ebay authenticity guarantee limits now 250/750

[Exhibitman]

We all know that eventually this will just be another skimming center for eBay fees. Sellers will receive that "we just did something great" email ramming this 'service' down our throats at a cost, and eBay will skim its 3% off the deal for processing payments for this 'service'. The proof that this is a proposed profit center rather than a legitimate effort to protect buyers is in the complexity of the solution. The vast majority of card buyers are familiar with what they are buying. If you want the buyer to have a chance to look over a raw card purchase, the answer is simple: give all buyers three days from receipt to review their purchases and hold the funds until the three days is up. if the buyer decides to return the item during the return period, the funds are there pending proof of return to the seller. It is called "escrow" and it doesn't cost eBay a dime: eBay is already processing and holding funds. If the buyer doesn't apply for a return, then after three days the buyer is SOL. And don't do it at all for slabs--they are already vetted. But nooooo, eBay prefers a solution where everyone has to be inconvenienced and put at the mercy of a third party's (possibly bad) judgment. Why? Because eBay can make money off that process whenever it decides to force the cost onto sellers by charging its funds processing fee on the cost.

Why unveil this now? Probably because in their recent earnings call, eBay cited Gross Merchandise Volume (GMV) down 17% in the first quarter of 2022, year-over-year. Revenue down 5%. And the number of active buyers dropped 13% from 163 million in Q1 2021 to 142 million in Q1 2022. They are scrambling for revenue and imposing a new service and skimming yet another processing fee is a way to get it.

So when does the cost get imposed? I'd guess around Black Friday, just in time to force sellers to choose between paying the piper in order to sell into the holidays or telling eBay to get stuffed and scrambling for another platform.

[jchcollins]

Originally Posted by Exhibitman

We all know that eventually this will just be another skimming center for eBay fees.

Exactly. At best the current setup is a disproportionate solution that doesn’t really fit the problem. Oh, and it’s easily turned into a fee generating service…


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[sreader3]

Originally Posted by Exhibitman

Probably because in their recent earnings call, eBay cited Gross Merchandise Volume (GMV) down 17% in the first quarter of 2022, year-over-year. Revenue down 5%. And the number of active buyers dropped 13% from 163 million in Q1 2021 to 142 million in Q1 2022. They are scrambling for revenue and imposing a new service and skimming yet another processing fee is a way to get it.

I believe (my opinion of course) that a lot of this decline in eBay sales and sellers has to do with the new 1099 requirement imposed on eBay, PayPal, Zelle, Venmo, etc. to report aggregate annual gross transaction revenues per seller over $600 -- which was part of the 2021 American "Rescue" Plan. The new service/skimming will ultimately not work and just shoo more sellers (and buyers) away from these platforms. It is fair to say that this new 1099 requirement makes unscrupulous sellers who under-report sales pay what they owe; on the other hand, many sellers (myself included) who report their card income to the IRS simply don't want the hassle of receiving a 1099 and will no longer deal with these platforms.

[BobC]

Originally Posted by sreader3

I believe (my opinion of course) that a lot of this decline in eBay sales and sellers has to do with the new 1099 requirement imposed on eBay, PayPal, Zelle, Venmo, etc. to report aggregate annual gross transaction revenues per seller over $600 -- which was part of the 2021 American "Rescue" Plan. The new service/skimming will ultimately not work and just shoo more sellers (and buyers) away from these platforms. It is fair to say that this new 1099 requirement makes unscrupulous sellers who under-report sales pay what they owe; on the other hand, many sellers (myself included) who report their card income to the IRS simply don't want the hassle of receiving a 1099 and will no longer deal with these platforms.

Scot,

You've hit the nail on the head!

[FrankWakefield]

eBay seems to have commenced a process designed to reduce or minimize fraud from sellers misrepresenting sports cards. Examples would be reprints, altered cards, or altered TPG holders.

So how many items are there on which eBay pay out refunds? If a seller knows that the item he's selling isn't genuine, that's fraud. If he's mistaken as to what the item is, that could create a civil liability, but maybe not criminal liability.

So, what is it eBay is trying to fix? Are they trying to minimize criminal fraud? Are they trying to reduce civil liability? Are they trying to protect buyers? Are they trying to retain buyers rather than have a buyer leave eBay rather than continuing to get burned?? Are they trying to minimize their own potential civil or criminal liability from providing a platform for problematic sellers to market their items to the unaware?

I think this move is geared toward protecting themselves from problems one day when law enforcement commences an inquiry or investigation about the selling of reprinted or altered cards or TPG slabs. Part of the problem with TPG is that people buy stuff not knowing what they're buying. Maybe like buying a diamond... you need to know and trust your jeweler. Most of us here aren't idiots, but how many of us can distinguish diamonds from other stuff with certainty? Most of us are better at spotting a reprint T206 or an altered T206 in amongst some real T206s. But there are lots of people out there who lack that discerning eye that most of us have.

