eBay Comes Clean On Price Jacking

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Earlier this week, we reported on a Samsung Galaxy Note 9 eBay deal that was literally too good to be true. Advertised as '20% off' on Allphones' eBay store, the deal displayed a pre-sale price of $1619.99 - $120.99 above the phone's recommended retail price (RRP).

eBay has since acknowledged that the "deal" was in breach of its promotion and booted the seller from the sale. It's a good start, but many questionable prices still remain on the platform. Here's what you can do about it.

eBay Has A Serious 'Price Jacking' Problem

Allphones's eBay store is currently selling the Samsung Galaxy Note 9 for 20% off. Sounds great, right? There's only one problem. the pre-sale price is listed as $1619.99 - a whopping $120.99 markup on the actual RRP.

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Unlike online retailers like Kogan, eBay is just a marketplace - it doesn't set the prices of the products it sells. Unfortunately, this has enabled third-party sellers to artificially inflate pricing in the leadup to a big sale.

The reason they do this is to make discounts look bigger than they actually are. It's an age-old practice, but the aforementioned Samsung Galaxy Note 9 deal was especially egregious as the list price actually exceeded the RRP.

When we brought this pricing anomaly to eBay's attention, it responded with the following stock response:

ebay.com.au is Australia’s largest online marketplace with 1.1 billion listings and 40,000 Australian retailers on the platform. As with any marketplace, sellers have the freedom to set their own pricing based on their individual business needs.

However, it seems that the story caused a bit of a stir online. eBay has since revised its position on the Allphones pricing. This morning, it sent the following statement to Lifehacker:

This seller has been removed from this promotion as they are in breach of our retail promotion terms and conditions.

All sellers who take part in our retail promotions are subject to contractual terms and conditions that prohibit this type of activity and we will continue to enforce these as part of our ongoing commitment to ensuring genuine value is offered by our sellers.

Under Australian Consumer Law, artificially inflating the 'Before' price during a sale is illegal and falls under false advertising. Unfortunately, there a quite a few loopholes that unscrupulous merchants are able to exploit.

For example, eBay policy stipulates that a product's pre-sale price cannot be altered seven days prior to the start of a sale. However, sellers are often given more than a week's notice about upcoming promotions. This means that participating retailers can still hike up prices without breaking any rules.

In addition, merchants are entitled to set and raise prices independently as they see fit - selling products above the 'street price' is perfectly legal. What isn't legal, is purposely misleading customers via false two-price comparison advertising.

This is a big no-no in Australian Consumer Law. Here are the rules as outlined on the ACCC website:

Businesses often make comparisons between product prices being charged and:

  • the company's previous pricing (including 'was/now' or 'strike through' pricing or by specifying a particular dollar amount or percentage saving)
  • the 'cost' or wholesale price
  • the competitor's price
  • the recommended retail price (RRP).

Businesses that use such statements must ensure that consumers are not misled about the savings that may be achieved.

Statements such as 'Was $150/Now $100' or '$150 Now $100' are likely to be misleading if products have not been sold at the specified 'before' or 'strike through' prices in a reasonable period immediately before the sale commences.

Such statements are also likely to be misleading if only a limited proportion of a product's sales were at the higher price in the period immediately before the sale commences. The volume or proportion of sales that may result in such statements being misleading will depend on the circumstances of each case.

The length of the period will depend on factors such as:

  • the type of product or market involved
  • the usual frequency of price changes.

If a business has a policy or practice of discounting goods when not on sale and uses two-price advertising in relation to sale periods, there is a significant risk that the use of two-price advertising will involve conduct that is misleading. The business would be representing to consumers that they will make a particular saving if they purchase the item during the sale period, when this is not necessarily the case.

Armed with the above knowledge, it's easy to see why eBay pulled the Allphones deal from its sales promotion. There's just no way the phone was being sold at $1619.99 for a "reasonable period" before the sale commenced.

While it's good to see eBay take a proactive approach, the problem remains rife on the platform. The front page results for the Samsung Galaxy Note 9 still show several prices north of the RRP. We can only assume that other products suffer from the same issue.

As we've said before, you should always, always compare the sales price to other online retailers before hitting the purchase button; especially if it seems too good to be true. Trust nothing.

On the plus side, eBay does offer a Best Price Guarantee that can provides instant restitution if you do accidentally get burned. Simply send eBay proof that the product was cheaper on another site at the time of purchase, and it will send you a voucher for the price difference plus an extra 5%.

Meanwhile, if you see a pre-sale price that looks blatantly misleading - on eBay or anywhere else - you can make a complaint to the ACCC.


Comments

    That's a good start. Now if they'd just do the same to the hundreds of other sellers who pull the same crap on their site.

      It is good start and it's good to see Lifehacker holding them to account.

    Have we actually gotten a commment from Allphones (I think that was the company) yet? Pretty sure they used to be an aussie retail store so they must have some physical presence here.

    It's like a hydra: eBay stops one scam and another two pop up...

    They got around the "item: $1, freight:$99" issue with the "lowest price+postage" search.
    Now there's any number of scoundrels selling an expensive item along with a cheapie, and treating them as options (normally used for colours, sizes, etc.)
    So, the price you can search on is, say, "$1.49 to $39", where the $1.49 is a cable and the $39 is the actual item, that other sellers, on the second or third page of the search, sell for $32.

      Good point, it happens all the time with RAM and Hard Drives. Search for 6TB and you get a page listing 1TB-10TB but it sorts based on the 1TB price :(

      Beware of sellers with multiple items in one listing. They include one item at a low prices, to ensure they get a "cheap" listing.

      I was looking for a hip flask, suitable for engraving. Several Ebay lists show them at $1 - but check the listing, and you find only the funnel at that price. [Can still find $10 bargains, once you get to the "honest" listings]

    They need to make it easier to report as well. I see some that are so outrageous that it seems they are money laundering! I have gotten so frustrated at times trying to report this kind of thing, not one of their options has a price gouger report option

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