June 20, 2008 / 1:41 AM / in 10 years

EBay, PayPal offer new perks to buyers and sellers

SAN FRANCISCO (Reuters) - EBay Inc buyers and sellers using its PayPal online payments service will be protected from fraud for the full value of auction purchases, expanding a more limited program, eBay said on Thursday.

The eBay headquarters in San Jose, California is seen in an undated handout photo. REUTERS/eBay/Handout

The company, fighting to keep sellers off rivals such as Amazon.com Inc, also said sellers with top ratings would get an improved 20 percent discount on auction fees.

EBay has been taking steps this year to reward its best sellers and give new incentives to buyers, including coupons.

Later this year, eBay will refund buyers using PayPal up to the full price of items bought on the site in case of fraud. Sellers will be protected from fraudulent credit card use.

The moves — to be detailed on Friday at eBay Live, the company’s annual conference for its top sellers taking place in Chicago this week — are designed to boost trust in the eBay marketplace as part of a plan to revive growth in its auction business, which has seen slowing growth in recent years.

Customer feedback and ratings of sellers, key ways for them to win buyers’ trust on eBay, is one focus in dozens of changes it is making in how buyers and sellers interact. Sellers with feedback ratings of 4.9 on a 5.0 scale get the new discount.

“Buyer and seller protection will become the hallmark of eBay,” Lorrie Norrington, president of eBay marketplace operations, said in an interview ahead of her Friday speech.

PayPal Buyer Protection covers undelivered items and items that are significantly not as described. Later this year, PayPal will remove existing coverage limits where buyers in many cases were only protected up to $200 in purchase value.

PayPal’s increased buyer and seller protections will take effect before the holiday shopping season. Similar protections were recently announced for eBay customers in Australia.

Buyer protection was initially introduced in 2004 and has gradually expanded. So-called “power sellers,” who often have shops set up on eBay, were offered the protection this year.

Now all transactions will be covered, and the number of sellers covered will be increased 30-fold, Norrington said.

An estimated 1.3 million people make a living selling goods or services on eBay. The offer covers those shipping to buyers in any of the 190 markets worldwide where PayPal is accepted.

“The seller does not bear the risk as they do with credit cards,” Norrington said. “There is a step change (improvement) with sellers in safety.”

There are some 84 million active eBay users. Three-quarters of U.S. auction listings are paid for with PayPal, and nearly 60 percent of PayPal payments are made on eBay.

MAKING BUYERS HAPPIER

The company is testing various loyalty programs and plans to distribute millions of discount coupons to eBay buyers by the end of June, with the bulk going to U.S. customers.

In addition, top sellers have been given priority ranking in search results. Listing fees have been cut in many cases, as eBay has shifted to charge more for successful transactions.

The San Jose, California-based company also has raised listing standards to discourage overcharging on shipping or not describing items accurately.

In other moves aimed at keeping buyers from going to Amazon and classified site Craigslist.com instead, eBay plans to offer toll-free phone support to top customers this holiday season.

EBay began experimenting this month with a radical redesign to give buyers on its Italian site a more comprehensive view of items, with those up for auction and those sold in fixed-price shopping formats appearing on the same page, Norrington said.

On Monday, Stifel Nicolaus analyst Scott Devitt upgraded his investment rating to “buy” on eBay, based on recent changes made to tighten up sales procedures and make it easier for buyers to find products for sale.

“EBay is forcing sellers to treat buyers better,” Devitt wrote in a research note to investors. “(It) is making positive progress in its efforts to increase trust on the site.”

Additional reporting by Eric Auchard; Editing by Braden Reddall

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