(CN) - EBay must face a class action seeking fee refunds for items that the site allegedly delisted though bidders had not actually purchased them, a federal judge ruled.
Luis Rosado, the lead plaintiff in the San Jose, Calif., lawsuit, alleged that eBay violated California's False Advertising Law (FAL) and the Consumer Legal Remedies Act (CLRA) when it refused to provide a full refund of his listing fees after his car didn't sell on eBay Motors.
During the auction, a prospective buyer had clicked the "Buy It Now" button - which immediately delisted Rosado's car - but did not complete the transaction.
Rosado relisted his car the next day and requested a refund for the $24 listing fee he originally paid, but eBay provided a credit of just $4.25.
In his lawsuit, Rosado claimed "sellers are on notice that they will not receive a refund if their item runs its course and does not sell, ... [but] sellers have no reason to suspect that they will lose a portion of the listing duration already paid for when their item is delisted after a prospective buyer clicks the Buy It Now button but the item is not sold."
EBay moved to dismiss all of the claims, arguing that it acted in accordance with the site's user agreement, which states that "insertion fees and optional fees are charged at the time of the listing and are nonrefundable."
U.S. District Judge Edward Davila found last week, however, that Rosado may be able to show that eBay's user agreement - in particular the portion regarding a user who "commits" to buying an item - is misleading and vague.
"The court does not find that plaintiff is attempting to re-write the contract as eBay argues," Davila wrote. "Furthermore, the existence of a contract between parties does not intrinsically allow one party to contract to circumvent the factual question of whether the agreement was misrepresented or misleading."
It is also possible for the class to show that eBay's allegedly misleading statements would mislead the public, as needed to satisfy the standard for fraud claims under FAL and CLRA.
Rosado showed "that members of the public are likely to be deceived and describe[ed] the content of information omitted that would have clarified eBay's policy in regards to fixed-price listings that ended early without the completion of a sale," the ruling states.
"Plaintiff also adequately alleged reliance by pointing out that he relied on representations on eBay's website and the online form used to create his listing, believed that his vehicle would be listed for the full amount of listing time purchased unless his vehicle sold before the listing period expired, and had he known he would not receive a refund for the time remaining or that he would not be given an opportunity to relist the item, he would not have placed the listings, for which he paid money and consequently suffered an economic injury," Davila added.
The ruling also lets Rosado advance his claims for bad faith, unjust enrichment and a declaratory judgment that eBay's behavior violates the law.