“It’s a huge problem. And retail isn’t the only sector that’s affected by online fraud — any company that has a product that can be resold is susceptible,” says Peter Martin, president at AFI International Group Inc., a Toronto-based security firm.

eBay’s site was designed to make it to make it easy to connect sellers and buyers, not to counter fraud, says Cynthia Navarro, principal at Finnegan’s Way, a San Francisco-based investigative firm.  “There were many disgruntled companies and tons of complaints initially. But eBay’s grown over the years, and has instituted many programs to combat fraud on its site.”


What eBay is doing
Online businesses are evolving, and are growing increasingly co-operative when it comes to combating crime. As the largest online auction platform, eBay is taking the lead in implementing security mechanisms that make it easier to investigate and prosecute criminals.

One example is eBay’s VeRO program to report infringements of intellectual property rights to authorities, says Navarro. “When eBay first came out with VeRO, it wanted no responsibility for removing listings, but it’s come around now.”

In addition, eBay recently instituted its PROACT outreach program to help loss prevention and security managers set up undercover accounts, build geo-map searches, investigate leads, and learn about other ways to support their investigations.

“We have 2,000 people in our Fraud Investigations Team who are responsible for responding to people who report fraud and reviewing items kicked out by our fraud analytics,” says Paul Jones, Washington-based director of retail partnerships at eBay.

He points out that eBay was designed to allow buyers to check potential sellers and their histories on their own, so there are many public search and reporting features available. “We often find that LP and security people aren’t familiar with our advanced searches and how to program them to automatically produce reports. They should sign up and sell something on eBay to learn how these internal mechanisms work.”

In terms of practicalities, security staff need to focus on stolen items resold in bulk, as law enforcement is unlikely to get involved in smaller sell-offs. “When people are moving large numbers of stolen goods, they’re not going to sell pieces individually on eBay,” says Martin.

To assist in the investigations of large-scale theft, Jones says eBay is happy to take data feeds from victimized companies — be it a simple Excel file or a more complex program — and use internal tools to scan the site for them.