By Paritosh Bansal
A jewelry company on eBay Inc. that allegedly bid on its own auctions
to illegally drive up prices by as much as 20 percent agreed to pay
$400,000 in restitution and penalties, the New York state attorney
general's office said on Saturday.
Ezra Dweck and employees of his company, EMH Group, placed more than
232,000 such bids worth some $5 million over about a one-year period,
Attorney General Andrew Cuomo's office said.
Dweck and EMH Group have also been banned from the online auction
industry for four years under the terms of the settlement agreed to by
the parties, Cuomo's office said.
A lawyer for Dweck and EMH said they had resolved the matter "only to
avoid an interminable, costly battle with the AG's office."
"EMH and Mr. Dweck did not intentionally encourage any fraudulent
bidding," the lawyer said. "A buyback program, which was vetted by two
attorneys, was created to give winning bidders an incentive to sell
back to EMH certain items."
EBay brought the case to the attention of the attorney general's
office and helped in the investigation over several months. The
world's largest online auction company has been trying to demonstrate
to buyers and sellers that it is making aggressive moves to halt fraud
on its sites.
The announcement of the settlement comes ahead of next week's annual
eBay Live conference, when thousands of the company's top sellers
gather for a three-day convention in Boston. Executives are expected
to highlight various ways the company is cracking down on illegitimate
sales practices.
An eBay spokeswoman said the timing of the release of the information
was decided by Cuomo's office.
"We do not tolerate criminal activity and proactively assist law
enforcement to prosecute any individual who may try to defraud our
users," spokeswoman Nichola Sharpe said.
Dweck, who sold jewelry on his eBay store called Jewelry by Ezra,
often offered shoppers "no reserve" auctions, which do not have a
minimum price, the attorney general's office said. But Dweck ensured
his employees knew of which auctions to bid at along with a
predetermined price, it said.
"This scam highlights the growing vulnerability of online auction
shoppers," Cuomo said. "Consumers should not have to surf with
sharks."
Copyright 2007 Reuters Limited.
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Paritosh Bansal, Reuters (reuters@telecom-digest.org)