Gumtree for Buying and Selling?

The History of Gumtree in Australia

Founding and Launch

Gumtree, Australia’s beloved online classifieds platform, was launched in 2007, providing a space for Australians to buy, sell, and find just about anything. Although the specific founders of the Australian branch are not well-documented, the platform is an extension of the original Gumtree website, which was founded in 2000 by Simon Crookall and Michael Pennington in London, UK. The platform was initially designed to help expatriates find housing, jobs, and local services in their new cities.

Expansion to Australia

The success of Gumtree in the UK prompted the founders to expand the platform internationally. In 2005, Gumtree was acquired by eBay Inc., which helped fuel its global expansion, including its launch in Australia in 2007. The Australian market welcomed Gumtree, which quickly became a popular destination for users to buy and sell a wide range of goods and services, from furniture and cars to job listings and real estate.

Business Model

Gumtree.com.au operates on a freemium model, where users can post basic ads for free but have the option to pay for premium features. These premium features include higher visibility for ads, longer ad durations, and the ability to feature ads at the top of search results. This model allows Gumtree to cater to a wide range of users, from casual sellers to businesses looking for extensive advertising options.

Acquisitions and Ownership Changes

1. eBay Acquisition (2005): The initial acquisition of Gumtree by eBay Inc. in 2005 was a significant milestone. This acquisition allowed Gumtree to leverage eBay’s extensive resources and expertise in online marketplaces to expand its services and improve its platform.

2. Adevinta Acquisition (2020): In 2020, eBay sold its classified ads business, including Gumtree, to Adevinta, a leading online classifieds company based in Norway. The deal, valued at approximately $9.2 billion, marked a new chapter for Gumtree under the ownership of a company with a strong focus on the classifieds business.
   

3. The Market Herald Acquisition (Previously HotCopper) (2022-2023): In late 2022 and early 2023, Gumtree was sold to The Market Herald, an Australian financial news and media company, for a reported value of $60 million. This acquisition was part of The Market Herald’s strategy to diversify its business operations and enter the online classifieds market. However, the transaction faced scrutiny, and the Australian Securities and Investments Commission (ASIC) initiated legal action regarding the deal. ASIC’s concerns revolved around issues of market disclosure and compliance with corporate governance standards. The outcome of this legal action remains a significant point of interest for stakeholders.
   

Impact and Evolution

Gumtree’s impact on the Australian market is substantial. It has provided a convenient and accessible platform for millions of Australians to engage in buying and selling activities, fostering a sense of community and sustainability by promoting the reuse and recycling of goods.

Fraud Issues on Gumtree: A Growing Concern

Despite its popularity and wide usage, Gumtree has not been immune to fraud and scam activities. These issues have plagued the platform in recent years, affecting both buyers and sellers. Here, we outline the common types of fraud encountered on Gumtree, the impact on users, and the measures taken by the platform to combat these issues.

Common Types of Fraud

1. Fake Listings: Fraudsters often post fake listings for high-demand items like electronics, vehicles, and rental properties. These listings typically offer goods at below-market prices to lure potential buyers. Once the victim shows interest, the scammer may request an upfront payment or a deposit, and then disappear, leaving the buyer without the promised item and out of pocket.

2. Payment Scams: Some fraudsters request payment through untraceable methods like wire transfers, cryptocurrency, or gift cards. These payment methods make it difficult for victims to recover their money. Additionally, scammers may use fake payment confirmations to trick sellers into shipping goods before payment is genuinely received.

3. Phishing Scams: In phishing scams, fraudsters pose as legitimate Gumtree representatives or buyers and send emails or messages containing malicious links. These links can lead to fake websites designed to steal personal information, login credentials, or financial details.

4. Identity Theft: Scammers may use stolen identities to create fraudulent accounts on Gumtree. These accounts can then be used to post fake listings, engage in fraudulent transactions, or gather sensitive information from unsuspecting users.

5. Overpayment Scams: In this scenario, the scammer overpays for an item using a counterfeit check or stolen credit card and then asks the seller to refund the excess amount. By the time the seller realizes the payment was fraudulent, they have already sent the "refund," resulting in a financial loss.

Impact on Users

The prevalence of fraud on Gumtree has had a significant impact on user trust and safety. Victims of these scams often experience financial losses and emotional distress. The platform's reputation can also be affected, as potential users may become wary of engaging in transactions due to the perceived risk of fraud.