too good to be true, or am I overly cautious?

[money_noob]

There was once a business (company "A") online that was selling products on ebay. These products were tools. Basically copies of name brand tools. For example a wrench made by craftsman, well they sold an identical wrench with no craftsman lable at about 1/10th the price. All the goods were made in asia and sold here on ebay. People really liked them and sales were good.

Well, once a new product came thru. It was a wrench came and it actually said "craftsman" - obviously a fake, but it went right up on ebay with pix and after some time, company "A" got kicked off of ebay after a long time of being there.

Well, I was not part of company "A" and this is just the story I got from them. The people selling these wrenches know nothing about tools. I step in here (about 1 year before they got kicked off ebay) and help them market the tools. I'm able to make a little money and then after a while they got booted. I was then asked by them if they could use my ebay account. They would list everything automatically with a service, and all I do is transfer payments via paypal to them. I get to keep 1% for my trouble, which does not amount to much. Volume is decent, but at 1% it's still not much for me.

I have never met anyone at company "A" and know nothing much about them. It's quite murky. I know they sell these tools all over the place and I get good eBay feedback and people are not complaining. So, according to company "A" as long as they continue to sell tools that are not inappropriately labeled, there is no issue, no wrong doing.

My wife wonders if I'm involved in something illegal. I tell her I don't see how I can be, since people are getting what they paid for, the ads are quite clear that these are knockoffs and that people leave pos feedback.

As for taxes, if I'm making 1% and I can prove the rest goes to company "A" I'm only responsible for taxes on that 1%, correct?

Is there something I'm missing here, am I being played for a fool? Or is this just an easy 1% for me and I should not worry?

The story gets more interesting in the last 6 months. I will get into that once people have posted some comments on this part.

[disneysteve]

Well, it certainly sounds shady.

What I don't understand is how you got involved. You say you never met anyone from the company and don't know much of anything about them, but you had no problem giving them full access to your ebay account. Sounds like you are leaving something out of this story.

I'm no expert on copyright law, but I don't think it is illegal to sell a look-alike item as long as it isn't being misrepresented. The dollar stores are filled with look-alike items and they don't seem to have any trouble. It is only when you totally copy the design/label/packaging and try to pass the copy off as the original that you get into trouble.

[money_noob]

I know it's pretty cloudy. I'm not leaving anything out. We've built up some trust, both ways, in the beginning, they would ship items I paid for (I got to sell some of the new wrenches on my account, keep any markup, and send the cost of goods to them). So I took some risk, they did not let me down. Now I get payments for them, and I have not let them down (have not taken the money and run so to speak). We're quite far apart, different ends of the country practically. I've got at this point a few years trust built up with them.... I didn't see how I'd get hurt because I wind up holding the money till I transfer it, the risk is on their end I think.

[disneysteve]

The one risk on your end is that they have access to your ebay account. If they screw up, you lose your ebay privileges, so keep that in mind. Since they submit the listings, you don't get to see them in advance. They could do something wrong and you would be the one punished.

I consider my reputation worth more than 1% of sales, whatever that may be. So if it were me, I'd say no thanks and stay out of this.

[maat55]

If you are doubting your involvement means something. Why be apart of something that may be wrong for so little reward?
If I were you I would discontinue this arrangement until you are 100% sure you are legit. How much is your integrity worth? Until you know whats really going on, your integrity is compromized.




















If I were you I would discontinue this arrangement until you are 100% sure you are legit.

[money_noob]

well, that's just it, there is more to it, as mentioned. Basically, before I take the plunge for the next steps, I wanted to see if there was something major I was missing. Maybe i can't see the forest for the trees, you know?

the next step is starting a new company, of which I am one of the owners. We'd be creating private label tools. Very similar to the same ones we have, but a better quality premium tool. They'd sell for more and be marketed better. (the tools company A sells have a pretty poor reputation (but people in general like them). Basically the arrangement at that point becomes 1/2 profts for me 1/2 proftis for my partner. He's putting up the money for tooling overseas and I'm puttiing up time in picking marketable tools, etc. I do all the marketing, sales, customer support, etc. He puts up the money for development, warehousing, etc. He's got the connections overseas and this is something too big for me to just do on my own (before you ask.... well, why not do it all yourself?)

there's a lot of money to be made.

[Hypersion]

If they don't pay the ebay fees guess who is has too.

Are they also asking to use your paypal account too?

