSE MERCURY NEWS SAN JOSE, Calif. — When does a $2.33 transaction turn into a Superior Court case? When it happens on eBay. A dispute over a piece of smoky quartz normally would have been of little consequence to Kiel Sturm, who was selling the stone on eBay. But when a Los Angeles buyer made defamatory remarks that threatened to forever mar Sturm's online reputation, Sturm was forced to begin a yearlong legal battle to get the comments removed from eBay. The squabble is another example of how user feedback on such sites can force ordinary people into time-consuming court proceedings to defend their reputations against remarks that can damage their business, because the comments remain online. Even after Sturm obtained a court ruling stating that he had been defamed, eBay's lawyers continued to resist removing the remarks because the notice from small claims court was in the wrong format, forcing another round of court filings. EBay has built itself into the world's largest online marketplace in large part because of trust created by feedback from users. Hoping to tap into the wisdom of crowds, Internet companies from Yahoo to YouTube are incorporating user reviews into their business models. But a problem arises if a review is false. How does an Internet company separate unpleasant truths from defamatory lies? Most companies choose to let the courts decide. The defamation Sturm, a 23-year-old computer programmer from Santa Clara, Calif., said he immediately offered to return Eusebio Guerrero's money after Guerrero told him he did not think the stone he bought was real. Sturm said Guerrero, who did not respond to an e-mail from the San Jose Mercury News, refused. Sturm was in the middle of about 20 auctions when Guerrero left the first nasty note about him on an eBay feedback forum, on July 20, 2005. "Not as advertised," the first note said. "Absolutely misrepresented." The note was followed by a string of accusations, most of them written in capital letters. "THIS SELLER CANNOT BE TRUSTED. HE SELLS JUNK. BUYERS MUST BEWARE OF THIS SELLER." Sturm felt the effect of Guerrero's remarks immediately, as buyers fled his auctions. A Colombian emerald that had been appraised for thousands of dollars ended up selling for $8. Sturm said that he had enjoyed his hobby of buying and selling gems on eBay because many precious stones are undervalued. However, maintaining his reputation was crucial, he said, because buyers are afraid of counterfeits. "People definitely check you out before they make a bid," Sturm said. "If you have anything that looks suspicious, they are not going to bid or they are not going to bid very much." Sellers can also check out buyers. But Sturm said he was running so many auctions he didn't check out feedback left about Guerrero, which might have raised a red flag, before he sold him the quartz and two other stones. EBay's stance Afterward, it was too late. EBay will not remove feedback unless it receives a court order finding that the disputed feedback is "slanderous, libelous, defamatory or otherwise illegal." Eric Goldman, director of the High Tech Law Institute at Santa Clara University, said such a policy is necessary to maintain the integrity of eBay's feedback system. But in Sturm's case, eBay's goal of maintaining a reliable record through feedback of how transactions have gone had an unintended consequence: To clear his reputation, Sturm said he was forced into a string of lawsuits. When Sturm filed against Guerrero in small claims court in Santa Clara County, Guerrero offered to settle, and both wrote letters to eBay requesting that the feedback be removed. An eBay employee named "Kelsee" wrote back: "Upon reviewing all correspondence regarding this request for feedback removal, a final decision has been rendered. The comment will not be removed. These removal policies have been made by our Legal Department and approved by eBay's management team." Sturm protested. "I was hoping that if we submitted a request in writing, which we did, both of us, that eBay would see that as a valid reason to take down the comment," he said in an interview. Next, "Willie" responded. "Thank you for your e-mail regarding the status of your account," the note said. "Your lawsuit, if it was against the other party, has no bearing on eBay's rules and policy. EBay is not involved in member disputes. We have thoroughly researched this case and are unable to remove the feedback without notice from a court of law. Since a final decision has been made, we will not revisit this case." Cases Sturm told Guerrero he would file against him in small claims court in Los Angeles, where Guerrero lived, to get a written order. Sturm said he wanted to make the legal process easy for Guerrero. On Jan. 31, small claims commissioner Graciela Freixes made a "factual determination that the statements posted by the defendant on plaintiff's eBay site were defamatory." Sturm sent Freixes' order to eBay. This time Francine F. Lyle, an eBay attorney, responded. "There are too many ambiguities in this order, so I won't be able to use this to remove the comments," Lyle wrote. "What I was looking for was an order that you would have prepared and presented to the court (a proposed order), with the language I gave you, that the court would then sign and enter." Sturm then filed a third suit directly against eBay in Santa Clara County Superior Court. Sturm argued that eBay was guilty of libel for publishing the defamatory remarks. Generally, U.S. courts have found that Internet companies cannot be held liable for comments, ratings or reviews posted on their sites by users.