A class action lawsuit has been filed with the Tel Aviv District Court, amounting to tens of millions of shekels, against the owners of online auction sites. The petitioners claim that the sites committed systematic fraud through the selection of auction participants.
The respondents in the lawsuit are the companies owning the websites Get It, Nanashops, Olsale, P1000, and Wallashops. The lawsuit also cites as respondents more than 60 vendors who sell products on these websites. The petitioners claim that the websites “handle more than 85% of the tenders of all electronic commerce in the country.”
The petition states that the websites defraud participants in auctions by blocking their legal right to win products that the sites determine to be “underpriced”. The petition also claims that this practice is carried out through the use of fictitious bidders during an auction. The petitioners claim that they have gathered evidence that “leads to only one logical conclusion” - systematic fraud.
The petitioners cite the example of “D. from Kfar Saba”, who used the username “david267” to participate in auctions by vendor Vitorio Divani Ltd. on Olsale. This user won auctions for 13 living room sets, six dining room sets, and three bedroom sets, all supplied by Divani, and all during a period of less than one month.
The findings gathered also indicate a periodic recycling of usernames by serial winners. For example, many users were located who won many sales by the same vendor, Divani, all of whom had the same username structure, which combined a private name and the number 267. In addition to david267, there was haim267, who won 21 Divani living room sets; yoni267, who won 14 living room sets; rvka267, who won 13 living room sets; tzch267 and shiri267, who each won 11 living room sets; as well as others, all within the period of one month.
The petitioners claim that the “phenomenon is very widespread. Fraudulent and misleading acts have a huge quantitative and financial scale. On the basis of the evidence gathered, it can decisively stated that a large proportion of the vendors benefit from the use of fictitious bids, and that each month, thousands of improper auctions are held. Only after full disclosure of the relevant data by the websites and the vendors will it be possible to prove the full scope of this huge fraud, which has been going on for years.”
In addition to the lawsuit, the petitioners are asking for a temporary injunction banning the websites from amending, erasing, or disposing auction sales data that they have collated, so that it will be possible to discover the extent of the fraud and the damage.
No statement of defense has yet been filed.
Wallashops said in response that it has never been involved in the sales, either through fictitious bidders, or through the automatic system. “Wallashops was the first of the e-commerce websites to publish a service contract in which it promised transparency, fairness in transactions, and a customer financial guarantee in every case, and in which it undertook not to intervene in sales,” the website stated.
Wallashops says that its contracts with vendors require them not to intervene in sales. “Wallashops considers itself free to sue the petitioners in the event that its reputation has been harmed,” it added.
Published by Globes [online], Israel business news - www.globes.co.il - on September 3, 2007
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