This is because PayPal enables any business or consumer with an email address to establish an account that can be used to send and receive payment from bank account and credit card online.¹⁶ This allows individuals and small businesses that otherwise would not be able to accept a credit card payment to do the business on the online auction.¹⁷ Also, PayPal funds a customer's payment request by charging the customer's bank deposit account using. the account information that the customer provides to the PayPal. PayPal  then sends the e-mail to the receiving party stating that it is holding funds in the receiving party's name that can be redeemed by check or electronic fund transfer.¹⁸ Further, PayPal  also offers the securing of the financial information by permitting the online purchaser to engage in transaction "without mailing a check or sending a credit card number to an unknown person or Website. Therefore, with PayPal buyers do not need to disclose any bank account or credit card information to the seller. Because of its adaptable model to ease the problems arising from the nature of the online auction for instance, PayPal helps small businesses and individuals to sell their products in an online auction environment. Further, PayPal allows the contract to conclude instantly by deducting from the user account. With these unique benefits, PayPal has

become the most successful online payment system for this new kind of transaction. Consequently, PayPal boasts more than 20 million users in 38 countries, with an average of 28,000 new users per day.¹⁹ With this success, PayPal payment services were added by eBay in 2002.²⁰ After the merge between eBay and PayPal, this move created more business sense to both firms and also made online auctions more popular. As can be seen, PayPal user had generated a total of $1.79 billion in total payment volume, this represent a 93% increase from the $925 million generated in the third quarter of the previous year .²¹ Further, by the first quarter of 2005, PayPal's worldwide number of account holders was up 57% from the same period of the year. PayPal halve account worldwide up to 72 million. This gives PayPal more account holders than the Giant Credit Card Company like American Express.²²

C. Shift In behavior In the online commercial world.
The commercial field is still the area that boosts the popularity on the internet. It combines the advantages of the internet with the new technologies or the new methods of management system which bring the internet closely analogous to the physical world. In other words, the internet always develops the nature of itself in response to the new business demand of the players. Unsurprisingly, this new kind of business transaction was created by the new players eBay or PayPal. Of course, the internet is still the big

free place for the commercial and for someone who comes up with good ideas to do business. However, the behavior of business in the internet itself has changed. One factor is that the entire internet has become huge market place with many ways to buy and sell. Furthermore, the change of behavior of consumers or purchasers on the internet which satisfy not only in the purchase of the products online but also in the enjoyment of using the internet as an important medium in distributing their products or their used products.²³

As can be seen, the internet nowadays is not merely an online store like the electronic bookshop of Amazon, but also a place for individuals who are free to sell what they think are valuable for him and the others. Some products which even qualify as a junk such as a broken Apple Pod for someone can be useful for the others in using their iPod batteries to power another iPod. This can prove the old adage "one man's junk is another man's pleasure."²⁴ As this result; the internet is not merely a world "department store" which consists of the brand names or the big giant companies but the internet also the market place of the small or amateur individual seller like `Bazaar', where small rank sellers can enjoy reaching a wide audience at a low cost and get the highest possible price and Buyers can enjoy the fun and the excitement of the potential finding unique bargains or the infinite search for what they demanded. Of course, this is an interesting online environment because it change the face of the commercial online and also shiftes the nature of its transaction from the Business-to-Consumer transaction (B2C) to Consumer-to-Consumer (C2C) transaction. Inevitably, the newcomer means occurrence of novel problem and the new regulation may need to be shape. The later section will discuss more about legal issues that may arise from this new C2C transaction.

Chapter 3 : Some problems and current existing solutions in the C2C transaction and criticisms of the existing solutions.

