- Online marketplaces need comprehensive user policies that detail the types of items sold through their sites and a combination of software filters and human review to ensure that listed equipment is not shipped inappropriately. (Carson)
- Regulators need to provide key word lists and regularly communicate with online marketplaces in order for screening and filters to be effective. (Carson)
Previous discussions at the workshop had identified the Internet and online marketplaces as an avenue for transnational movement of used chemical manufacturing equipment and therefore as a new challenge to non-proliferation activities. At the start of the second day of the workshop, Michael Carson, Senior Manager for Global Regulatory and Policy Management at eBay, spoke about the steps that eBay takes to prevent regulated or illegal equipment from being sold and exported through its online auction site without the proper licenses.
The eBay brand comprises three major businesses: eBay Marketplaces, its online auction site; PayPal, an online electronic payment system; and eBay enterprise, an e-commerce provider for large businesses. eBay Marketplaces, Carson said, has 145 million active users and 650 million live listings at any one time. “From my perspective, we are always trying to find the proverbial needle in a haystack because 99.9 percent of those listings are completely legitimate,” said Carson. “There are a small percentage of items that my group and a group within eBay concentrate on and are looking at for violating listings. We also educate users about what potential hazards may be out there with different listings.”
For those at the workshop who were not familiar with eBay, Carson explained that it acts as a marketplace that brings together buyers and sellers and it never handles the goods itself. Sellers list items on the Marketplace and buyers from around the world can look at these items, bid on them, buy them, and receive them directly from the seller. All that eBay does is facilitate the auction and collect and disburse the purchase price of the items. eBay earns revenue from an item listing fee and a small percentage of the final sale value. Other online marketplaces compete with eBay, said Carson, including Amazon, Craigslist, uBid, and eCrate.
eBay has policies set forth in a user agreement that details the type of items that cannot be sold through its Website. These policies, of which there are 54 that relate specifically to prohibited and restricted items, are enforced by monitoring users with a variety of tools, including filters created from information about export controls. The goal, said Carson, is to prevent listings that violate these policies from getting on the site and then educating those who try to list a prohibited item so that they do not try again. If a prohibited item does get listed on its site, eBay works with investigators around the world to deal with that after the fact. “Whether it is working with law enforcement on an investigation of a fraudulent transaction or potentially illegal transaction, we have a whole team of people around the world that work with law enforcement to provide them with information to help with that investigation and if appropriate, prosecute those sellers that may be violating our policies,” explained Carson.
Aside from the user base complying with the provisions of the user agreement, eBay employs teams of customer support agents around the world to examine thousands of listings per day that are identified by filters as potential problem listings. In some cases, this review results in eBay contacting the seller and providing them with information so that they can list the item, such as listing it only on eBay’s domestic site and not on its international sites, which would create the chance that the prohibited item would be exported. In other
cases, the items are permanently blocked with no referral to customer service agents.
To illustrate how eBay enforces its listing prohibitions, Carson gave three examples that took place within one week, earlier in 2014. In the first example, a small Canadian town tried to auction a 40 foot sperm whale that had washed up on its shores after the Canadian government rejected the town’s call for help. Unfortunately for the town, eBay has a policy that prohibits the sale of endangered species—even dead ones—and the company notified the town that they could not list the carcass. “When we were developing our animal parts policy, we certainly didn’t have this in mind,” said Carson. “As you can see, we need to be able to expect anything.”
In the second example, eBay was approached by the Australian Consumer Protection Agency about people selling inflatable pools that violated a new enacted safety standard. In response to the Australian government’s request, eBay created a message to inform users of this new provision of Australia’s law. Using filters, eBay’s system automatically targets and notifies relevant individuals “This is a very targeted effort. We are not messaging anybody who is listing an item on eBay’s Australia site about swimming pools,” Carson explained.
The third example involved a visit from a special agent from the Naval Criminal Investigative Service (NCIS) who talked to the company about goods whose export is controlled by ITAR and Export Administration Regulations (EAR). From eBay’s perspective, the company prohibits these items from being exported outside of the United States altogether. NCIS wanted to know how eBay dealt with these items and understand how its filters work, while eBay was interested in improving its filters with keywords that NCIS could provide. “It is a collaborative situation when we work with these regulatory agencies,” Carson explained.
eBay’s prohibitions related to ITAR and EAR-regulated goods, detailed in one of its 54 policies, starts from a policy position of first trying to educate its user community about the regulations. For ITAR-listed items, eBay’s policy states that both buyer and seller have to be located within the United States. The policy provides a Web link to the relevant regulations. eBay’s guiding philosophy is that the majority of its users are not trying to abuse the system and that they comply with these policies once they are educated about the prohibitions for specific items.
The eBay Listing Violation Identification System (eLVIS)—the filters that screen every potential eBay listing before it is posted to the Web—is a rules-based engine built using keywords from a variety of sources. Among these sources are member reports—every eBay member can report an item as a potential violation—internal input, regulatory agencies, law enforcement agencies, and industry. eBay works closely with the Food and Drug Administration and Drug Enforcement Agency, for example, in the area of drugs and supplements, both legal and illegal. It also works with the Consumer Products Safety Commission to identify recalled items, with the Fish and Wildlife Service on prohibited items such as ivory carvings, and with the U.S. Agriculture Department on the important export of seeds, plants, and animal products. The company works with a similar set of regulators in the European Union, Australia, and the Asia-Pacific region, though Carson added that these international agencies have not been as interactive with eBay as have U.S. agencies in terms of providing keywords or language for the filters.
