Ricks Cabaret Antitrust Lawsuit against eBay Forces Change in Policy Regarding
Adult-Oriented Movies and Devices Wednesday April 23, 9:05 am ET
HOUSTON -- (BUSINESS WIRE) -- April 23, 2003
RCI Internet Services, Inc.,
a subsidiary of Rick's Cabaret International Inc. [NASDAQ: RICK - news], and
owner of the adult auction site NaughtyBids.com, has withdrawn an antitrust suit
against eBay, Inc [NASDAQ: EBAY - news], after eBay's PayPal subsidiary changed
a policy that was allegedly permitting the leading Internet auction company to
monopolize online auctions of X-rated videos, sex toys and other "mature" material.
After receiving RCI's lawsuit, eBay/PayPal agreed to change the policy that RCI
alleged to be unlawful and will now refuse to process payments for any mature
audience material including eBay sales," said Max Tribble, an attorney with the
Houston law firm of Susman Godfrey, which represents RCI Internet Services.
"PayPal has taken a clear step back from its original position, which we believe
was an attempt to eliminate competition and help eBay monopolize this segment of
the online auction market."
Late Tuesday, RCI voluntarily dismissed the antitrust suit it had filed last month
in the U.S. District Court for the Southern District of Texas Houston Division
that alleged eBay violated antitrust and anti-competition laws by having its PayPal
subsidiary restrict processing of transactions for "adult" auction to only those
items sold through eBay's own "mature audiences" section. Prior to the change,
PayPal handled transactions for all adult-oriented auction sites, including the
Rick's Cabaret auction network, NaughtyBids.com.
In its complaint, RCI said eBay controls over 80 percent of the adult auction market.
Naughtybids.com is the largest competitor to eBay's "mature" section, providing a
marketplace for racy videos, sexual aids such as vibrators, latex and leather
products and articles of clothing signed by adult entertainment personalities.
PayPal is a favored system to pay for such items since it provides security for
Travis Reese, Vice President of Rick's Cabaret responsible for the company's Internet
activities, noted that the NaughtyBids.com Website "will provide a list of alternative
ways for our customers to pay for mature material if they choose not to use their
personal credit cards, money orders or checks. We consider this a victory since
eBay will no longer have an advantage over NaughtyBids.com, but we remain puzzled
about why PayPal has decided to refuse to process any transactions in this popular
category. It seems to us they are denying their customers a valuable and simple-to-use
service. Fortunately there are other options."
About Rick's Cabaret:
Rick's Cabaret International Inc. [NASDAQ: RICK - news] is organized into two business
lines: 1) Nightclubs and entertainment comprising Rick's Cabaret clubs in Houston
and Minneapolis, XTC Clubs in San Antonio, Houston and Austin, and 2) Internet
activities encompassing adult entertainment membership portals that provide access
to third-party websites such as xxxpassword.com and auction sites such as naughtybids.com
that operate on a single proprietary technology platform and earn revenue by providing
a marketplace for mature audience material and through Webmaster referral fees.