eBay Transaction Losses Up 19% In Q3, Mostly Due To Simple Delivery Claims

[valueaddedresource]

Interesting stat from the Q3 earnings call for those who missed it - Transaction Losses spiked a significant 19% year over year with CFO Peggy Alford telling investors it was mostly due to increased consumer protection costs of Simple Delivery, ie. paying out loss and damage claims, as well as some non-specific increase in general buyer and seller fraud.

Alford said on the call: "...and then lastly Transaction Losses were up 19%. A lot of it had to do with our higher consumer protection losses that were due to the ramp of the UK managed shipping program as well as some unfavorable fluxuations in buyer and seller fraud. This is an area that fluctuates quarter by quarter but nothing really concerning in the trends."

So I suppose that answers the question of whether the carriers or eBay are taking on the cost of paying out claims (clearly eBay is at least paying some of it from their pocket) and it also might shed some interesting light on recent reports around here that some buyers are only getting partial refunds on SD damage claims. 

[pegr-834437]

With regards in in house authentication, I can only comment on 'sneakers' as I buy way too many of them and pre authentication I'd not have touched ebay to buy and neither would any of my mates who again spend too much on them, now though eBay is our go to. They have no doubt taken in more in sales than it would have cost to buy sneakercon and the yearly sales will cover overheads. The problem they have is mobile phones, with some trainers they come in a sealed packed and eBay refuse to open them so no idea what theyd do with a sealed phone, guess they could do an opt in option where you know the packaging was sealed upon arrival and will be opened by eBay.

Also with regards to the loss eBay are suffering due to SD, that'll soon fall, currently they just refund and allow buyers to keep the majority of things, once you have 3,5 or 10 strikes on your account that rug will be pulled no doubt. At the open event they mentioned how they are going to change punishing accounts for being bad, this will be within that, so yes you could be unlucky multiple times but at some point eBay will just say enough is enough. Also they will start saying please send the item back before getting a refund and then they'll sell it, half of cases wont then be sent back as buyers would have just been trying to get lucky and the rest will be sold on eBay as mystery broken boxes and what not. 

[1956glyn]

But what if its an expensive piece of signed designer jewellery which is not real gold or silver........eg Christian Dior etc  that can be worth hundreds 😞          Personally i think SD should not cover any jewellery as its not black and white.

[the_book_seekers]

Also with regards to the loss eBay are suffering due to SD, that'll soon fall, currently they just refund and allow buyers to keep the majority of things, once you have 3,5 or 10 strikes on your account that rug will be pulled no doubt. 

Perhaps. Scammers will find work arounds, they always have had done. Simple Delivery is showing ebay what sellers have to deal with and this is only private sellers. 

[thesmokingrunner]

I must admit that I'm intrigued by the part of eBay's statement which reads "...higher consumer protection losses that were due to the ramp of the UK managed shipping program as well as some unfavorable fluctuations in buyer and seller fraud".

How do they know that some of the losses were due to buyer and seller fraud? Ok so it's odds-on that some fraud does take occur, but surely by quantifying it they must be able to identify buyers and sellers who are involved? And if the accounts can be identified why is little or no action being taken to both recover any money obtained by fraud or prevent the fraud in the first place?

Stating that fraud occurs and putting a figure on the amount lost to such action but without having the systems in place to identify those responsible just looks like a bit of creative accounting to reduce the net bottom line. "Fraud? Yeah, it happens. How much shall we put in the accounts? Think of a number..."

I'd be more concerned about the 46% increase in 'General and Administrative' operating expenses.

[valueaddedresource]

@thesmokingrunner eBay knows what the losses to fraud were because they paid them.

To be clear, in that statement they're not talking about all fraud on the platform - they're only talking about fraud that occurred where they had to pay out compensation under the terms of their buyer and seller protection policies, which is a figure they absolutely can and do track and report.

As to what actions they take against those accounts, there's no way for us to know - likely they do take action to remove at least some of them.

The spike in General and Administrative costs is also likely considered "no concern" as a one/limited time thing.

