Ebay and Big Brother is watching you - and documenting

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: Will Doherty <wild () eff org>
Date: Thu, 20 Feb 2003 11:20:42 -0800

This article was apparently in the Israeli paper Ha'aretz today.
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Big Brother is watching you - and documenting

eBay, ever anxious to up profits, bends over backward to provide data to
law enforcement officials

By Yuval Dror

"I don't know another Web site that has a privacy policy as flexible as
eBay's," says Joseph Sullivan. A little bit later, Sullivan explains what
he means by the term "flexible." Sullivan is director of the "law
enforcement and compliance" department at eBay.com, the largest retailer in
the world.

Sullivan was speaking to senior representatives of numerous law-enforcement
agencies in the United States on the occasion of "Cyber Crime 2003," a
conference that was held last week in Connecticut. His lecture was closed
to reporters, and for good reason. Haaretz has obtained a recording of the
lecture, in which Sullivan tells the audience that eBay is willing to hand
over everything it knows about visitors to its Web site that might be of
interest to an investigator. All they have to do is ask. "There's no need
for a court order," Sullivan said, and related how the company has half a
dozen investigators under contract, who scrutinize "suspicious users" and
"suspicious behavior." The spirit of cooperation is a function of the
patriotism that has surged in the wake of September 11.

eBay is the world's largest auction site. Some 62 million registered users
buy and sell a variety of merchandise through the site, which charges
commissions for every item sold. Sullivan claims that 150,000 Internet
users earn their livelihood from the site, some having left their old jobs
to become buyers or sellers on eBay.

The sales method on the site is simple: An individual registers as a user,
types in his particulars, and affirms that he accepts the user conditions
and the site's privacy policy. Whenever an item is sold, the buyer fills
out an evaluation form, telling other users about the treatment he
received, whether the merchandise was sent on time, etc. Other eBay users
can then avoid buying from sellers who have received poor grades.

Sullivan says eBay has recorded and documented every iota of data that has
come through the Web site since it first went online in 1995. Every time
someone makes a bid, sells an item, writes about someone else, even when
the company cancels a sale for whatever reason - it documents all of the
pertinent information.

One would think that preserving privacy of the users, whose moves are so
meticulously recorded, would be keenly observed at eBay, whose good name in
the Internet community is one of its prime assets. But in the U.S. of the
post 9/11 and pre-Gulf War II era, helping the "security forces" is
considered a supreme act of patriotism.

Who needs a subpoena?

"We don't make you show a subpoena, except in exceptional cases," Sullivan
told his listeners. "When someone uses our site and clicks on the `I Agree'
button, it is as if he agrees to let us submit all of his data to the legal
authorities. Which means that if you are a law-enforcement officer, all you
have to do is send us a fax with a request for information, and ask about
the person behind the seller's identity number, and we will provide you
with his name, address, sales history and other details - all without
having to produce a court order. We want law enforcement people to spend
time on our site," he adds. He says he receives about 200 such requests a
month, most of them unofficial requests in the form of an email or fax.

The meaning is clear. One fax to eBay from a lawman - police investigator,
NSA, FBI or CIA employee, National Park ranger - and eBay sends back the
user's full name, email address, home address, mailing address, home
telephone number, name of company where seller is employed and user
nickname. What's more, eBay will send the history of items he has browsed,
feedbacks received, bids he has made, prices he has paid, and even messages
sent in the site's various discussion groups.

Attorney Nimrod Kozlovski, author of "The Computer and the Legal Process"
(in Hebrew), heard the lecture, and could not believe his ears. "The
consent given in the user contract should be seen as `coerced consent,' in
the absence of any opportunity to exercise free choice, with no real
alternative but to agree. This is most certainly not conscious consent."

Kozlovski is part of the Information Society Project group at Yale Law
School, in which he and his colleagues consider the effects of the new
media on the structure of society. American law does not authorize searches
of a person's home or body, he says, except in exceptional cases such as
when the court authorizes a search, or when the individual gives his
consent to a search.

"In the case before us, the Web site signs the user to a document that says
it can do whatever it wants with his information. The eBay contract signed
by the user concedes his or her rights to protection from the government;
in essence, as soon as the contract is signed, eBay can invite the
government to do whatever it wants with the information, he says.

A brief visit to the company's Web site reveals that the "user contract"
that visitors are supposed to read before agreeing to the conditions is
4,023 words long. One paragraph makes reference to the site's "privacy
policy." The user has to click on a link and is diverted to another
document that is some 3,750 words long. It then takes another 2,390 words
to reach the section about which Sullivan told the legal authorities: The
user's privacy is solely up to eBay.

"The users are asked to read and agree to the site policy before they can
make use of it," eBay spokesman Kevin Pursglove told Haaretz. "We provide a
link to our privacy policy on every single page of our site, and provide
summaries of this policy, all so that users will be familiar with our
policy."

We will work for you

Nevertheless, eBay does not make do with simply sharing its data with the
legal authorities. Sullivan says the company employs six investigators, all
of whom have experience in police investigations. Their job is "to track
down suspicious people and suspicious behavior." To that end, they scan for
patterns that are atypical - different from "normal patterns." For example,
if a person sold baseball tickets for two months and suddenly switches to
selling a car, the eBay system will "wave a red flag" and signal the seller
as someone behaving unusually. Who asks eBay to do it? No one. eBay
volunteers.

eBay goes even further. In his lecture, Sullivan spoke about how he helped
investigators locate a user who had been suspected of selling stolen cars
through the site. "We tried to buy the car from the thief and in that way
incriminate him. But the bad guy was smart. He saw there wasn't a single
feedback in the history of the person who was making the purchase. He told
us he didn't want to make a deal with us."

