eBay Admits It Overstated Sales and Will Stop, Kinda

by: pace306

We all said it over and over - eBay lies.

They lie to their sellers, they lie to the state and they lie to the government

All the of us here in the trenches - the front lines know eBays numbers are trash - yet people here will swear how great eBay is and how its growing- it’s NOT

There needs to be a complete forensic examination of ebays books from top to bottom and ask clear cut questions like

1) are postal rate increases and the money they bring on fvfs for shipping being counted at all? Counted as income?

2) why are fvfs on shipping being counted at all?

3) are returns bring deducted from gross numbers?

4) what are the float and interest on sellers funds in MP being tallied as?

5) are state taxes being considered income?

There’s a ton more things that need examination from this crooked company!!

by: Mbrj201

How is this legal?

by: Snapped

Based on the 4Q ‘20 data from the OP, eBay’s ‘mis-statements’ amounted to a 13% difference in what they ‘claimed’ as sales, that were not actually sales.  And that’s just one quarter over the past 20+ YEARS.

Interesting that the percentage actually mirrors what most sellers experience individually too - better than one in ten UPI’s.  

Meanwhile, they still count those folks treating eBay like some kind of eCom video game as ‘buyers’, even though they don’t actually buy anything.  Any takers on a bet of how many of those folks are ‘new’ members contributing to eBay’s ‘growth’ boasts?  Any more on how many won’t be shown the door via eBay’s latest ‘promise’ to act on bad buyer behavior?

One day maybe the SEC will awaken and require all these ‘fee for service’ venues report what they make in fees, not ‘sales volume’, because the latter is meaningless regarding company fiscal position.  Payouts are subtracted above the line when defining what a company ‘made’ when their revenue consists of funds they don’t get to keep.  Well, not ‘forever’ at least.  

Same holds true for taxes and shipping costs ‘collected’ of course, not to mention that whole inflated Best Offer price well below sales price thing they don’t mention either.  No telling when eBay’s “increased visibility” due to MP may compel a more fully ‘truthful’ itemization of their claims.  

Because it surely is not forthcoming organically.  Never has.

by: The End

Jee WHIZ Beave !
Etsy does the SAME Thing......
RELEASE THE HOUNDS ! ! !  

by: COVID-19

Gotta lie to those idiots over at Seeking Alpha Arrangements somehow, right?

by: Rexford

I don't know, but is that not Securities fraud?

by: 4yourinfo

I happen to agree with ebay here. They are reporting any revenue that comes in in which they earn revenue from. Because they collect fvf from sales tax, it turns out sales tax is a revenue generator for them. They aren't just passing the sales tax on, as you would think. Same thing with shipping, I'm not sure which shipping charges they are reporting but they are definitely making money when sellers buy labels from them - and when buyers pay for shipping they are almost always paying more than the costs, not to mention the fvf. So while it would seem crazy to report a sales tax as revenue - that would be if no money is made off of it. But there's plenty of $ for ebay in sales tax hence good idea to let the investors know it's basically like a sale for ebay..

by: Coin Seller

Wonder if this is another example of overstatement of sales?  I sell an item with quantity discounts.  For example customer buys 4 identical items and saves 30% on total.
The eBay email notification sent to me for a this sale shows Paid: $27.20 (the price before discount), but the customer actually paid was $19.04, not given in the email. Did eBay report the $27.20 as GMV?

by: iheartjacksparrow

I'm really curious as to why eBay is admitting this now. Did someone at the SEC give them a heads up that eBay was going to be investigated for overstating earnings? As Pace said, we knew their numbers were bogus.

by: JR2856

This blog is a little bit misleading.  eBay's system was not technically overstating the GMV amount based on it's previous integrated PayPal system.  Gross Merchandise Value is a gross number- meaning the system showed $XXX in gross sales (including shipping and sales tax).  What this blog doesn't discuss are the offsets to that gross number.  Offsets also include customer cancellations after payment and refunds, not just non-payment amounts.  eBay is submitting a change in accounting methodology for GMV as they move to a system that will require instant payment- no more non-payment amounts to be included in financial statements.