Here's what eBay said about it:

General and administrative expenses primarily consist of employee compensation (including stock-based compensation), contractor costs, facilities costs, depreciation of equipment, legal expenses, restructuring, insurance premiums and professional fees. Our legal expenses, including those related to various ongoing legal proceedings, may fluctuate substantially from period to period.

The increase in general and administrative expenses for the three months ended September 30, 2025 compared to the same period in 2024 was primarily due to $28 million of restructuring costs, $9 million in employee-related costs and a legal accrual release in the third quarter of 2024 of $50 million.

The increase in general and administrative expenses for the nine months ended September 30, 2025 compared to the same period in 2024 was primarily due to $89 million of senior leader transitions and restructuring costs, $61 million of legal accruals recorded during 2025, $32 million in employee-related costs and legal accrual releases in 2024 of $56 million.

The plain English version of that is:

1.) eBay paid large severences to multiple execs who left this year and bonuses/stock compensation to execs who were promoted or hired to take their places.

2.) eBay shut down the Syracuse, NY authentication facility for subsidiary TCGPlayer and moved those operations to a new warehouse in KY which meant laying off over 200 unionized workers and paying the severance and benefits package the union was able to negotiate for them, not to mention all the costs involved of moving the operations.

3.) eBay also shut down their R&D center in Israel, laying off ~600 people there, and opened a new R&D center in India where they have been on a massive hiring spree - again, more restructuring and employee related costs.

4.) eBay was being sued by the US Department of Justice on behalf of the US Environmental Protection Agency in litigation that could have had the potential for ~$2B in fine - so of course eBay hired the biggest, baddest law firms to defend them (same ones that represented BP in the Deepwater Horizon oil spill, Volkswagen during "diesel gate" and more).

That lawsuit was dismissed late last year, but DOJ was still appealing and then finally dropped that appeal in April this year, so that's over now and the legal bills were due.

eBay also hired one of the most expensive and infamously anti-union law firms to try to bust the union at TCGPlayer/drag out contract bargaining for almost 2 years before shutting down the NY location, so I'm sure closing out that chapter also probably meant some of those legal bills came due.

There is of course still one major lawsuit ongoing against the company, related to the 2019 cyberstalking scandal, but that's likely to be wrapped up sometime next year.

While all of that does obviously represent a significant chunk of change, and most of us would question some of that executive compensation in particular, again as far as investors are concerned these are not entirely unexpected costs and they are also not expected to continue to be this high in the long-term, so it's not a major source of concern.

[suelel1968]

@1956glyn definitely costume jewelry, but as Lucy says, the answer regarding gold and silver and gem stones is unknown. I'm going to try liting that fench crown i found in a Parisian thrift store and I will let you know. 

[pegr-834437]

It'll be a game of whack-a-mole for eBay for sure, but unlike sellers who have had no real option but to either accept it or leave eBay can ban IP addresses. Pre SD and still for business sellers all you could do was add to banned list, if they just changed their username to add a 1 at the end that bypassed the ban or they just opened a new account, eBay have powers way beyond that. They can probably ban certain postcodes if they are high risks of fraud, eBay have taken on the challenge that all sellers were unhappy about so lets see how they deal with it, but as stupid as some of the decisions theyve made I cant imagine all of this hasnt been thought of before the big change. They just couldnt be strict from the off as it would have been a car crash beyond anything thats already happening.

[ett1954]

"does that mean they weren't "listening" to sellers and they were reacting to the amount of claims when they put the bar up?" - This is one of the points I was trying to make in post # 15.  Over the years eBay have demonstrated little inclination to understand the challenges sellers face on their platform; especially correctly registered business sellers.

eBay's modus operandi over the past 5 or 6 years has been to find an increasing number of ways to extract more fees from each sale and since "free to sell" was introduced this primarily falls on business sellers' sales.  This increasing burden results in reduced margins or increased prices of sellers' goods; both of which inhibit sales growth for a variety of reasons.

This obsession by eBay to find increased avenues of revenue streams seems to me to be very short sighted as the only perceived benefit seems to be to provide revenue to subsidise the share buyback scheme in order to keep the investors happy for another quarter.

