eBay Feedback Farms Undermine Feedback Ratings System

Last week, Ina Steiner documented the basic story of ‘Feedback Farms’ on eBay.

I have to be honest, these scams continue to amaze me, and one has to conclude that these scams are damaging and undermining the entire feedback/merchant rating system.  If fraudsters can so easily create feedback/merchant ratings in the thousands, then buyers will have to increase their vigilance online.  From a buyer’s point of view, it continues to be more and more difficult to truly discern good from bad.

This story reinforces the marketplace need for objective, third-party, seller certifications and financial guarantees similar to buySAFE.  As I have defined in the past, the key for online marketplaces to avoid the "Market for Lemons" scenario is to implement strong, credible signals regarding the merchants’ professionalism, credibility, reliability, and financial condition.  These trust signals have to have teeth, and that means strong due diligence and financial guarantees, not just feedback/merchant ratings.  Anything less will not solve the marketplace information asymmetry problems.

I am obviously biased, but I continue to believe that buySAFE (and its surety bond solution) is the best answer to eCommerce’s information asymmetry problem.  The fact that 6 of eBay’s top 10 sellers worldwide (by Feedback Rating) and almost 40% of eBay‘s top 100 sellers in the U.S. (by Feedback Rating) are also buySAFE Bonded Merchants should be a pretty strong indication that many in the merchant community believe bonding is a solution to information asymmetry online.

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