eBay Faces $64M+ Loss, Possible Criminal Action In Cyberstalking, DEA, & EPA Suits
UPDATE 2-1-24
eBay has agreed to pay historic $59 Million to settle DEA allegations regarding pill presses sold on the site.
Liz Morton
UPDATE 1-11-24
eBay has been found criminally liable in connection to the 2019 cyberstalking of journalists Ina and David Steiner of Ecommercebytes, and agreed to pay a penalty of $3 million as part of a deal to defer further prosecution.
Liz Morton
UPDATE 9-30-23
eBay's latest 10-Q filed with the SEC ups the ante, setting aside an additional $50 Million for these ongoing legal costs, bringing the total set aside to $114 Million.
In connection with the government matters and criminal and civil actions described above, the Company has accrued for probable losses of
$114 million in the aggregate as of September 30, 2023 and as of the date of this report, of which $50 million was recorded as a component of general and administrative expense during the three and nine months ended September 30, 2023.
UPDATE 7-27-23
The EPA has filed a lawsuit against eBay alleging the company failed to stop the sales of illegal pesticides, harmful chemicals, and emissions-control cheat devices on the platform.
Liz Morton
As suspected after yesterday's Q4 earnings call, eBay's latest 10-K filing with the SEC reveals the company has accrued for probable losses of approximately $64 million+ in legal costs and could be facing possible criminal action from the US Attorney's Office in relation to the 2019 cyberstalking and harassment of the publishers of EcommerceBytes.
Seven eBay security personnel who were charged with multiple federal felonies pleaded guilty to their roles in the bizarre criminal conduct that included disturbing deliveries of live insects and funeral wreaths, threatening Twitter messages, doxxing, in person surveillance and more.
Documents from the criminal cases have revealed multiple emails and text messages between ex-CEO Devin Wenig, ex-Communications Chief Steve Wymer, then (and still) Chief Legal Officer Marie Oh Huber, ex-SVP of Global Operations Wendy Jones and ex-Security Director Jim Baugh that have spurred additional scrutiny and lingering questions about corporate accountability.
Liz Morton
The civil case remains ongoing and so far has named the 7 criminal defendants as well as Wenig, Wymer, eBay Inc. and Progressive Force Concepts LLC, a security company with which eBay contracted to fill intelligence analyst positions.
Today's filing shows now only is eBay facing possible criminal fines for the cyberstalking incident, they're also being investigated by the DEA and EPA due to illegal and dangerous items being sold on the platform.
the Company has responded to inquiries from the U.S. Department of Justice (“DOJ”) regarding products sold on the Marketplace platforms alleged to violate certain laws and regulations, including regulations of the Environmental Protection Agency (“EPA”) and, separately, regulations of the Drug Enforcement Agency.
The inquiries relate to whether and to what extent the Company should be liable for the sale of regulated or illicit products manufactured and sold by others who listed such products on Marketplace platforms in a manner that evaded and/or was designed to evade detection by the Company.
With respect to the inquiries regarding EPA regulations, the EPA, DOJ and the Company have begun discussions relating to allegations of noncompliance arising under the Clean Air Act, among other alleged violations, which discussions include a potential settlement. If the Company is found to be liable for such activities on the Marketplace, it likely will be subject to monetary damages, changes in our business practices, or other remedies that could have a material adverse impact on our business.
The Company is also responding to inquiries from the U.S. Attorney for the District of Massachusetts regarding potential criminal liability of the Company arising from the stalking and harassment in 2019 of the editor and publisher of Ecommercebytes, a website that publishes ecommerce news and information.
Six former Company employees and one former contractor have pleaded guilty to crimes arising from the conduct. The Company has begun discussions with the U.S. Attorney’s Office, which discussions include a potential settlement. We expect any such settlement may include fines, other payments, and non-monetary remedies, such as additional remediation, compliance and reporting requirements.
Although the Company has concluded that losses in the U.S. Attorney matter are probable, we are unable at this time to estimate the losses that may be incurred because the matter is still under investigation and involves open questions relevant to the Company’s potential liability for conduct of its former employees. The editor and publisher also have a pending civil action against the Company, which seeks unspecified damages arising from the above-described conduct.
In connection with the government matters and civil action described above, the Company to date has accrued for probable losses of approximately $64 million in the aggregate. Given the uncertainties involved, the ultimate resolution of these matters could result in additional losses that may be material to our financial results for a particular period, depending on, among other factors, the size of the loss or liability imposed and the level of our net income or loss for that period.
