The buyer, Michaela Jordan, told national news agency DPA she had filed a case against Ahlen city authorities for “fraud”.
The pug – which goes by the full name of Edda von Kappenberger See – was seized late last year by local officials in Ahlen, a city of slightly over 50,000 residents in North Rhine-Westphalia, from a family which had been unable to pay their debts to the city authorities.
A city employee put Edda on eBay using a private account and sold her for €690, with the proceeds going to city coffers.
In the advert, the pug was described as healthy, vaccinated and dewormed, but the buyer said the animal suffers from multiple problems including an eye injury that would require an operation.
“It was all lies,” she said, adding that her lawyer had filed the lawsuit against city authorities on Thursday last week.
The unusual case has gripped pet-loving Germany.
Over the weekend, a spokeswoman from North Rhine-Westphalia state's interior ministry said that while animals can be seized to pay off their owners' debts, house pets are essentially exempt.
She also noted that impounded items should be publicly auctioned and not simply sold on eBay through a private account.
Amid the howls of outrage, Ahlen city authorities said on their website that they were ready to reverse the sale “if the parties involved are in agreement”.