[maat55]

There's nothing wrong with having a partnership in a legit business. Your good at one thing and he at another. Just make sure you think of every disaster senerio when drawing up a contract. Death, divorce, personal lawsuits, insurance etc. Co ownership in business has it's challenges.

[jodi]

What am I missing here - why don't they just get their own new E-bay account?
I wouldn't do anything without a legally drawn up business agreement.

[money_noob]

of course the fees are paid by company A, my 1% is off the gross.

Well, it sounds like there are no huge things that I'm missing. Its pretty simple and based on trust, and I believe that we've got a good thing going here. I think it would be wise to meet and create a document regarding roles, money, etc.

Any suggestions on how to outline that document, and must it be done by a lawyer?

[disneysteve]

Originally Posted by money_noob

Its pretty simple and based on trust

Any suggestions on how to outline that document, and must it be done by a lawyer?

I would never enter into a business deal based on trust. That is just asking for trouble. Especially when you know that your partner has a history of illegal activity as in this case. How do you know that they aren't continuing to sell Craftsmen knock-offs elsewhere? If you become their partner, you may become partly liable for their illegal actions.

I think you are allowing money to cloud your judgement. I'd stay far away from these folks.

[money_noob]

Originally Posted by jodi

What am I missing here - why don't they just get their own new E-bay account?
I wouldn't do anything without a legally drawn up business agreement.

apparently ebay, paypal, etc track IP's and they've been banned. It's odd, because the new ads are the same as the old ads... just a different account. If ebay, paypal, etc all track IP's then how are they not smart enough to see the ads are the same?

[DebbieL]

I'm with Steve. This whole thing smells funny. I'd stay out of it. Do you know that many criminals spend the time to earn trust before going in for the kill (sometimes literally the kill - but I was using the word figuratively, lol). If they were honest law abiding people they would be allowed to have their own eBay account. Stay away.

[Kedi]

RUN don't walk!!!!
If you don't know who you're getting into bed with you shouldn't.
You risk losing your eBay account permanently just like they did
They are asking you to circumfent eBay rules & regs/policies
That should tell you how honest or NOT they are

Did you ask eBay what happened to this company?
Why they are no longer on eBay.
eBay doesn't just kick you out for no good reason
this company is either dealing in "knock-offs" or stolen merchandise
just NOT worth the risk

[Saving in So Cal]

Just because your "fee" is only 1% of the gross does not mean that you are only required to account for the 1%. All of the transactions on going through your eBay account, so you are responsible for accounting for the entire gross, including any sales taxes, etc. that may be due. I know of no legitimate business structure that would allow you to entirely avoid this responsibility. Moreover, your failure to properly account for the gross has both civil and criminal repercussions. Before you go any farther with this venture, I would recommend consulting with both an attorney (experienced in advising businesses of your type) and an accountant (also experienced in advising businesses of your type).

Finally, given the minimal information you have provided, it is impossible for anyone on this board to accurately comment on whether you are "missing anything." What I can be said with 100% certainty is that a generic query on this board does constitute due diligence and, if there is anything illegal about your proposed venture, ignorance will not be an effective defense.
Unless you are willing to risk your freedom and your financial well-being, you need to proceed more cautiously.

[money_noob]

spoke to an accountant. There are no sales taxes on internet sales, and the income is based on the 1%.

[disneysteve]

Originally Posted by money_noob

spoke to an accountant. There are no sales taxes on internet sales, and the income is based on the 1%.

There is sales tax if the customer resides in your state. For example, I live in NJ. When buyers in NJ win my ebay auctions, I do collect and submit sales tax for those transactions.

You income would be based on the 1%, but you don't just report the 1%. You report the entire amount and then deduct the expenses. In your case, expenses would total 99% of the total. For most of us, expenses are cost of merchandise, shipping supplies, ebay fees and Paypal fees. I'm willing to bet your business partner isn't filing the proper taxes and reporting his income, so that's another risk here. If you partner with this guy and he is evading taxes, you could be held liable for that, too.

[DebbieL]

The whole thing is shady, and an all around bad idea. I don't honestly think you have any intention of listening to anyone's advice anyways. Did you want a pat on the back or something. It's ILLEGAL and wrong.

[lovcom]

The original poster sounds like an accessory to fraud. You have no out if a district attorney gets involved. You need to get out now. You might go to jail along with the principals of "company A".

[Joan.of.the.Arch]

NOTE TO SELF: Do not buy any Craftsman knock-off tools via eBay.