eBay has faced controversy, including failure to combat fraud committed by buyers and sellers, concerns over its rating systems, and concerns over sales of controversial or illegal items.

This article's lead section may be too short to adequately summarize the key points. (September 2016)

Fraud committed by sellers includes selling counterfeit merchandise / bootleg recordings, shill bidding (undisclosed vendor bidding that is used to artificially inflate the price of a certain item by either the seller under an alternate account or another person in collusion with the seller), receiving payment and not shipping merchandise, shipping items other than those described, giving a deliberately misleading description and/or photo, knowingly and deliberately shipping faulty merchandise, denying warranty exchange after pre-agreeing to return merchandise authorization of defective on arrival merchandise, knowingly fencing (selling stolen goods), misrepresenting the cost of shipping, using bulk shipping prices to knowingly mask much higher costing, individual return shipping, and using pseudo-accounts to make high nonpaying bids on similar items that competitors are selling. eBay has been criticized for not doing enough to combat shill bidding. There are techniques such as auction sniping, which let buyers avoid shill bidders.^[1][2]

Fraud committed by buyers includes filing a false shipping damage claim with the shipping company, friendly fraud (receiving merchandise and claiming otherwise), returning items other than received, removing parts from an item and returning it for a refund, sending a forged payment-service e-mail that states that he or she has made a payment to the seller's account as proof of payment, making a low bid then using pseudo-accounts to make high nonpaying bids in an attempt at gaining a low second chance offer price, damaging a non-refundable item to get a refund by claiming that the seller sent the item already damaged (in cases of buyer's remorse), and a package redirection scam, in which the return package is filled with garbage and sent to the wrong address.^[3][4]

In March 2008, Professional Coin Grading Service issued an alert noting counterfeit PCGS slabs and various United States and Chinese coins originating from the People's Republic of China being sold on eBay.^[5]

In 2004, Tiffany & Co. filed a lawsuit against eBay claiming that over 70% of the Tiffany silver jewelry offered for sale on eBay was fake and that eBay profited from the sales of counterfeit Tiffany items that infringed on its trademark.^[6] On July 14, 2008, a Federal District Court judge ruled that eBay does not have a legal responsibility to monitor users selling counterfeit items.^[7] In 2010, the Second Circuit affirmed this decision in Tiffany (NJ) Inc. v. eBay Inc.^[8]

In June 2008, a court in Paris awarded damages of €40 million to LVMH over eBay auctions of counterfeit bags, perfumes, and other items sold by non-authorized retailers and entered a permanent injunction against eBay auctions of LVMH perfumes, whether counterfeit or not. eBay banned such items from its site.^[9][10] Also that month, a court in Troyes, France awarded eBay to pay luxury goods maker Hermès €20,000 due to the sale of two counterfeit bags on eBay in 2006. The court also ordered eBay to post the ruling on the home page of eBay's French website for three months.^[11]

eBay allows buyers to rate any seller with positive, neutral, and negative comments. However, the option for sellers to leave anything other than positive feedback to buyers was removed in 2008.^[12][13]

Criticism of the feedback system includes:^[14]

• Small and large transactions carry the same weight in the feedback summary. It is therefore easy for a dishonest user to initially build up a deceptive positive rating by buying or selling low value items, such as e-books, recipes, etc., then subsequently switch to fraud.
• Sellers can attempt to boost their own feedback by buying their own items with alias accounts, and leaving positive feedback for their main selling account.
• Sellers can request feedback be removed and eBay will sometimes do so.
• When eBay removes feedback, the buyer is not informed.

In 2007 and 2008, during the period of eBay's ownership of PayPal, eBay required sellers to accept and buyers to pay with PayPal in many instances. This resulted in scrutiny by several regulatory agencies worldwide.^{[15][16][17][18]} The company later changed its payment requirements.^[19]

In 2008, eBay reached a deal with Buy.com to list millions of items for sale by the retailer, angering sellers who faced additional competition.^[20]

In January 2010, Auctionbytes.com held an open survey in which sellers could rate eBay, as well as competing auction and marketplace sites. In the survey, users were asked to rank 15 sites based on five criteria: profitability, customer service, communication, ease of use, and recommendation. eBay was ranked 13th, after other large sites such as Amazon.com and Craigslist, as well as lesser-known selling sites such as Atomic Mall, eCRATER, and Ruby Lane. In individual category rankings, eBay was rated the worst of all the 15 sites on customer service and communication, and average on ease of use. Some respondents stated they would have given eBay a rating of 10, three to five years ago. eBay was rated twelfth out of fifteen in the Recommended Selling Venue category.^[21][22]

In 2011, eBay agreed to pay $30 million to settle a class action lawsuit alleging that it overcharged seller fees for sales of auto parts and accessories between April 2005 and August 2009. Members of the class received a refund of 6.67% of the fees paid in this category.^[23]

eBay has been criticized for arranging its affairs so as to pay a low level of taxes in the United Kingdom. The Sunday Times reported in October 2012 that eBay paid only £1.2 million in tax on sales of over £800 million in 2010. eBay responded that it "complies fully with all applicable tax laws".^[24]

On May 21, 2014, the company revealed that the consumer database of usernames, passwords, phone numbers, and physical addresses was breached between late February and early March. Users were forced to change their passwords. The Syrian Electronic Army took responsibility for the attack and said that it would not misuse the data; however, in a move of website defacement, replaced the front pages of the websites with their own logo.^{[25][26][27][28]}

In June 2020, five employees were terminated and were subject to charges of cyberstalking after they were accused of targeting Ina and David Steiner, the editors and publishers of EcommerceBytes, a newsletter that eBay executives viewed as critical of the company. In addition to sending harassing messages and doxing, the defendants "ordered anonymous and disturbing deliveries to the victims’ home, including a preserved fetal pig, a bloody pig Halloween mask, a funeral wreath, a book on surviving the loss of a spouse, and pornography". The defendants also vandalized the couple's home in Natick, Massachusetts.^{[29][30][31][32][33]} The conspirators pleaded guilty and most were sentenced to prison terms.^[34] Wenig, the company's CEO at the time of the harassment campaign, who was frequently targeted by the newsletter and was described as having paranoia over the criticism, was not charged, instead leaving the company in September 2019 with a $57 million severance package.^{[35][36][37][38]} Steve Wymer, chief communication officer, who had ties with local politicians, was fired "for cause" for alleged involvement but was not charged and was hired by the local chapter of the Boys & Girls Clubs of America.^{[39][40][41][42]}

Items prohibited to be sold on the website include illegal items such as child pornography, counterfeit products; or items that require licenses to sell such as tobacco, alcoholic beverages, firearms and ammunition, certain knives,^[43] human body parts,^[44][45] drugs, tarot readings and spells,^[46][47] virtual in-game items;^[48] as well as offensive items such as Nazi memorabilia, flags of the Confederate States of America, and used sex toys. Regulations vary by jurisdiction.

In September 2023, the United States Department of Justice sued eBay, accusing it of violating the Clean Air Act and other environmental laws by allowing the sale of several illegal products, including devices that defeat automobile pollution controls, restricted-use pesticides, and paint and coating removal products containing methylene chloride.^[57]