Reputational failure

Online auction house eBay‘s reputation-driven trust scheme is a much-admired and much-emulated model. Or at least, it was until recently when eBay made a significant change to its operation.

Back in February this year, eBay announced changes to its Feedback system. Until that time, buyers and sellers could leave feedback about each other to rate each transaction. The system worked extremely well; anyone could build up a trusted profile over time, and both buyers and sellers used these profiles to determine the level of risk associated with a transaction. When something went wrong, the other party could leave negative feedback to warn others. It was easy to spot newcomers by their low scores, and even to identify hijacked accounts when a previously unblemished score started to accrue negative feedback. Buyers and sellers were generally careful about leaving negative feedback, lest the other do the same.

The system worked well. By and large, it was self-policing. eBay rarely needed to get involved (relative to the number of transactions), and had resolution measures where these were necessary. eBay’s reputational community was a model for how to build trust, and was arguably the most effective trust infrastructure of its kind on the Internet. Coupled with PayPal, and its buyer protection, eBay had an unbeatable combination.

In May, the change came into effect: sellers can no longer leave negative feedback for buyers. eBay claimed that there were too many buyers leaving negative feedback for sellers when they shouldn’t have. The change seems insignificant, but it completely shifts the balance of power between buyers and sellers, and in turn undermines the credibility of the system. Now, when a buyer fails to pay up, or claims the goods weren’t as promised, the seller has no recourse through the feedback system. All they can do is contact eBay and hope that something will happen. If the bidder has failed to pay, then the seller can – after a delay – recover the listing fees for the auction.

The feedback scheme has become unbalanced, and as such is no longer the valuable thing that it was. Sellers no longer have the same level of influence as buyers, and when things go wrong they have to depend upon eBay – which is arguably an inappropriate third party in this relationship – to put them right. eBay seems to have forgotten that many of us are both buyers and sellers, and need protection in both modes. In consequence an ecosystem of websites offering alternative feedback has sprung up in an effort to protect sellers.

eBay would do well to re-read Kim’s Laws of Identity and think carefully about how they apply to its feedback mechanisms. And then it should return things to the way they were.

PS – A message to the muppet who won an item I was selling last week: don’t buy things you claim you can’t afford to pay for. Because there’s nothing I can do about it now.