EBAY Under investigation( 0 Audi Content)

["Mik Tip" <miktip@surfnet1.net>]

By John Borland
Staff Writer, CNET News.com
February 26, 1999, 5:25 p.m. PT

Web auctioneer eBay said today that it is under investigation by the federal
government
for potentially illegal transactions on its Internet site.

In a terse statement released at the end of Friday's business day, eBay said
it had been
contacted by the government in late January.

"On January 29, 1999, the company received requests to produce certain
records and
information to the federal government relating to an investigation of
possible illegal transactions
in connection with the company's site," the statement said.

"The company has been informed that the inquiry includes an examination of
the company's
 practices with respect to such transactions," eBay added. "The company is
fully cooperating
 with the inquiry."

An eBay spokesman said he could not give any more details on the type of
transactions involved,
which agency had contacted the company, or why the statement had been
delayed almost a month.

The company did say the news was unrelated to Microsoft's stepping up its
scrutiny of pirated
software trading on the service, however.

The investigation comes as eBay reacts to increased scrutiny of what its
users do on the site.

eBay has already come under investigations from New York City officials for
possible incidences of
fraud on the Web site.

On January 28--a day before it was apparently contacted by the federal
government-eBay said it would
cooperate fully with the New York City Department of Consumer Affairs.

Two weeks before that date, the company had instituted a new system of
anti-fraud rules in an attempt
 to cut down on illegal activity on the site.

Starting next month, eBay will ban the sale of guns on its Web site, because
it is impossible to ensure
 that bidders are legally permitted to own guns.

And last fall, eBay disclosed in a regulatory filing it had been contacted
by a state attorney general's
office regarding complaints about its service. The complaints alleged that
eBay did not adequately
inform customers it merely provided a forum for online person-to-person
auctions and did not guarantee
the completion or price of the transactions conducted in that forum. eBay
has not identified which state
made the inquiry.

eBay today won a temporary restraining order against a dealer who was
allegedly using the site to sell
banned software and CD-ROMs.

The company has maintained that it is not legally responsible for fraud
perpetrated by the sellers on its
Web auctions, but has said it will do its best to protect buyers on the
site.

eBay's stock jumped 34.5 today to close at 334 on news that it plans to
split its stock and that its usage
continues to rise.

The firm will split its stock Monday 3-for-1 for shareholders of record
February 9. One of the few profitable
companies doing business only on the Internet, eBay's usage rose 9 percent
in January from December,
while other online retailers' Internet use dropped after the holidays, an
analyst said.


                     Mik