| April 09, 2009 |
 eBay, Online Sellers: Beware of Fraudulent Payment Attacks |
| By: Ina Steiner |
| Thu Apr 9 2009 10:45:24 |
 In today's AuctionBytes Newsflash newsletter, I report on a baffling case of online fraud affecting a merchant using eBay's PayPal service. What struck me about this case was the fact that it appeared any merchant could be halted in their tracks if a fraudster decides to include them in a scam. In this particular case, the merchant was unable to use PayPal on his website for 2 weeks.
In researching the article, I found some features that might have helped this merchant. It behooves eBay and online sellers who use PayPal to become familiar with "PayPal Account Optional" specifically (explained in the article), but also about how to manage their risk (more on that is coming in Part 2 of the story).
PayPal's Sara Gorman wrote to us this morning:
"This was a rare occurrence, as we discussed, with a new type of fraud. Our fraud models worked as they should in detecting the bad payments, which is why they were limited, but I understand that it was frustrating for (the merchant) as we worked to stop the payments from coming through.
One thing I wanted to make sure to point out is that the vulnerability in our PayPal Account Optional feature has since been closed, so we've already fixed the issue that allowed these payments to go through. So, it wouldn't be accurate to advise that merchants turn off this feature to protect against this going forward. Of course, merchants always have that option if they'd prefer to do so."
My research highlighted how difficult it is for all online payment processors to keep up with fraud - every company deals with combating fraud on an ongoing basis, not just PayPal. While these firms make it easy for merchants to get up and running and accept payments, sellers should not assume they are 100 percent foolproof. Organized criminals from all over the world are working fulltime to find and exploit vulnerabilities.
The lessons I came away with is that merchants should be always on the lookout for fraudulent attacks (not just the occasional fraudulent customer), and should always be prepared to the extent possible in case of such an attack. Merchants should also become familiar with the settings and features of their payment accounts. This page explains settings available to you as a PayPal merchant.
We'd like to hear from merchants about cases in which they've been the victims of fraud or have had their accounts suspended through no fault of their own. Learning about what can happen may help sellers avoid similar circumstances or at least help them think about coping strategies should they actually experience such situations.
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