And GMV must include shipping and sales tax as these figures are calculated for final value fees.  GMV is not reporting these numbers as revenue, per se, but as a method of calculating final value fee revenue.

Just as your 1099-k reports gross income that doesn't account for refunds, GMV reports gross sales that don't account for other offsets to that total number.   This is a small part of complex financial statement accounting.

by: Snapped

This is more than some accounting trick to reveal the previously disguised unedibles in their apple cart.  Which still contains oranges regardless.

Sales tax and (separate) shipping are not ‘merchandise’.  Offer price is not the ‘value sold’ if sold for less.  If they want to report gross merchandise revenue, then they should call it that.  

Note that prior to MP, eBay didn’t include sales tax (yes, it was collected by some sellers) or shipping in their inflated (nevertheless) GMV reports.  Though it is pretty clear why they wanted everybody to embed ship cost and call it ‘free’ in this context.  It has only been included since they started injecting themselves into the revenue stream.  

And naturally, it was portrayed as part in of their ‘growth’, without appropriate explanatory caveat.  This blog isn’t misleading.  eBay is.

by: plcombs

Non-payments should have never been included in their accounting as sales, this is pure padding to boost numbers.

It should have been caught much sooner by auditors as the Net income figures after expenses would not have balanced. 3.5 Billion is a 15% discrepancy per quarter. Who the heck overlooked that?

It begs the question of who audits and certifies their books?  

by: Ric

eBay admits they have been lying....and they are announcing they will continue to lie - only differently.  Go figure.

Can't wait to see if the IRS and SEC have anything to say.about this admission of intentionally lying about financial details.

I have to believe that the only reason eBay is coming clean is because of Mangled Payments and the fact that the numbers do not line up.

by: toastedmutt

Oh well, what's a piddling 3.5 Billion overstatement amongst friends .......

More shim-sham flim-flam from eBay.  What do you expect?

by: Geetar

Sellers were suspicious? We all knew it was a damn lie.

Their lies make tax accounting a nightmare for sellers.

A cancellation is not a sale
Sales tax is not a sale
shipping is not a sale
A return is not a sale.

All of these things make for a bloated sellers sales number. Bloated 1099 number, that after adjustments can attract scrutiny from tax agencies.

Add on top of that their crappy reports, it is just a nightmare.

by: Marie

@Ina

You asked this question in your Editor comment on today's Email regarding this subject.

"While that's sobering enough, does that mean eBay charged commission fees on billions of dollars of transactions for which sellers never received payment from eBay buyers? "

The answer to that is no.  Most sellers are now in MP and the fees are not charged to the seller until the buyer has made payment as they take the fees out up front.

For anyone that is not in MP, the FVFs are charged at the time of sale on the Seller's Monthly invoice.  But when the seller files the cancellation and refunds the buyer, the fees are reversed.

by: Marie

I too am curious as to why this is being brought up now.  I personally do not find this as surprising as others seem to.  If they are to report Gross Sales, then it isn't that much different than how our 1099Ks are done.  

It is Gross sales before ANY deductions.  Cancellations, refunds, fees, etc.  I don't know that other sites do it any differently.  I also don't know that Ebay lied about anything.  I remember years ago with discussed this on this site.  Unfortunately my memory isn't near good enough to remember the blog, sorry.

Either way it won't change my sales and that is usually what most sellers are concerned with.  What does this mean to my personal sales?  This is unlikely to affect any of us on this level.

by: Chicago48

"How is this legal?"
I question a) who threatened to blow the whistle and thus forced Ebay to admit this? b) somebody - a seller or stockholder - is going to file a class action lawsuit, betcha. c) The SEC is negligent.

by: MBwhatevA

So is our 1099K wrong???

by: toolguy

eBay's lies have zero affect on my sales!

Honestly I could care less what eBay does.

I'm semi retired and loving it.