Ebay's Ban on Virtual Property Auctions

This year, as of late January, eBay, the widely popular online auction site, has been actively enforcing a new policy of banning the sale of virtual property by removing any auction listings selling virtual merchandise from online games. The ban includes not only video game accounts and characters but also in-game currency, weapons, and any other virtual items. Interestingly enough, this new policy does not apply to the virtual world of Second Life.

The Process of Buying and Selling Virtual Property on eBay

Prior to the ban, the selling of virtual game goods on eBay was multi-million dollar market. Sellers would list auctions for online game accounts, characters, and/or items with descriptions of what they were selling, method of delivery, and usually a picture. When selling accounts, the seller, upon receiving payment from the winning bidder, would usually e-mail the winning bidder with a username and password to the game account they were selling. When selling virtual items and not whole accounts, the seller would either create a "mule" account and send the winning bidder the username and password or meet the winning bidder in the game and deliver the item using an in-game trading system.

Why Did eBay Ban the Sale of Virtual Goods?

This new policy was allegedly instituted to avoid complex legal issues that are associated with virtual property. Selling accounts and property is usually illegal according to the EULA (End User License Agreement) and terms of service of most online games. By no longer allowing users to buy and sell virtual property on their site, eBay may have avoided future legal action against them.

Besides that, another motive for eBay to ban the sale of virtual property is to reduce time spent dealing with customers who were misled or ripped off over a virtual property auction. Unlike physical goods, whose shipments can be tracked and confirmed, there is no effective way to track the delivery of virtual items of game accounts. Naturally, this means that bidders run the risk of being victims of fraud. eBay had received several complaints about sellers accepting payment for virtual property and then never delivering the goods.

The Exception to the New Policy: Second Life

The selling of virtual property from all online games has been banned under eBay's new policy with the exception of one: Second Life. Second life is an online community that allows you to script and create your own buildings, objects, etc. You can even you're your own business in this online community. Several Second Life players make part time to full time income from their Second Life Business. eBay has not banned the selling of virtual property from Second Life likely because it is not considered a game by many.

The Pros and Cons of Banning Virtual Property Auctions

The positive aspects of eBay's decision to ban the sale of virtual goods is already discussed in the above two paragraphs. By not allowing virtual property auctions, eBay avoids future legal complications and reduces the amount of time their customer service must spend dealing with consumers who have been defrauded.

However, this policy also has a downside. As mentioned earlier, the sale of virtual property on eBay was a multi-million dollar market. eBay profits from sales their users make by charging varying listing fees (dependent upon starting price, amount of pictures, listing features, etc.) as well as taking a percentage of the final sale value. By banning the sale of virtual game items, eBay will lose the profit it was receiving from the sale of these items. In addition to this, eBay's new policy will likely cause many sellers to take their business elsewhere.

eBay's new policy may have cost them the revenue gained from virtual property sales commissions but in the long run it was probably good idea. They no longer have to worry about (as many) disgruntled customers or potential legal action from the gaming industry.