A prime example of the above is the new promotion scam 'opportunity' whereby should anyone click on your promoted item, whether it be a potential buyer, a casual browser or even a competitor and the product is subsequently purchased by someone who went direct to the listing or even a regular customer then you are charged the promotion fee.  I don't doubt this is legal however it is certainly unethical.  I have reduced my number of promoted items however an increasing amount of my diminishing sales are now attracting promotional fees.  I have no idea whether the buyer was enticed by the promotion or not.  This is particularly galling on an international sale where fees can significantly reduce the margin anyway.

eBay appears to be becoming more of an advertising venue, much like those sites you used to see at the bottom of the listing page many years ago, rather than a sales platform.  eBay marketing seems to be totally focused on 'free to sell'; I never see an advert aimed at enticing buyers to the site!

A week last Monday was the first time in nearly 20 years I never had to trek to the Post Office on a Monday afternoon (other than public holidays) as there were no sales since the previous Thursday.  Sales have been in a steady slow decline, even with increased listings, for the last two to three years however this decline has accelerated significantly in the last 5-6 weeks and I am now seriously looking at an alternative platform whilst also considering downgrading my shop on here to a basic level.  Fortunately my other sales avenues (not online) are holding steady suggesting that online sales have passed their peak (maybe with the exception of Amazon) and other popular platforms are in a terminal decline.  Certainly eBay is no longer providing an adequate return on time and effort.

[suelel1968]

Hi @lucy_farmer  I just tried to list  a Gold ruby ting for £195 and the only option is SD.

[thesmokingrunner]

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@valueaddedresource wrote:

@thesmokingrunner eBay knows what the losses to fraud were because they paid them.

Thanks for that @valueaddedresource  but I have to disagree that eBay knows what the losses to fraud were because they paid them.

Ok, so eBay paid out an increased amount of compensation due to an increased number of 'Arrived damaged' claims made under Simple Delivery but there is absolutely no way of quantifying whether those claims were genuine or fraudulent.

They could be genuine claims resulting from items arriving damaged due to mis-handling by Evri during shipping, they could be fraudulent claims made by buyers knowing that they will be refunded and get to keep the item for free, they could be fraudulent claims made by sellers and buyers working together. But unless the actual number of fraudulent claims and their value is identified then the only statement which can be made is that the amount paid out in compensation has increased.

eBay may claim that increased compensation payouts are due to fraud but they could just as easily claim it on an increasing number of parcels being damaged in transit by Evri. It's most probably both but chances are eBay wouldn't claim it was Evri's fault because signing a delivery contract with a useless courier doesn't look too good.

And claiming an unknown and unquantifiable number of fraudulent buyers and sellers are responsible for losses shifts the blame nicely...

[1956glyn]

Wow thats bad then.   When i recently sold some 9ct gold and also silver SD did not come up as an option.

[valueaddedresource]

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@thesmokingrunner wrote:

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@valueaddedresource wrote:

@thesmokingrunner eBay knows what the losses to fraud were because they paid them.

Thanks for that @valueaddedresource  but I have to disagree that eBay knows what the losses to fraud were because they paid them.

Ok, so eBay paid out an increased amount of compensation due to an increased number of 'Arrived damaged' claims made under Simple Delivery but there is absolutely no way of quantifying whether those claims were genuine or fraudulent.

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@thesmokingrunner  go back and read my previous posts here as well as the actual statement from the Q3 report.

The UK Simple Delivery damage claims are clearly stated as a separate thing from the increased buyer and seller fraud and the CFO said both of those individual things drove increased transaction losses.

So yes eBay absolutely knows how much they paid out as a result of buyer and seller protection policies due to situations that eBay themselves have designated as fraud, unrelated to UK Simple Delivery damage claims.

[suelel1968]

@thesmokingrunner  i think to be fair to @valueaddedresource , they think the fraud is worldwide, it was me who read it as blaming the UK for the increase. We do know that levels of fraud have gone up here, we read about the scams every day on here and recently about Evri in the press and we know that eBay are paying out on SD claims. We also know that the UK is the only sector to have SD. 

