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December 2004

PeSA Official Statement on eBay's INR/SNAD Process:
Service Review


The Item Not Received (INR) and the Significantly Not As Described (SNAD) functions are new tools for a buyer to report an issue with a transaction. Built on the Unpaid Items (UPI) platform, it uses a similar interface for the management of open disputes on the eBay site through the My eBay page. A buyer can open a dispute with a seller from 10-45 days after the auction ends, regardless of the date of payment. The timeframe was recently expanded from seven days due to feedback from the community. The INR or SNAD process only applies to purchases that were not paid via Paypal. If a purchase was paid with Paypal, the buyer will be directed to use Paypal's Buyer Claim dispute system. The seller must respond within 10 days after a dispute is filed. If a seller does not respond within 10 days, eBay's Trust and Safety department might take action against the seller's account.

eBay has enabled API calls that will allow sellers to review open disputes as well as respond to those disputes. Sellers can respond to disputes in the following ways:
  • Offer a refund
  • Provide shipping information
  • Post a comment for the buyer
After the seller responds to the dispute, the buyer can close the dispute with two options. The buyer can state that the issue has been resolved, or the buyer can state that the issue has not been resolved and file a claim under eBay's Standard Purchase Protection Program. Any disputes that are not closed within 60 days are closed by eBay automatically without any repercussion to the seller.

The new INR and SNAD process is meant to remove the 'fraud' label that buyers assign to a transaction that doesn't go as expected as well as provide a consistent communication platform on eBay. eBay indicated that 80% of the inquiries it processes through its current fraud system can be resolved through better communication between the buyer and seller and are not fraudulent actions by sellers. This new dispute system is a mechanism by which buyers can notify eBay of a potential problem with a transaction while allowing the seller an option to respond to the claim.

Issues that Sellers will Face with the New INR and SNAD Process

The timeline for opening a dispute seems to be problematic in that by setting such a short timeframe, it becomes too inclusive. A large number of non-productive disputes may be opened just because enough time has not been allowed for the transaction to complete normally. From a survey of the sellers in PESA, we found that the average collection time on orders that are paid (excludes NPB) is approximately three days. The average time to prepare an item for shipping ranges from one to three days. While the eventual transit time of a package will depend on the geographic proximity of the buyer and seller, according to UPS and Fedex, the average transit time for a package in the United States is approximately three business days with a standard service, which sometimes extends to 5 calendar days when the transit time falls over a weekend. Based on an average, efficient transaction, the expected timeframe for completion ranges from 7 to 13 days, with the 10 day INR dispute time falling right in the middle of an average transaction. It is also important to note that our seller collection time includes Paypal payments, which according to eBay, has accelerated the payment process. Excluding Paypal payments would mean that the average completion time of a non-Paypal transaction will be longer than the 7 to 13 day range. Based on these time frames, half of all eBay transactions will be eligible to open an INR dispute, which is excessive.

We have seen the comparison of the UPI versus the INR in that it is a tool for the buyer to raise an issue on a transaction. In looking at the UPI, the timeline seems to flow with a goal of limiting the potential UPI disputes to those transactions that may have issues. We agree with that methodology.

Our members tend to receive most of their payments within five days (average is three days) of an auction end with the likelihood of receiving payment diminishing as time progresses. The seven day initial filing of an UPI dispute logically uses a timeframe that is several days past the time when a payment is normally expected. In reviewing the timeframe of the INR, a buyer can open an initial dispute at a time when the average transaction may still not be expected to complete. It seems that a 17 day timeframe would be more appropriate.

A timeframe that is too short will result in excessive disputes. In all likelihood, if a buyer has not received an item, he or she will contact the seller directly, but may also use the INR dispute system. The seller will more than likely respond to the buyer directly, however, since an INR dispute has been opened, the seller must reply to that dispute as well, duplicating the effort necessary in communicating with the shopper.

INR Business Tools

High volume sellers have invested significantly in developing business processes and integrating them with the eBay marketplace. The rollout of any new features should include options to completely integrate the new features with a business' internal process. In the past, eBay has rolled out new features with only a short development timeline providing little time for sellers to adopt the new features, some mission critical. It appears that the INR/SNAD process has API calls enabled in the sandbox at this time, however, there are still some questions involving the business process in processing disputes.

For those sellers that prefer to use the eBay site solution to manage INR/SNAD disputes, the interface is unreliable for high volume sellers. Many members of PESA are still not able to retrieve their monthly invoices or access the My eBay page. Since INR and SNAD are going to be an extension of the UPI platform, it appears that those issues will still be a problem for high volume sellers trying to manage disputes. In our opinion, it is more important to resolve access issues before building new features on top of a platform that cannot be used by the highest volume sellers.

An added feature that has been requested by members is the ability to add users with restricted access to an eBay account. As it currently stands, an employee that manages customer contacts has full administrative access by having the user name and password. Paypal currently has this capability which has been very useful for PESA members.

