Tuesday, April 1, 2008

EBay VIOLATES Federal Law 11 U.S.C. 362 Automatic Stay

Tucson, AZ, March 31st 2008. -Early March, 2008 U.S. auction site eBay Inc. gets notice of a Chapter 11 Reorganization from a top level titanium power seller, Foxy Findings, an established Tucson, AZ based business with over 80 employees selling exclusively on eBay. March 7th, 2008 without warning, Ebay proceeds to shut down Foxy Findings, ignoring Federal law which states that a company in bankruptcy protection cannot be interfered with. Ebay further engages in alleged anti-trust violations when in a deliberate coordinated action with Ebays' wholly owned subsidiary Paypal, over $50,000.00 of Foxy Findings' company funds are seized from the company's Pay Pal account in an effort by eBay to hedge exposure. Ebay and Pay Pal are publically traded companies on the U.S. based NASDAQ exchange (eBay Inc, EBAY.O and Paypal, PYPL.P).

Foxy Findings, which paid over $700,000.00 in the past year in fees to eBay was shocked when without notice, warning, or communication; eBay made Foxy Findings an "UNREGISTERED USER", effectively shutting down the small businesses' ability to generate or collect revenue. Such actions by eBay were not only reckless but a clear and undisputed violation of the federal automatic stay law as governed by the bankruptcy code. Attorney for eBay and Paypal, Mathew Waterman stated that "major power sellers on eBay filing for bankruptcy protection is a unique occurrence for eBay" and as such it is clear that eBay has not developed adequate internal controls which prevent such a violation of Federal law from occurring again. As U.S. bankruptcy filings are predicted to be the highest in years, violations by eBay of 11 U.S.C. 362 and the mandatory automatic stay law are expected to continue, thus exposing eBay to more potentially egregious punitive damages against the publically traded company.

Tucson based Federal Judge, Eileen W. Hollowell warned eBay's legal counsel in open court, that such actions were a violation of eBay's responsibilities to Foxy Findings under the "executory contract" relationship between eBay and Foxy Findings. In fact there are thousands of obligations and responsibilities to be considered by each party at any given time on the auction site. Foxy Findings, (eBay user name Foxy_Facets) routinely lists as many as 60,000 items for sale on the auction site every week; each of which holds specific performance obligations by eBay and Foxy Findings or any seller for that matter. In essence eBay and Foxy Findings are trading partners and both rely on each other to honor agreements.

Further anti-trust issues were raised when on the 7th of March, 2008 at or about the same time that eBay shut down Foxy Findings stores, due to notice of the bankruptcy filing, a call to Ann Powers at Paypal was made by eBay's Merchant Fraud Division, allegedly instructing her to seize the cash assets of Foxy Findings held in the company Pay Pal account. Foxy Findings ability to access their Pay Pal account, pay bills, issue refunds to customs, or resolve disputes that were now rolling in as a result of being an "unregistered eBay user" were halted and any communication by Foxy Findings with Pay Pal was restricted until further notice by Paypal. Paypal in the mean time would enjoy the benefit of holding nearly $50,000.00 of Foxy Findings capital. It was not until Federal Judge Eileen W. Hollowell instructed the release of the funds to Foxy Findings that Paypal then partially restored access to Foxy Findings in an effort to appease an aggravated situation.

Paypal inc. is a wholly owned subsidiary of eBay Inc. and as such is a separate entity entirely. Investigation into Paypal and eBay practices involving the seizure of funds per eBay's request is ongoing and as March 31, 2008 Paypal still holds tens of thousands of dollars belonging to Foxy Findings without reason or consideration as to the potential liability such actions will bring. An Evidentiary Hearing is now scheduled for the 24th of April, 2008 in which eBay and Paypal will testify under oath in a Federal Court as to the merits of their violations and ensuing actions. Foxy Findings owner, John A. Jacobs states that "the eBay shut down substantially damaged the business and that the hostility by eBay towards the company since the shutdown has been fierce". In fact John indicates that he expects eBay will do anything possible to shut down his business which grossed over three million dollars on eBay in 2007 and showed growth potential of up to six million dollars in sales on eBay for 2008. In the meantime eBay and Paypal have been advised by their council to discontinue communication with Foxy Findings, and have issued minimal statements suggesting that the shutdown of Foxy Findings business and seizure of funds were not in fact related to the company's bankruptcy filing.

Hostilities towards eBay sellers by eBay are nothing new says customer service manager for Foxy Findings, Jessica Johnson. There are dozens of sites popping up all over the internet filled with sellers whom are frustrated and fleeing eBay in a mass exodus as search algorithms and feedback changes affect the way business is conducted on eBay. "It takes a Federal Judge to get eBay to do the right thing" says Jessica who deals with customers every day asking her when Foxy Findings when offer items on a traditional based web site instead of the eBay auction site. Until March of this year Foxy Findings predicted that their relationship with eBay would be a long and happy union, however John A. Jacobs reports that this will most likely no longer be the case as he has watched over the last week as eBay has now systematically suspended the registration of family members with unrelated eBay accounts in an effort to expel any seller bearing the last name "Jacobs" from eBay auction sites.

Certainly eBay represents the most volatile threat to our external environment of business states John A. Jacobs. "Even in a slowing economy we projected a healthy growth trend this year, since eBay's attack on our business, we have lain off dozens of employees and are now barely operating on eBay under an "auction cap" that restricts our auctions to almost half what we used to offer". John A. Jacobs goes on to point out that not only did the actions of eBay cripple his growing business, but it devastated his reputation on eBay and substantially harmed his feedback and reputation with customers. It is expected that Foxy Findings will show negative growth numbers for 2008 as a result of eBay's and Paypal's actions and the company hopes for a swift resolution which could involve sanctions and injunctions against eBay as soon as April.

In a group discussion with the remaining 37 Foxy Findings employees a general undertone of concern filled the room as layoffs and family hardships were fresh on everyone's thoughts. Those who still had jobs were ready to fight for them, they all agreed that working harder with fewer employees was better than standing in the unemployment line. The Foxy Findings employees who could afford to miss a day of work, pledged to be in the courtroom at 10:00am on the 24th to show their support for the company.

Several related sites where you can post your opinion about this article are http://www.paypalbreakslaw.blogspot.com/ or http://www.powersellersunite.com/

ebay user: Foxy_Facets (www.stores.ebay.com/foxyfindings) Titanium Power Seller

Show support for this seller: www.FoxyFindings.com