Acquisition of Fraud Sciences Ltd helps to Secure PayPal.

David Heath
Wednesday, 30 January 2008 01:37

Your IT - Home IT

eBay’s transaction processing business unit PayPal has agreed to purchase the Israeli company Fraud Sciences Ltd for $US 169M to enhance the detection of fraudulent transactions.  Fraud Science’s technology allows the automated analysis of transactions to determine unusual, and hence possibly fraudulent, usage.

If you ask Google for sites relating to eBay fraud, you’ll be inundated – it’s a big problem, particularly in low to mid-value items where the authorities aren’t interested in helping.

Recognising this problem, eBay is currently pursuing an aggressive program to improve trust and safety across all of its sites, hoping to reverse the tide of ill-feeling amongst both buyers and sellers.  Integrating Fraud Sciences’ risk tools with PayPal’s sophisticated fraud management system should allow us to be even more effective in protecting eBay and PayPal's hundreds of millions of customers around the world," said Scott Thompson, President of PayPal.

Much has been made of the difficulties of handling “no card presented” transactions, where there is onus upon both parties to agree that the transaction is valid, allowing the transfer of goods in one direction and funds in the other (or not, in the case of a fraudulent transaction).  eBay alone was unable to resolve this alone and purchased PayPal in 2002.  Although helping, fraud was still an unresolved thorn in the side.

Fraud Science’s technology permits much closer analysis of transactions and in the long term will allow the more automated determination of trust in much the same way as existing peer-ratings assess both buyers and sellers.  This will hopefully allow eBay to assist frequent buyers by unwinding some of the more irritating preventative measures such as the telephoned bid verification number.

PayPal expects the deal to close within 30 days with most staff retaining their positions.