INR/SNAD Bypasses Seller TOS

The messaging and education surrounding the new features will play an important role in aiding communication. However, there is a strong chance that the new system can create confusion and miscommunication. One of the greatest concerns to sellers is that buyers will disregard a sellers' Terms of Sale (TOS) in favor of the INR or SNAD process. Sellers have invested years in fine tuning the systems that they have placed in service to address customer issues. INR seems to be a stepping stone to forcing a replacement of those systems with an eBay required mechanism that appears less effective and certainly not scalable. There are also a number of unanswered questions regarding the details of the process:
  • If a sale is 'as is', can a buyer use the SNAD as recourse?
  • If the seller has a return policy, is the buyer required to return the merchandise before filing a claim with eBay?
  • What happens if a seller ships an item with the USPS and can confirm shipment, but the package does not arrive? What if the seller offers insurance, but the buyer opted to not purchase it?
  • If a seller offers a 15 day return policy, and the bidder evaluates an item for 30 days, will eBay override the sellers terms of service by allowing the bidder to file an SNAD claim?

It appears that eBay is becoming more involved in making determinations about specific transactions which is different than 'eBay as a venue' policies of the past. It is important to be aware of the potential confusion to shoppers when faced with two separate rules for governing a transaction. By stating specific timeframes for a completed transaction, eBay will be setting certain expectations for the buyer that may not be consistent with the sellers' TOS.

Potential Abuse/Misuse

From a Sellers' perspective, there are a number of ways that the new INR/SNAD system can be abused/misused. Buyers may turn to use the INR system as the primary mechanism to manage purchases which will actually reduce direct correspondence between buyer and seller. The result will be that the tone of communication between buyer and seller will not be as cordial as direct email.

If sellers do not adopt the system, which was some guidance that was offered by eBay, it will result in negative feedback from bidders that say the seller is not responding to their inquiries.

eBay staff members will be placed in impossible situations trying to determine if an item is materially different from a description. As sellers, we can only assume that eBay will rule in favor of the buyer in most cases.

Does the Process have the Right Name?

When the process was first announced, a number of members of PESA had an issue with the name of the process. However, as was detailed on the thread in the PESA boards, the new process name works toward eliminating the subjective fraud accusations that tend to fly when a transaction does not complete smoothly. It seems to be a positive step that the term 'fraud' is removed from the sight of a buyer, especially if most issues are not related to fraudulent acts of a seller. The two new options are factual and logical. If a buyer did not receive an item, they can open an Item Not Received dispute.

Another issue was raised that 'dispute' is a serious word for something that may be as simple as 'the package is still in transit'. From a buyer's perspective, the name 'dispute' does indicate that there is a more serious method available to them to pursue an issue. Naming something a 'dispute' is certainly serious, however, if a buyer finds that he/she is filing numerous disputes, then the value of the term 'dispute' becomes diluted and the value eBay is trying to gain will be lost.

Buyer Education

Buyer education on eBay is still an area where the platform falls short. As sellers, we commit significant resources trying to explain the eBay process. Issues such as paying for an item, or canceling a bid, or leaving feedback or navigating the site are examples where basic education at signup would alleviate confusion. For most transactions, the eBay buyer should be able to address an INR/SNAD issue with the seller. It is important that buyers understand that they should communicate with the seller via the mechanisms the seller has in place before filing a dispute. Since there are no sample pages for the language that a buyer will see, we cannot comment specifically; we can only offer suggestions of important points.

If the buyer hasn't reviewed the TOS before placing a bid, they should review them before opening a dispute. It is important that the buyer have reasonable expectations for the delivery of their purchase.

If the buyer is attempting to file an SNAD dispute, eBay should check if the seller posted a return policy with the listing. With the new Return Policy feature, eBay now has an automated solution for presenting the policy to the buyer. This issue relates to an open question posed earlier. Will the SNAD policy supersede a sellers' TOS?

Implementation

With the new feature, eBay buyers will be presented with a new set of options for opening a dispute with a seller. It appears that eBay will be increasing the prominence of the new recourse options. It is important to be aware that an increase in the number of unqualified claims, especially if it guides buyers to file premature Paypal Buyer Claims, may impact the Paypal acceptance rate for eBay transactions. It is important to focus on the goal of improving bidder confidence in the eBay marketplace. If a new feature is developed that creates a large number of unqualified disputes from buyers, it will not help improve the marketplace.

Summary

While PESA understands the concept of an INR/SNAD process, there are more effective options for improving the confidence of the shopper as well as changing the mindset of eBay as a flea market. It is time for eBay to devise an effective means of insuring the trust and safety of all shoppers who visit the site. The logical method would be to differentiate established and well trusted sellers beyond the mere feedback numbers and easily attainable Power Seller logos. New sellers should be required to verify and authenticate their existence before being given free reign as an equal to established merchants. Until eBay can confidently say that all their approved sellers are 'basically good', buyers will always have a confidence gap.
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"PeSA has helped thousands of merchants optimize their eBay sales and I am pleased to say that my business is one of them."

- Jonathan Garriss, Executive Director and online merchant of shoes and posters.
 
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