Reckon the day law enforcement takes action is coming soon? Maybe eBay thinks it is.

[jayshum]

Originally Posted by sreader3

I believe (my opinion of course) that a lot of this decline in eBay sales and sellers has to do with the new 1099 requirement imposed on eBay, PayPal, Zelle, Venmo, etc. to report aggregate annual gross transaction revenues per seller over $600 -- which was part of the 2021 American "Rescue" Plan. The new service/skimming will ultimately not work and just shoo more sellers (and buyers) away from these platforms. It is fair to say that this new 1099 requirement makes unscrupulous sellers who under-report sales pay what they owe; on the other hand, many sellers (myself included) who report their card income to the IRS simply don't want the hassle of receiving a 1099 and will no longer deal with these platforms.

If you are already reporting card income, why is receiving a 1099 a hassle? Is it because all that is reported is the total amount sold with no indication of costs (and therefore profit)?

[Exhibitman]

Originally Posted by jayshum

If you are already reporting card income, why is receiving a 1099 a hassle? Is it because all that is reported is the total amount sold with no indication of costs (and therefore profit)?

I don't get that logic either. Most of the average person's income is already reported and papered: W2, 1099INT, K1, etc. What difference does it make if there is one one piece of paper in the pile? The tax reporting obligation remains the same regardless.

[Deertick]

Originally Posted by Exhibitman

I don't get that logic either. Most of the average person's income is already reported and papered: W2, 1099INT, K1, etc. What difference does it make if there is one one piece of paper in the pile? The tax reporting obligation remains the same regardless.

The same reason charitable deductions (not donations) went down when the IRS started requiring documentation. Overstating went down because of documentation and now understating is going to take a big hit.

[Lorewalker]

The burden for having the documentation or proof to validate your costs or deductions has always been there. Only thing is that might be different now is the impression that just because a 1099 is issued it means you will be asked to provide the proof. One should still have it even if it is never needed.

Accountability is only ever a problem when you really and truly do not want to be accountable...imo.

[Exhibitman]

Originally Posted by Lorewalker

Accountability is only ever a problem when you really and truly do not want to be accountable...imo.

That's true. Again, I don't see how a 1099 is of concern to anyone who has been following the tax laws already. Heck, as a lawyer I get a 1099 from anyone who pays me. Stacks of them every year. Just a waste of paper since I keep proper books. Same with eBay sales: just keep proper books and the 1099 is just a piece of junk mail.

My uncle was a tax attorney in DC for decades. His advice: pay your taxes. Just pay your taxes.

[BobC]

Originally Posted by Exhibitman

I don't get that logic either. Most of the average person's income is already reported and papered: W2, 1099INT, K1, etc. What difference does it make if there is one one piece of paper in the pile? The tax reporting obligation remains the same regardless.

Although I believe that the main issue and reason for reduced Ebay business in 2022 is because most sellers who previously weren't reporting their Ebay sales on their tax returns don't want to risk getting a 1099 and having to report those sales for income tax purposes going forward, there is possibly another issue/reason that may influence those who were already reporting their sales for tax purposes.

By receiving a 1099, that seller's activity is now formally entered into the IRS' system and subject to additional scrutiny and review as part of their automated system. ALL 1099's the IRS ever receives are matched to the recipient's respective income tax returns, and ANY perceived tax discrepancies or errors are going to result in an automated response from the IRS.

And maybe even more importantly to some, there is the intrinsic belief or perception that receiving a 1099 indicates the recipient is operating a business and acting as a dealer, and is therefore not an investor or collector. It at least opens the door for the IRS to come asking questions as they will likely assume the 1099 recipient is operating as a dealer in business as well. And lacking any direct evidence or documentation to the contrary, the IRS ALWAYS assumes the most negative impact to the taxpayer, until it is proven to them otherwise. All for which means the 1099 recipient should prepare and be ready for such questions in advance, and have answers and records ready to prove their purpose and intent to the IRS, if and when needed.

At a minimum, the negatives for being treated as a dealer include having all your net income always treated as ordinary income, subject to the highest possible tax rates. There is no potential long term capital gains tax rate limit of 20%/28% on business net income, that is only available if you can claim you are a selling items as a collector or investor. Also, being in business means that in addition to income taxes, the net income you make from selling your cards/items is now also subject to self-employment taxes (social security and Medicare taxes), which can be as high as 15.3% of you net taxable income from such sales, AND THAT IS IN ADDITION TO THE INCOME TAXES YOU'LL OWE ON THAT NET INCOME. On the plus side, you do get to deduct additional business related expenses you don't get as a collector or investor, but I can see many people not wanting to bother with the work and hassle of doing so, and dealing with the additional scrutiny it can bring from the IRS as a result.

So, there are possibly some other very good reasons for people not wanting to receive a 1099, other than just not wanting to have to report the sales income on their tax returns.