Power Sellers Unite

elgato · Joined: 24 Feb 2005 Posts: 17240 Location: Texas

An eBay seller whose account was frozen has sued the company for fraud. According to the Courthouse News Service (CNS), Iconic Trading Co. ("Koolzap" on eBay) was making close to $200,000 a month selling auto parts on eBay, but the plaintiff claims eBay froze its account with no notice and suspended his online store.

The complaint alleges that "eBay falsely accuses thousands of sellers of fraud and freezes accounts on a whim, in an "illicit scheme" to force sellers to pay money they don't owe," according to CNS.

Two other lawsuits have been filed over PayPal's practice of holding funds, both of them having sought class action status.

http://www.auctionbytes.com/cab/abn/y12/m02/i02/s02

cohibastore.com · Joined: 14 Sep 2006 Posts: 4908

http://feedback.ebay.com/ebaymotors/ws/eBayISAPI.dll?ViewFeedback2&userid=koolzap&ftab=AllFeedback

so upon checking out koolzap one ebay, they went from zero to 8,000 feedback in about a year. tremendous growth but stayed a top rated seller.

not taking sides, but why freeze their account? seems to be the kind of seller they'd want.

wish we had the details.

notime2play · Joined: 08 Apr 2011 Posts: 21

[b]Always good to have the whole story...

LOS ANGELES (CN) - An online vendor claims eBay falsely accuses thousands of sellers of fraud and freezes accounts on a whim, in an "illicit scheme" to force sellers to pay money they don't owe.
Plaintiff Iconic Trading Co. does business on eBay as Koolzap. It claims in Superior Court that its online store was shut down after it paid eBay $27,000 to resolve a false claim that it had committed fraud.
Koolzap claims it has lost hundreds of thousands of dollars in profits since its account was suspended and now makes "virtually zero dollars."
It claims that eBay "has regularly engaged in a course of unfair business conduct and illicit scheme wrongly to obtain funds for their own benefit and use, to the detriment of thousands of eBay sellers".
Koolzap, which sells car and truck parts on eBay, accuses eBay of an "illicit scheme to wrongly obtain funds for their own benefit and use, to the detriment of thousands of eBay sellers."
Koolzap claims that eBay, "with little or no warning," restricts or freezes seller accounts and "destroys and fundamentally disrupts the seller's ongoing economic relationships with customers" by falsely "claiming there's 'suspicious activity' or that another account which owes eBay money or which is otherwise restricted/suspended is 'linked' with the seller's eBay account even though there is no fraud or other inappropriate activity involved and the seller is completely innocent of any wrongdoing and there is no such 'linkage' such that the seller is in any way responsible for what happened with the other 'linked' account".
The complaint adds: "On or about June 1, 2011, Alex Farahani, the president of plaintiff Iconic Trading Company, Inc., received an e-mail from defendants informing him that the Koolzap store account had been 'restricted' because the account was supposedly 'linked' to another account which had been suspended for non-payment of eBay fees back in June 2010 (before Koolzap was even formed and before plaintiff Iconic was even incorporated). Defendants further stated that the Koolzap account was frozen and restricted from posting any new listings so that all plaintiff and/or Koolzap could do was to sell off what was listed as of June 1st and that if that $27,000 was not immediately paid, the Koolzap account would be shut down within 14 days.
"These assertions by defendants were false, as plaintiff and/or Koolzap had no legal responsibility for the other account or the supposed debt purportedly owed to eBay and should never have been 'linked' to that account. Accordingly, the resulting restrictions placed upon the Koolzap store as well as defendants' threats of its pending closure were all highly improper."
Koolzap claims that, robbed of the ability to add new listings and with thousands of orders to fill, it had no choice but to pay eBay money it did not owe.
"With the suspension looming, despite the fact that plaintiff had no legal or moral responsibility to pay the nearly $27,000 purportedly owed to eBay by third parties, Mr. Farahani, on behalf of plaintiff was forced to tender payment of the demanded sum or suffer a shutdown that would have irreparably damaged the business' goodwill and reputation and potentially put plaintiff out of business. However, Mr. Farahani expressly and in writing made the payment of $27,000 to defendants conditional on the acknowledgment by defendants that Koolzap had no 'link' or other association with another account, that Koolzap was not engaged in any 'suspicious activity' and that the Koolzap account would be placed back in good standing and remain so without restrictions, limitations and/or suspensions imposed. Mr. Farahani further expressly stated in writing that if defendants/eBay accepted the $27,000 payment, they would be agreeing to the conditions imposed."
Koolzap says that after it paid the $27,000 and eBay accepted its terms, Koolzap continued to grow and received glowing customer reviews. But in late 2011 customers complained of problems paying for Koolzap goods through PayPal, an eBay subsidiary.
"Then, on December 27, 2011, without any warning, notice or discussion whatsoever, and in clear violation of the express written conditions agreed upon by the parties prior to the payment to eBay of nearly $27,000, eBay, without any reason or justification, 'froze' and suspended the Koolzap online store," the complaint states. "Customers began frantically calling and emailing through the Koolzap account, which is how Mr. Farahani learned of the shutdown. Numerous customers began expressing panic about the fact that they could not even see their online transactions with Koolzap, as their orders had 'disappeared' from the website. Customers, thinking it was a problem on eBay's platform began calling eBay's customer service. Some of these customers informed Mr. Farahani that defendants had stated that the Koolzap store was 'linked' to 'suspicious activity,' and further stated that plaintiff was engaged in 'fraudulent activity' and that plaintiff was a 'fraud,' which were the purported 'reasons' the Koolzap store was shutdown. These statements were completely false. Plaintiff and Mr. Farahani were/are completely innocent of any wrongdoing. Further, there was no 'suspicious activity' linked to the Koolzap account.
"After defendants made these untrue and defamatory statements to customers, customers became extremely agitated and irate. They contacted Mr. Farahani, telling him that eBay said the company was a 'fraud' and customers accused him of being a 'thief.'"
Koolzap says Farahani contacted eBay and asked why the store was shut down after he had paid $27,000 to keep it open, and eBay responded: "'We won't tell you. Go ahead and subpoena us if you want to know.'
"In or about the time the Koolzap store was 'frozen,' approximately $45,000 in Koolzap PayPal account had also been 'frozen' and to this date cannot be withdrawn or otherwise accessed."
Before eBay disrupted its business, Koolzap says, it was making close to $200,000 a month.
"From December 27, 2011 to date, while defendants have suspended the Koolzap store and have asserted to Koolzap's customers that Koolzap is a 'fraud' and linked to 'suspicious activity' the Koolzap store is still listed by defendants on the eBay website as a 'top rated seller' and a platinum rated seller with a green star," the complaint states.
Koolzap seeks an injunction and damages for interference with contract and unfair trade practices.
It is represented by Nima Farahani with Campbell & Farahani, of Sherman Oaks.
eBay did not respond to a request for comment.