A. Online Auction Fraud

Fraud is one of the oldest causes of action and a traditional problem that has long been occurred with every commercial transaction, whether in the physical world or the online world. The term of fraud is a generic term describing any of the variety of ways a party can lie or suppress the truth for personal gain.²⁵ In online worlds, fraud has plaqued internet users for a long time in numerous ways of fraudulent acts whether it be classical theft like credit card theft or identity theft through technological fraud "cyber jacking."²⁶ C2C transaction is the transaction in cyberspace where the buying and selling of merchandise take place in free and non-governmentally regulated space like another online commercial transaction. For example, the auction buyer usually cannot personally inspect the seller or the actual goods and many sellers are individual or small businesses reputation. Of course, when these sellers operate outside their local communities, they may not be subject to the reputation and legal constraints. Consequently, the goods are frequently sold in uncertain value causing concern in misrepresentation. Inevitably, fraud has been flourished and spreaded into the context of C2C transaction like online auction. Furthermore, in conjunction with rapid growth in the number of online auction transactions, not surprising, fraud has generated more figures in case of online auction transaction in
parallel with the number of increasing transactions.
            Nowadays, online auction fraud is already the second most frequently reported form of  fraud on the internet.²⁷ Since the Internet reported complaint scheme was launched in 1996, the  number of complaint in 1997 to 10,872 in 2000.²⁸ In 2004, the online auction fraud account for 14% of total internet fraud report according to Federal Trade Commission (FTC) report.²⁹ Of course, with these figure, online auction fraud affects consumers severely. For instance, in the United States, it is estimated that victims of fraud are loosing $500 million per year³⁰ Therefore, as mentioned above, fraud is considered to be an important legal issue that arising over C2C transaction.

16.. Paypal website.
17.. David E. Sorkin, Payment Method for Consumer-To-Consumer Online Transaction (2001) 35 Arkon Law Review 12.
18. S. Adam & David J. Martz. Development in Cyber banking (2002) 57 Bussiness law Review 1257, 1272-73.
19. See Deborah Bach, eBay Goals for PayPal: Expansion and Subtraction, American Banker, July 9, 2002, p1.
20. On October 3, 2002, a majority of PayPal's 61.1 million outstanding shares were voted in favor of the $1.3 billion merger with eBay. See Brian Bergstein, PayPal Shareholders OK for eBay Merger, Associate press online Oct. 3 2002 at <http://www.paypal.com/html/press/070802APEbayBuys.html> access on 1/7/05.
21. See <http://www.Shareholder.com/ebay/releases-earn ings.cfm>.
22. A special report on eBay, the Economist, 11 " June 2005, p. 74.
23. Economist p.16.
24. Andre Guagdmuz.
25. See Merium Webster's Dictionary of law (1996), Warren Freedman, the Business Tort of Fraud and Misrepresentation iii (1989).
26. Cyberjacking means that the fraudulent act the involve loging on to a website that automatically reroutes the consumer to another website. See Kenneth Sanny, Cyberjacking , Mousetrapping and the FTC Act: Are Federal Consumer Protection laws helping or Hurting Online Consumer (2001) 3 Vanderbuilt Journal of entertaining Law & Practice 221, 222.
27.See Robin Field, Some E-Auction Users Get less than they Bargain for; Internet; Fraud has escalate at online Bidding Sitef Promoting LA times Mar 162000 at A1 See also Report from the National Consumer League to the US department of Justice Concerning  Telemarketing and the Internet Fraud available at http://www.fraud.org/ ably, fraud telemarketing /fraudrep.htm access on 3/7/2005.
28.See Mirium R. Albert, E-buyer beware: why online auction fraud should be regulated, 39 American Business Law Darnel 575.
29. In complaint the FTC must prove that conduct rises to the level of fraudulent or deceptive in order to bring a successful action for fraudulent conduct and recover damages. To Prove defective practice FTC must prove three elements. Specificially that the scheme was 1 ) an unlikely act to mislead 2) consumer acting reasonable under circumstances 3) about the material fact. Federal Trade Commission, The report of complaint trend in e-consumer, available at <http://www.econsumer.gov/english/contentfiles/pdfs/PU15%20Jan-Dec% reroutes the 202004% 20-%20FINAL.pdf > access on 3/7/2005.
30. See Shawn T. Hynes, Stopping another phantom menace : using the commerce clause to force states topolice online auction shill bidding oe face Congressional mandate (2003) 5 University of Pensilvania Journal of Constitution Law 763,796 cited Chris Farnworth & Chris Knap, Net Fraud is Tangled Web for Victim and Police, Orange County Regulation, Mar. 26, 2002 at 1D.