Stricter Rules Ahead: What eBay Sellers Need to Know About $59 Million DEA Settlement
eBay agreed to pay $59 Million to settle DEA allegations regarding pill presses, molds, stamps, and dies sold on the platform, in violation of the Controlled Substances Act (CSA), but how will enhanced compliance requirements impact sellers on the site?
Liz Morton
The DEA claimed eBay violated the CSA by failing to comply with requirements set forth in connection with transactions involving pill-making machines from at least October 25, 2015, through the present, making the following specific allegations:
- During the Relevant Time Period, transactions involving pill-making machines occurred on eBay’s online marketplace, including sales of pill presses that were shipped to buyers in the United States.
- During the Relevant Time Period, eBay did not comply with the CSA’s reporting and recordkeeping obligations in connection with any transactions of pill-making machines on the platform.
- Thousands of the pill presses sold on eBay’s online marketplace to buyers in the United States were high-capacity pill presses capable of producing thousands of pills per hour. The vast majority of these commercial-grade machines were shipped to residential addresses.
- Hundreds of buyers during the Relevant Period also purchased stamps used to mimic legitimate pharmaceutical manufacturer markings that are stamped onto pills (“counterfeit dies”). For example, multiple eBay buyers with residential shipping addresses purchased pill presses and counterfeit dies bearing the imprint “M30,” which is the marking associated with 30 mg oxycodone hydrochloride pills manufactured by a legitimate pharmaceutical company.
- Numerous individuals who purchased pill presses on eBay were subsequently successfully prosecuted in connection with trafficking illegal drugs, often involving counterfeit pills.
- eBay failed to maintain certain records for transactions involving pill-making equipment, as required by 21 U.S.C. § 830(a). Because eBay did not verify purchasers’ identifications, eBay did not record the type of identification information required by the CSA.
- Despite the thousands of transactions that occurred on its online marketplaces, eBay did not report any transactions involving pill-making machines to the DEA, as required by the CSA, 21 U.S.C. § 830(b)(1)(D).
eBay denies any wrongdoing and thus settlement is not an admission of liability, but "to avoid the delay, uncertainty, inconvenience, and expense of protracted litigation of the above claims" both sides agreed to a $59 Million settlement and enhanced compliance and risk procedures.
Some of those procedures will require eBay to create and enforce stricter policies governing certain items sold on the platform as well as collect and share information about buyers and sellers with the government.
The Company shall ensure such policies and procedures related to the Relevant Products address:
a. Continued prohibition of listings on the Company’s online marketplaces of any pill press, tableting machine, and encapsulating machine, as part of a new, standalone Pill Press, Die, and Mold Policy. In developing and updating the new policy, the Company may consult with the United States as provided in subparagraph (c).
b. As part of the standalone policy, a prohibition of listings on the Company’s online marketplaces of any punch, die, plate, stone, or other thing designed to print, imprint, or reproduce the trademark, trade name, or other identifying mark, imprint, or device of another or any likeness of any of the foregoing upon any drug or container or labeling thereof so as to render such drug a counterfeit substance, as prohibited by 21 U.S.C. § 843(a)(5) (“counterfeit dies”).
c. In the event the Company is uncertain about whether a particular item qualifies as a pill press, a tableting machine, an encapsulating machine, or a counterfeit die, the Company may contact the United States to request assistance in making the determination.
Reporting
eBay will report to the United States periodically as described below...
...Within 90 days of the Effective Date of the Agreement, eBay shall provide to the United States and DEA the following information to the extent reasonably available:
Seller identification, buyer identification, listing information, and transaction information associated with any listings with sales that have been removed or any purchased items identified as violating eBay’s new Pill Press, Die, and Mold Policy within the prior year.
Throughout the Term of the Agreement, eBay shall on a quarterly basis provide to the United States and DEA, the following information:
Seller user IDs, e-mail addresses, relevant data fields associated with the seller’s eBay account, listing information, and any transaction records associated with (a) listings with completed sales that are identified during the prior quarter that violate eBay’s new Pill Press, Die, and Mold Policy and (b) sellers whose accounts eBay suspends for violations of eBay’s new Pill Press, Die, and Mold policy during the prior quarter.
Buyer user IDs, e-mail addresses, relevant data fields associated with the buyer’s eBay account, and transaction history for any users who purchased items from listings identified pursuant to subsection (i)(a) of this Paragraph during the last quarter.
Sellers are nervous that increased regulatory scrutiny on eBay, including the still ongoing EPA lawsuit regarding pesticides, chemicals and emissions-control cheat devices sold on the site will negatively impact their businesses - especially with legislation like SHOP Safe back under consideration in Congress.
Liz Morton
That concern has only grown in recent weeks as eBay laid off ~1,000 employees and sellers are noticing increased use of AI and automation for critical policy enforcement, dispute resolution and customer service functions previously handled by humans.
Liz Morton
Have you noticed eBay cracking down on listing policies in the wake of changing regulations and legislation? Let us know how these changes impact your business in the comments below!