cohibastore.com · Joined: 14 Sep 2006 Posts: 4908

Thank you for the story

If ebay can provide some evidence linking the accounts he's screwed.

The comments about his account status passed to buyers by ebay CS could easily be considered libelous and damaging, and more costly to his reputation, than the actual monetary damages.

Rumors and as yet un-prosecuted/un-proven accusations should not be passed on to other members in any instance.

CS

gooddealsbooks · Joined: 08 Mar 2007 Posts: 1048

I hope the bay loses millions for this and paypal too

GreyJaguar · Joined: 12 Jul 2008 Posts: 316

It's always nice to hear a company actually take on eBay in a lawsuit. This type of situation has happened to many selling on eBay. The problem is, in the end, usually, a settlement is reached that includes money and no one is allowed to discuss the settlement, and eBay continues doing this over and over again to other sellers.

Can you imagine this happening to a retail tenant in a mall, for example? It doesn't because there are laws. Those laws do not apply to online giants like eBay or Amazon. They can shut an online retailer down just like that, and there goes their primary income.

Stockmiser · Joined: 03 Jun 2006 Posts: 1169

Koolzap appears to be doing just fine over on Amazon...so they are not exactly out of business.

My skeptical side has one big problem with this story (and we have only heard their side of it) - the $27,000 paid to ebay for a debit that was allegedly not theirs. Who would do that? What was in this "agreement"?

My gut reaction was that Iconic Trading may have had another acct under a different "corp name" and ran up a bill, and for whatever reason (like bad DSR's?) abandoned that acct, created a new corp, and started back up. After all, how many businesses can instantaneously manage $200K/month with no former ebay experience? Again, my gut says that this isn't the only acct they have had, and they may be playing corporate musical chairs...

thegolfingdolphin · Joined: 13 Jan 2009 Posts: 695

I agree with stockmiser. The dollar amount is to out of bounds to just say OK I will pay it. A lawyer would be a much less expensive way to handle this incident.

What they may not be keeping in mind is that if they have an employee that is handling much of the eBay transactions for them, and that same employee handled this problem account for another company, and has his e-mail or IP address linked to the good account, then eBay would have grounds for such action. eBay can not know the inside working of any company and something linked the unpaid seller account to the good standing account.

e-mail, IP address, same product, C/P descriptions, withdrawals from PP to the same bank deposit for both sellers, Ship from addresses the same for both accounts. There are a number of ways to connect the two accounts.

cohibastore.com · Joined: 14 Sep 2006 Posts: 4908

based on their amazon feedback page, they won't be there long. few sellers fall under 90% feedback and stay

http://www.amazon.com/gp/aag/details/ref=aag_m_fb?ie=UTF8&isAmazonFulfilled=&marketplaceID=ATVPDKIKX0DER&isCBA=&asin=&seller=A2ZZG55ZG2UNK8#

GreyJaguar · Joined: 12 Jul 2008 Posts: 316

I don't know, Stockmiser, it looks like before January, 2012, Koolzap was selling an average of over 1000 products per month. On Amazon, it shows only 71 feedbacks (and probably they sold 2 to 3 times the 71 number since many Amazon buyers don't leave feedback). But it's a huge difference in number of products sold.

However, I do agree there is too much missing information about this. There had to be a reason why this company paid eBay $27,000. And did they get some sort of 'agreement' from eBay in writing?