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eCommerce fraud buster at work


March 17, 2005

eCommerce "fraud buster" Early Warning is eyeing auction scams and similar eCommerce or auction sites with the opening of a new website.

ReportAuctionFraud.com went live on March 15 and offers fraud-screening for auction site users, allowing registered users to search a live database of fraud data. Each fraud search costs 50p.

Registered users can also add their own fraud data to the database, helping to keep the system as up to date as possible. No charge is made for using this feature.

Early Warning reckons that the vast majority of people likely to use its site are honest and unlikely to abuse this facility. Even so it has built in measures to help ensure bogus reports are weeded out. It has also established a procedure for parties to challenge the accuracy of its listings.

Early Warning maintains the CardAware database, a similar scheme designed to help retailers prevent losses from CNP (card-not-present) credit-card fraud. Andrew Goodwill, Early Warning’s managing director, said: "Our CNP fraud screening product, CardAware, has saved retailers just under £4m over the past two years.

We are now extending the CardAware concept of sharing fraud data into the online auction market. Online auction fraud has now reached pandemic proportions. Our new website will make a significant contribution to reducing this problem."

Online auction sites such as eBay have a feedback scoring system designed to indicate the reliability of a buyer or seller. Early Warning argues this facility is unreliable because a prospective fraudster can get his associates to give him favourable feedback.

Rather than being embraced by online marketplaces, the people behind ReportAuctionFraud.com expect to be criticised by auction sites for running an unnecessary service, at least initially. "Auction sites like eBay may say they are doing all they can to prevent fraud but we know different. Fraud is a major problem on online auction sites," Early Warning’s Goodwill told El Reg.

The ReportAuctionFraud database contains the details of individuals who have actually committed auction fraud before. Users have the ability to search on different criteria; name, email address, telephone number, postcode, username and auction item number.

By searching the database a user can find out if a match exists for the buyer or seller who they are dealing with. In the course of beta testing, 5,000 records have been added to the ReportAuctionFraud database.

Official figures for online auction fraud are hard to come by, particularly as auction site users can be reluctant to report small-scale frauds.

However, in 2003 the US FTC (Federal Trade Commission) released a report on Consumer Fraud and ID Theft, which claimed Internet auction fraud alone accounted for 48 per cent of Internet-related fraud complaints, generating losses of $437m.

A recent FBI report cited by Early Warning reports that 250,000 of an estimated 12.5 million transactions run through auction sites worldwide every day were fraudulent. Common frauds include the non-delivery of purchased goods, misrepresentations of the item for sale, non-payment for goods, the sale of stolen goods (which might later be confiscated) through online auction sites and various bidding scams.


Source: The Register



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