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Who Should Help Prevent Fraud?

The outcome of the eBay lawsuits in France and United States reflect different views about gate-keeper liability.

Gate-keeper liability is roughly the legal theory that liability should attach not only the person carrying out the fraud but those who innocently enable and negligently supervise the fraudsters.

eBay for years has allowed fencing to take place. Its very existence at a national level allows power users to escape all local pawn shop, second hand shop and consignment store laws.

It is an absurdity that eBay continues to enable the selling of counterfeit, stolen, or otherwise illegal knock-offs.

Like all lawsuits, the Court decision is never the end of the matter. It simple marks the beginning of the negotiations.

Joe Nocera, writing at his blog on the New York Times, has the correct view of the US case.

Even though it has won the first round of the Tiffany case, eBay would generate enormous goodwill if it instituted a policy of proactively fighting fraud on the site, instead of forcing companies to point out individual items, day after day, which it then takes down. EBay made a few moves along these lines, but it has a long way to go. The biggest issue eBay has is regaining customer trust. Fighting counterfeits -- side by side with Tiffany -- instead of fighting in court would be a good way to start.

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Full post as published by Misleading Advertising Law on July 17, 2008 (boomark / email).