I find it hard to believe that eBay knew how much fraud was going on, when they weren't footing the bill for it. How long can they keep denying the obvious I wonder.

[valueaddedresource]

@suelel1968  @thesmokingrunner  the way I look at is this - if they had swapped the order in which they listed them it would have read:

A lot of it had to do with our higher consumer protection losses that were due to some unfavorable fluxuations in buyer and seller fraud as well as the ramp of the UK managed shipping program. 

That would have made it more clear but either way I believe that's what was meant - The total losses they are talking about are global so "UK" only applies to "managed shipping program" because that's the only place where eBay currently has a managed shipping program while the fluxuations in buyer and seller fraud are global.

And not for nothing, but I'm not the only one who read it that way - I regularly engage with market analysts who are on these calls and that's how they interpret it as well.

Both fraud and Simple Delivery damage or loss claims are considered "consumer protection losses" but they're separate categories under that heading if that makes sense.

[suelel1968]

Hi @valueaddedresource You are likely to be right, but fraud  has gone up with the introduction of SD  although we can't prove it. Obviously the same person writes the CFOs scripts as writes the EBay help pages, always leaving some wriggle room ....I guess the truth will out when or if they roll out SD elsewhere.

[magpiecorner1]

Its a provision, not an actual cost.  Its decided pretty much by eBay - though regulations mean that they have to put something in the accounts because not making a provision for losses - and potential losses - would be overstating the health of the business.  Particularly as eBay are now a money management business, though the amount might be regulated somewhat, as its an expense and would therefore reduce eBay's future tax liability.

Interesting though in that it is also a consideration for investors and therefore eBay's value on the stock exchange.

Whilst Simple Delivery is likely being give as a reason, but doesn't really make sense, it will certainly comprise an increased risk if it becomes a change right across the board, for all sellers.

Or perhaps they are just worried that either all the Christmas pressies will be returned in January or that the stock market will crash.   

Though if eBay, with low overheads, no stock, no direct selling and relatively few employees are genuinely worried, eBay business sellers - who carry a far greater risk than eBay - should be very worried.

[custom-giftsuk]

What this means, on a personal experience level, is that buyers claim an item has not arrived and/or item is not as described.  We can provide tracking or ask a buyer to return the item. Pretty much every time a buyer "wants to return an item" or claim "an item hasnt arrive despite tracking", they phone up/contact ebay customer support, and at that time ebay CS escalate the case and refund the buyer, who then keeps the item and gets a refund. We aren't at fault and as such we get to keep our funds. 

This happens regularly so ebay are refunding the buyer without issue from their money as the item in case is usually low cost, so its easier to refund than go through the hassle of ebay CS dealing with the "buyer"

It's gotten to such a level that the only reason people from different parts of the UK know this "dodge" is that there must be message chats, online groups, pages online social media where this kind of information is spread. 

That money is never recouped and as such comes out of ebay's pocket (which is thereby funded by sellers). This has happened so many times, on such a regular basis, that its not even noteworthy or worth reporting anymore. 

[gjalp]

And this is why we have launched a website this year. Its only been live since July and it’s actually doing surprisingly well. We are looking to move away from ebay after 24 years of buying and selling (of which there is less of both these days, ebay is no longer my go to for buying)

[ett1954]

Good luck with the website - I missed the boat on that one.  I started work on one 15 years ago but I was so busy at the time it fell by the wayside.

As for buying on eBay; I have sourced a lot of my stock over the years from private sellers and always source my packaging and stationary supplies from business sellers on here.  Due to the current dearth of sales I stopped looking for new stock over a month ago and I cannot envisage having to replenish packaging supplies any time soon.  I will give online selling one more go in the new year with a different platform and if it is no better I will wind down all online selling.

[the-gilded-cage]

Any costs of Simple Delivery are offset by buyer fees and income from courier deals.  Because simple delivery was introduced to make eBay money, not cost eBay money, and UK private sellers are merely the lab rats.