eBay: a Website built on trust.

• Author: Hiebert, David
• Position: Special Report on Consumer Law

eBay is the world's largest online auction service, eBay uses the power of the Internet to help buyers and sellers find each other and agree upon a price. At any given time, eBay has millions of different auctions running each day!

The biggest difference between eBay and a store is that when you buy something on eBay, you are not buying it from eBay. In fact, when you buy something on eBay, you could be buying it from anyone in the world! As you might imagine, buying things from people you don't know in far away places requires trust.

This article explores the importance of trust in buying and selling goods, especially over the Internet, and how eBay helps people to trust each other when they can't use normal methods of deciding whether to trust someone.

Trust Issues

A sale of goods is really two things--the transfer of goods from the seller to the buyer, and the transfer of money from the seller to the buyer. These two transfers normally occur at the same time in the real world. You transfer your money to the store by paying for the milk at the till. The store transfers the milk to you by letting you take it home with you.

However, when you buy something on eBay, the two transfers get separated because the seller and the buyer never physically meet. This creates a problem of trust because at least one person (usually the buyer) must trust the other to complete the sale. Either the buyer must trust the seller to deliver the goods after the buyer has paid the seller or the seller must trust the buyer to pay for the goods after the seller has delivered them. (There are other alternatives such as escrow services, but they add to the cost of the transaction.)

One way to tell whether you can trust somebody is by checking their reputation for being trustworthy. In the real world, you can measure someone's reputation for trustworthiness by asking other people whether they think that person is trustworthy, but this only works if you know someone who knows that person. Since eBay can match buyers and sellers from around the world, it is more likely that you will be dealing with someone that you have no normal way of telling whether you can trust them or not.

Feedback

eBay's answer to how to measure someone's trustworthiness is to check their "feedback rating", eBay's system is best explained by a quote from Dr Phil--"the best predictor of future behavior is past behavior." eBay's feedback system keeps track of past behaviour of buyers and sellers on...