Has Web auction pioneer lost its allure?

Take fraud, for example. EBay maintains that less than one-hundredth of 1 percent of all listings are fraudulent, but scammers target high-priced items such as plasma TVs, and some victims have lost thousands of dollars. Although eBay’s fraud-detection software alerts internal investigators of suspicious listings, executives say it’s impossible to police a site receiving as many as 2,000 new listings per second.

By contrast, Chicago-based UBid Inc. verifies addresses and checks bank references for all 3,700 of its sellers. Service representatives place random orders to ensure prompt delivery, said CEO Bob Tomlinson.

“EBay’s taking a hands-off approach to fraud that makes some users uncomfortable,” Tomlinson said. “We’re taking a hands-on approach.”

EBay has also gained a reputation as unresponsive to complaints, a company that acts like an unregulated monopoly and only recently has extended an olive branch.

In mid-January, eBay warned sellers in a terse e-mail that the monthly fee to operate an “Basic eBay Store” would increase from $9.95 to $15.95, and standard listing fees would double, to 40 cents. Sellers peppered eBay executives with angry mail, forcing the company to reduce some fees.

EBay CEO Meg Whitman acknowledges that some of eBay’s user relationships have been difficult. But the company, which routinely flies in buyers and sellers for focus groups, has “redoubled” efforts to be innovative, she said.

“Sometimes it’s a little bit like being a politician,” Whitman said. “We have work to do in understanding our users’ sentiments.”

Bill Cobb, president of eBay North America, said the company would try to mollify disgruntled sellers with a new rule. If a winning bid comes from someone who has no intention of paying, the seller’s rating will not suffer in eBay’s “feedback” feature. Sellers often complain of too many fake bidders, particularly on cultural zeitgeist items. For example, in November, a grilled cheese sandwich purportedly depicting the Virgin Mary sold for $28,000, but only after the posting received 1.7 million hits and several astronomical fake bids were eliminated.

Such changes are a departure from the original mission of eBay founder Pierre Omidyar — to create a site that would act as an intermediary between buyers and sellers, devoid of oversight or bureaucracy.

“Pierre never in effect wanted customer support because the marketplace was supposed to work everything out,” Cobb said. “But when you scale to 150 million members, you have to account for the margins. Unfortunately you have a very small percentage of people who will try to disrupt the marketplace.”

But eBay’s contrition may be too late. Salt Lake City-based Overstock.com launched an auction site eight months ago that addresses complaints from eBay sellers partly by charging roughly one-third of eBay’s listing and transaction fees. It has 225,000 listings, from tractors to sneakers.

Holly MacDonald-Korth, senior vice president of Overstock auctions, takes calls directly from sellers. By contrast, eBay only stopped sending automated e-mail responses to sellers in February.

“Larger sellers give us a depth of inventory that we need, but the smaller sellers really give us the flavor,” MacDonald-Korth said.

Despite the complaints, eBay still maintains an enviable, passionate user base. More than 10,000 sellers converged in San Jose last week for eBay’s 10th anniversary, which ended Saturday with a concert by The B-52s.

Glenna Woolard of Santa Cruz, who sported a temporary eBay tattoo and a woven ponytail in eBay’s logo colors, has been a seller since 1999. A stay-at-home mother of four, she hawks items purchased from local estate liquidations, garage sales and industrial auctions, with monthly revenue of $3,000.

“EBay takes the 9-to-5 world away, so even someone like me can fit into the economy,” Woolard said. She hopes to spend next summer collecting items to sell on eBay while driving cross-country in her Fleetwood Bounder, a mobile home she purchased on eBay for $29,000.

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