By KATIE HAFNER
The New York Times
SAN FRANCISCO — A year ago Jacqui Rogers, a retiree in southern Oregon who dabbles in vintage costume jewelry, went on eBay and bought 10 butterfly brooches made by Weiss, a well-known maker of high-quality costume jewelry in the 1950s and 1960s.
Rogers thought she had snagged a great deal. But when the jewelry arrived from a seller in Rhode Island, her well-trained eye told her all the pieces were knockoffs.
Even though Rogers received a refund after she confronted the seller, eBay refused to remove hundreds of listings for identical "Weiss" pieces. It said it had no responsibility for the fakes because it was nothing more than a marketplace that links buyers and sellers.
That stance — the heart of eBay's business model — is being challenged by eBay users such as Rogers who are starting to notify other unsuspecting buyers of fakes on the site. And it is being tested by a jewelry seller with far greater resources than Rogers: Tiffany, which has sued eBay for facilitating the trade of counterfeit Tiffany items on the site.
If Tiffany wins, other lawsuits would follow and eBay's business model would be threatened because it would be nearly impossible for the company to police a site that has 180 million members and 60 million items for sale at any time.
Fakes are sold everywhere, but the anonymity and reach of the Internet make it perfect for selling knockoffs. And eBay, the biggest online marketplace, is the center of a new universe of counterfeit with virtually no policing.
eBay, based in San Jose, Calif., argues that it has no obligation to investigate counterfeiting claims unless the complaint comes from a "rights owner," a party holding a trademark or copyright. A buyer who thinks an item is a fake has almost no recourse.
"We never take possession of the goods sold through eBay, and we don't have any expertise," said Hani Durzy, an eBay spokesman. "We're not clothing experts. We're not car experts, and we're not jewelry experts. We're experts at building a marketplace and bringing buyers and sellers together."
Company officials said they do everything they can to stop fraud. The company said a minute share of the items being sold at any given time — 6,000 or so — are fraudulent. But that estimate reflects only cases that are determined by eBay to be confirmed cases of fraud, such as when an item is never delivered.
Fakes easily passed off
Experienced eBay users said the fraud goes well beyond eBay's official numbers and counterfeiters easily pass off fakes in hundreds of categories.
"eBay makes a lot of money from a lot of small unhappy transactions," said Ina Steiner, editor and publisher of AuctionBytes.com, an online newsletter. "If you've lost a few thousand dollars, you might go the extra mile to recover it. But if you've lost $50 or $20, you may never be able to prove your case, and in the meantime eBay has gotten the listing fee and the closing fee on that transaction."
The Tiffany lawsuit, in addition to accusing eBay of facilitating counterfeiting, also contends it "charges hundreds of thousands of dollars in fees" for counterfeit sales.
In 2004, Tiffany secretly purchased about 200 items from eBay in its investigation of how the company was dealing with the thousands of pieces of counterfeit Tiffany jewelry. The jeweler found that three of four pieces were fakes.
The case will go to trial by the end of this year, said James Swire, an attorney with Arnold & Porter, a law firm representing Tiffany. The legal question — whether eBay is a facilitator of fraud — is a critical issue that could affect eBay's future and Internet commerce generally, said Thomas Hemnes, a lawyer in Boston who specializes in intellectual property.
"If eBay lost, or even if they settled and word got out that they settled, it would mean they would have to begin policing things sold over eBay," Hemnes said. "The cost implied is tremendous."
eBay members such as Rogers have little desire to wait for court decisions; they said the flood of fakes is driving down the value of the authentic goods.
For the past few months, Rogers and three women she met on eBay who are also costume-jewelry buffs have banded together to track the swindlers they said are operating in their jewelry sector.
"People have faith that eBay will take care of them, but it doesn't," Rogers said. "eBay has done nothing."
An authentic Weiss brooch of good quality can command $150, said Carrie Pollack, who sells jewelry from her home in Sudbury, Mass., and is a member of Rogers' group. But she said the profusion of counterfeits has diluted the value of such a pin to as little as $30.
"It's a situation that's facing all of us in the jewelry world, and I suspect other decorative arts as well," said Joyce Jonas, an antique-jewelry specialist in New York. "It's totally out of control."
In the past few months Rogers and her team have reported to eBay more than 1,000 jewelry listings they believe to be fakes; only a few have been removed.
The women said that by watching the listings, they uncovered a ring of a six or so counterfeiters, most living in Rhode Island within a few miles of one another. They said the sellers supply one another with fake jewelry, conceal the fact that they are buying from one another to boost their seller status and regularly dole out positive feedback to fool potential buyers.
Pollack was unaware of the abundance of counterfeit pieces on eBay when she paid $360 for what she thought were genuine pieces of Weiss jewelry. She demanded a refund from the seller, who refused.
Pollack said it wasn't until she filed a formal complaint with PayPal, eBay's online payment system, that the seller offered a refund.
Since then, she has sent eBay officials what she said is evidence pointing out the presence of the counterfeits, including an independent appraisal by Gary Smith, a gemologist in Montoursville, Pa., who declared the five brooches Pollack sent him to be unmistakable fakes.
Rogers said, "The frustrating part is that eBay just stands back and lets these people make thousands and thousands of dollars" while taking a fee for each transaction. (The company's profits rose 36 percent in the last quarter from the year before, to $279.2 million.)
eBay's feedback system that allows buyers to post negative reviews of bad sellers is supposed to protect customers. Yet all the alleged counterfeiters had consistently positive ratings.
Steiner of AuctionBytes.com said the situation is not uncommon. Buyers and sellers are often reluctant to leave bad reviews, lest their own reputations suffer.
eBay does not allow members to contact other potential buyers to warn them of possible fraud. Otherwise, Durzy said, it would be too easy for someone to try to ruin the reputation of a legitimate rival.
Rogers and her team said their efforts may be working.
The number of bids on the fake vintage-jewelry pieces has dropped sharply since they went into action, they said.
Nonetheless, the seller who sold Pollack the knockoff is in business, and recently put up for sale a "beautiful Weiss brooch with lots of sparkle and shine." Starting bid: $9.99.