In some cases, law enforcement agencies will act as a buyer on the site for undercover investigations. To create export control filters, eBay looks at several listing attributes, including the keywords used to describe the product, the category in which it is listed, the shipping destinations and the location of the eBay site where the item is posted, and the buyer’s location. Carson noted that improving the filters to reduce false positives and still catch prohibited items, all while keeping the filters up to date, is a never-ending process. “We are always trying to fine tune the filters and looking at different circumvention techniques,” said Carson.
He described an example of the type of blocking message that gets sent to a user. In this case, the user was selling night vision goggles, which are legal to sell but not to export from the United States under ITAR regulations. The message informs the seller that the item cannot be exported, but that it can be listed if the seller restricts shipping options to exclude shipping outside of the United States. It also provides links to the relevant regulations and eBay’s policies concerning items that violate those regulations so that the seller can learn from the experience. Similarly, if a buyer tries to purchase an item that requires an export license from another country, the system notifies the buyer of that requirement and again provides links to relevant information.
While eBay is dedicated to being a good corporate citizen, it is also concerned about the eBay brand. “We don’t want to be associated with illegal items or brand-damaging items. We don’t want the headline to be that users saw a drone on eBay that was exported to Syria or something like that. Even though eBay may not be directly liable for that—it may be the seller who is prosecuted for it—it is brand damaging for us from an eBay perspective and also it impacts whether other people are going to use eBay,” said Carson. “It is in our own self-interest, separate from the legal and regulatory interest, to make sure that we have a safe and well-lit marketplace that is actively policed.”
When asked how long it takes from the time a flag occurs to when a person reviews the flagged listing, Carson replied that the goal is 6 hours, though sometimes it can take as long as 24 hours. Richard Cupitt then asked if eBay refers blocked items to law enforcement agencies. Carson replied that the
listings for any flagged item are delayed automatically from posting for 6 hours. He added that blocked items—those that are immediately spotted by eLVIS, blocked, and never referred to customer service—are never posted so there is nothing to refer to law enforcement. “If there is an item that does get onto our site and then is exported, we will work with the law enforcement agency, either proactively if we find it or reactively if they come to us, to provide them with information for this seller. In that scenario, we have a whole team that works with law enforcement on that,” said Carson.
Cupitt also asked if eBay works with the Department of Commerce on items regulated by EAR. Carson explained that with EAR, since it can cover such a wide variety of goods, the company looks at large categories of items and broader-based keywords so that it can send an educational message to both buyers and sellers. “We are not actually blocking the item,” said Carson, “because at the end of the day, we don’t know whether it is actually export controlled or not or if it is to which countries. The approach we try to take is we cast a broader net for EAR, but from an education standpoint as opposed to blocking and taking down.”
Astrid Lewis asked how eBay employees are trained to use eLVIS. Carson explained that it brings representatives of regulatory and law enforcement agencies to its Salt Lake City service center, which is where its North America eLVIS team is located. eBay and the agencies see these training sessions as two-way streets, Carson said, because both parties end up learning through these interactions. The agencies, for example, learn what eBay is seeing in terms of new trends, while eBay learns about any gray areas that need particular attention. He noted, too, that the eLVIS database has upwards of 20,000 different rules, each of which can contain from five to a thousand keywords, and that the company tries to focus on areas where historically it has seen violations. “We are trying not to boil the ocean,” he said. “We are always iterating, always going back and looking at how did this item get through.”
Kathryn Hughes asked Carson if he knows of other companies that go through similar lengths to screen the items it sells or lists. He replied that the situation is mixed, with some companies taking the same intensive approach that eBay takes and others that are completely reactive—letting anything on the site and then taking it down only when someone outside the company, such as user or law enforcement, points out a problem. “As much as our stockholders wished that everything you could buy and sell is only on eBay, unfortunately, that is not the case. There is a whole big Internet out there with different ways they can bring buyers and sellers together,” said Carson. “Even if we solved the problem on eBay in a particular area, that is not going to solve the problem on the Internet by a long shot.” He said eBay does share its best practices through various industry groups and it benefits from what other companies are doing in this area, too.
Clara Zahradnik asked Carson if chemical manufacturing equipment ever appears on eBay. He replied that such equipment is listed under the business and industrial category, which can also include items such as medical devices and farm machinery. He also noted in response to a question from Prieto that eBay tracks the type of blocked items that users try to list and how frequently they do so in order to spot trends that could be useful both for internal screening efforts and law enforcement agencies.
In response to a question from Cupitt as to whether eBay screens for names on specifically designated terrorist lists, Carson responded that eBay Marketplace does not, but PayPal and other financial institutions do that. “Ultimately, there is no way to use eBay without a financial instrument, so we rely on PayPal’s screening for that,” he explained. He added that eBay does look for items from embargoed countries, such as Cuban cigars and Iranian rugs, and for specific items by name and part number that are ITAR-listed. Carson explained that while some ITAR-listed items can be exported with the proper export license, eBay has no practical way of checking whether the sellers have the required licenses. “We made the decision to say if it is ITAR controlled, it can’t be shipped outside the United States,” said Carson.
Detlef Maennig asked if eBay can be sued for having prohibited items on its site. Carson said that generally speaking, the company has immunity in the United States as a marketplace because it does not control the items. “Ultimately, the legal responsibility falls on the buyer and/or seller in those areas,” he explained. From a civil standpoint, eBay has been sued by a number of rights owners over counterfeit goods, but so far, the company has successfully defended itself in those cases. “We do have programs in place to address those concerns, but ultimately it is not eBay’s legal responsibility.” In Europe, he continued, the standards are somewhat different, and the company has an international legal team to deal with the legal responsibilities.
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