Sullivan explained that the incident taught the company a lesson, and that
since then it has used pseudo buyers for which it constructs comprehensive
simulated histories, including simulated feedbacks, all for the sake of
incriminating those suspected of theft. "eBay is not willing to tolerate
acts of fraud carried out on its site," explains Pursglove. "We believe
that one of the ways to fight fraud is to cooperate with the legal
authorities at the various levels.

Sullivan is even more forthcoming. Aware of how hard the police work, he
decided to help as much as possible. "Tell us what you want to ask the bad
guys. We'll send them a form, signed by us, and ask them your questions. We
will send their answers directly to your e-mail." Essentially, by engaging
in what seems like impersonation, eBay is exploiting its relationship with
customers to pass on information to law enforcement authorities. Why? "We
take various steps in order to fight fraud and provide a safe buying
environment for our numerous users," says Pursglove.

"In order to prevent misuse of authority, the law ensures that authorized
impersonation will only be used with persons suspected of carrying out
illegal activity," says Pursglove. But eBay's practice is to impersonate
people on a regular basis, for law-enforcement objectives. However, "there
need not be a proven connection or well-founded suspicion of a crime having
been performed," claims Kozlovski.

In July 2002, eBay bought PayPal, Inc. for $1.45 billion. PayPal, which
offers the most popular means of payment on eBay, provides clearing
services for the execution of online transactions. It enables Internet
users to open accounts on the company site, transferring money from their
credit card or bank account. When carrying out a transaction, the seller
receives a certificate with which money can be withdrawn from the buyer's
account in cash. The system obviates the need to reveal personal financial
data.

When Paypal was acquired, the company reported 16 million users, as well as
3 million business accounts and 28,000 new visitors to the site each day.
About 60 percent of PayPal's income derives from commissions received from
users buying goods on eBay. About 70 percent of eBay buyers use PayPal.

Two years earlier, eBay bought Half.com, a site that specializes in sales
of CDs and books. Sullivan explained that these acquisitions help eBay to
provide lawmen with a full picture. "Every book or CD comes with a bar
code. So we know who bought what. The acquisition of PayPal helps us to
locate people more precisely. In the old days, we had to trace IP addresses
(unique address given to computers linked to the Internet), to locate the
buyer, but now Paypal supplies us with the money trail.

PayPal has about 20 million customers, which means that we have 20 millions
files on its users," Sullivan proudly relates. "If you contact me, I will
hook you up with the Paypal people. They will help you get the information
you're looking for," he tells his listeners. "In order to give you details
about credit card transactions, I have to see a court order. I suggest that
you get one, if that's what you're looking for." It isn't certain that
visitors to the site are aware of the thick hints eBay gives the lawmen.

"By buying PayPal, eBay is merging the information about the goods trail
with the money trail," explains Kozlovski. "Thus, in spite of the
protective mechanisms of the law against disclosure of details on
transactions, eBay is in a position to analyze the full set of data and
`advise' investigators when it might be `worthwhile' for them to ask for a
subpoena to disclose the details of a financial transaction. Essentially,
this bypasses the rules on non-disclosure of details of financial
transactions and the confidentiality of the banker-client relationship."

Kozlovski mentions how special investigator Kenneth Starr issued a court
order that ordered the bookstore where Monica Lewinsky bought her books to
report to him the names of the books she bought. "Then, there was a huge
fuss. Now you don't need a special order - eBay does the work for the
investigators."

Kozlovski feels that eBay's practice should be seen as part of a worrisome
trend in the West to curtail protection of individual rights. In communist
regimes, he says, the state would assign watchers to follow every citizen,
who would pass incriminating information on to the authorities. Now the
state doesn't have to do a thing. People come to it of their own free will.
This is also the case for eBay, which exploits its stature in the market to
have users accept contracts that strip them of their privacy. Perhaps the
regime is different, but the outcome is most assuredly the same.



A million new items a day

eBay has no operations in Israel. But in the U.S., Europe and even the Far
East, the name eBay is uttered in the same breath with names like Yahoo,
Google and Amazon. The company created an electronic business arena where
sellers offer their wares and buyers purchase them. eBay's trick is that
both the sellers and the buyers are ordinary citizens. On eBay, you can
find people selling used chewing gum (and there are buyers), torn soccer
balls, 18th century forks, sunflower seeds and luxury cars (in 2002 alone,
some 3,000 cars were sold on the site, at a total of $30 million.)

eBay is one of the few Internet companies that shows huge profits quarter
after quarter. The company completed the fourth quarter of 2002 with
revenues of $414 million and net profits of $87 million. The company had
overall income in 2002 of $1.2 billion, and net profits of $250 million. It
is traded on Nasdaq at a company value of $23.4 billion - three times that
of Amazon, twice that of Yahoo and eight times that of the Israeli security
behemoth, Checkpoint.

At any given moment, eBay is conducting some 12 million auctions, divided
into about 18,000 different categories. About two million new items are
offered for sale every day, and 62 million registered users scour the site
to find them. These users have given eBay the monopoly on online auctions
in America. Companies such as Yahoo and Amazon tried to get into the
auction market, but were forced to give up. An estimated 150,000 people
earn their livelihoods solely from buying and selling items by Internet.
The company maintains local sites in Britain, Germany, Italy, South Korea,
Ireland, Australia, Spain, Singapore and Sweden.

eBay is a monster that churns out money 24 hours a day, 365 days a year -
for itself and for its millions of users.



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