Causes of Disputes in Online Auctions

Abstract

While much attention has been given to reputation mechanisms to deter fraudulent behaviour in online auctions, we know little about the nature of disputes or the types of problems that users face. This is an exploratory analysis of 129 disputes for five different types of products that were sold on eBay. In the analysis we find seven different types of disputes including poor quality, slow shipping, seller withdrawal, fraud, poor communications, misunderstanding, and non‐paying bidders. Each type of dispute is affected by different factors.

This research finds that used products tend to have problems related to misrepresentation and fraud. A buyer with a better reputation is less likely to fail to pay and the likelihood to pay appears to be related to the auction process. Sellers are also more likely to avoid delays in the shipping of products if these have a higher price. Business‐related products are more likely to result in less disputes related to slow shipping. Seller withdrawal disputes are related to the ratings of the seller and misunderstanding related disputes are less likely to occur when a more detailed description is provided.

Keywords:

• dispute
• Internet auction
• market
• eBay

Notes

Ian MacInnes

([email protected]) became an Assistant Professor at Syracuse University's School of Information Studies in 1999 after spending two years at the University of Minnesota's Carlson School of Management. Before that he completed a doctorate from the University of Southern California in Political Economy and Public Policy and a master's degree at the London School of Economics. He was recently a Fellow at Harvard's Kennedy School of Government. His current areas of research include pure digital transactions for content, software and services; industry convergence; e‐commerce transformation; trust and fraud in electronic markets; and business models for online entertainment.

Because eBay discourages negative feedback through a click through screen, the system has a positive feedback bias. In order to counteract this positive bias, neutral grading of a transaction is considered a dispute.

We thank an anonymous reviewer for this observation.

Chargebacks are a recourse given to buyers by eBay/Paypal to get their money back when they complain about not receiving the product bought. The seller could face reversal of payments even if he sent the product but has not taken the precaution of having proof of shipment.

Additional information

Notes on contributors

Ian MacInnes

Ian MacInnes ([email protected]) became an Assistant Professor at Syracuse University's School of Information Studies in 1999 after spending two years at the University of Minnesota's Carlson School of Management. Before that he completed a doctorate from the University of Southern California in Political Economy and Public Policy and a master's degree at the London School of Economics. He was recently a Fellow at Harvard's Kennedy School of Government. His current areas of research include pure digital transactions for content, software and services; industry convergence; e‐commerce transformation; trust and fraud in electronic markets; and business models for online entertainment.