Can a defrauded eBay buyer take the matter to a local small claims court? The key is whether the court will have personal jurisdiction over the seller; that is, the legal right to pass judgment on the seller’s action. If the seller is in the same state as the buyer (or has sufficient “commercial contacts” with that state), the small claims court may have jurisdiction and the buyer can file the matter in that state’s small claims court.
Usually that's not the case. For example in a 2007 case, a New York judge ruled that New York did not have personal jurisdiction over a Missouri eBay seller. In that case, the Missouri seller had sold a defective Chevy 350 engine to a New York City resident. In order to have jurisdiction, the judge ruled, the seller would have had to have transacted business in New York City or had more than one transaction with a New York resident on eBay.
A buyer can always solve the personal jurisdiction problem by filing a suit in a small claims court in the seller’s home state. The process of traveling to another state to file a claim, however, is often too expensive to merit the lawsuit. Even if a buyer wins a case in small claims court, the buyer may still have to go through the process of forcing the seller to pay the judgment, a time-consuming process known as enforcing the judgment. Except in the case of high-value items, pursuing a small claims action over an eBay transaction is probably too cumbersome for most buyers and sellers. You can read more about personal jurisdiction at the Nolo website.