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January 28, 2008

eBay Acquires Fraud Sciences For $169 Million

Duncan Riley

38 comments »

fraudsciences.jpgeBay through Paypal has acquired fraud detection provider Fraud Sciences Ltd for $169 million.

Israel and Palo Alto based Fraud Sciences offers automated anti-fraud systems including SpotLight VFX and SpotLight T2T, merchant solutions the provide transaction verification with fraud prevention. In an October 2007 profile, Israelplug said that Fraud Sciences products “help online retailers verify the identity of buyers and accept orders that they would have seen as suspicious in the past - thus enabling them to increase their sales.”

eBay said the acquisition will assist them in significantly improving trust and safety across its sites in 2008. Fraud Sciences’ risk tools will be integrated with PayPal’s fraud management system.

Personnel from Fraud Sciences, including Yossi Barak, Fraud Sciences’ COO, and founders Shvat Shaked and Saar Wilf, will join PayPal’s technology and fraud management teams.

This acquisition is expected to be completed within 30 days.

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This entry was posted on Monday, January 28th, 2008 at 4:10 am and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. MYBLOG by Ouriel

    January 28th, 2008 at 5:20 am

  2. eBay покупает Fraud Sciences за $169 миллионов | TechCrunch по-русски

    January 28th, 2008 at 6:08 am

  3. eBay compra Fraud Sciences

    January 28th, 2008 at 6:14 am

  4. IndianBytes.com

    January 28th, 2008 at 1:42 pm


  5. January 29th, 2008 at 9:16 am

Comments

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  1. Rajeev

    January 28th, 2008 at 4:25 am

    The product will surely suceed as fraud is the main drain on the economy of DotComs.

    Also there should be some service to detect fraud from Companies which cheat on a regular basis.

    http://tekno-world.blogspot.com

  2. Technicle

    January 28th, 2008 at 4:47 am

    Shouldn’t the more proper acquirer be Google (obviously, for anti-clickfrauds..) :-)

  3. micfo.com

    January 28th, 2008 at 5:01 am

    Sound good, this will avoid any potential risk factors.

  4. Andrew Horowitz, CFP

    January 28th, 2008 at 5:12 am

    The reason why eBay needs this is that there are significant problems within the auction process as well. Written about in detail at:

    http://www.thedisciplinedinves.....bay-short/

  5. Silicon Valley

    January 28th, 2008 at 5:39 am

    Merchants have gotten so concerned that they are refusing all prospects from certain nations.

    Imagine how the GOOD, HONEST buyers from the Nigeria and Ghana must feel when they want to buy online or establish an account.

    What is so sad is that giants like Ebay do not invent this technology - they wait and acquire someone else’s software

  6. Jon

    January 28th, 2008 at 6:10 am

    @Silicon Valley

    I find this a mystery as well, to be honest, why can’t Ebay with all it’s resources, make it’s own technology for a fraction of the cost… I guess they are not the only “growth through acquisition” based companies out there but this is one things, in software development, that I have yet to understand when there are SO MANY cheaper alternatives to come to the same ends.

    Jon
    http://woodmarvels.com - Create Unique Memories

  7. Debbie Davies

    January 28th, 2008 at 6:37 am

    PayPal/eBay has as much chance as a subprime lender does of restoring trust

  8. CanCar

    January 28th, 2008 at 6:53 am

    That so interesting article. This tool must be use for the french people, thus they avoid another millionaire fraud.

  9. Chris

    January 28th, 2008 at 7:19 am

    anybody know what their revenues were, if any?

  10. Rob

    January 28th, 2008 at 8:26 am

    First Skype, now this! No one should wonder why Whitman is leaving.

    Is the product valuable? I won’t argue that. But $169 million!?!

  11. James Curran

    January 28th, 2008 at 8:58 am

    “But $169 million!”

    That’s a drop in the bucket for eBay, they’ll make it back in the long run. Anyway, they NEED something like this to continue. In fact, they needed it at least a year ago. This is a great move by eBay if they don’t want buyers to leave to a smaller nimbler auction site where fraud hasn’t plagued it yet.

    It shows they don’t think they are so high and mighty that users won’t leave the site just because they are comfortable with it. AOL thought in this manner and look at them now.

    People get VERY angry after being taken advantage of with Fraud and will not use a site again because of it. If eBay doesn’t try and curb it, they might as well just die off.

    The Skype buy was 4 times the amount of this I think? And there was NO tie in…. this is a good buy for them.

  12. James Curran

    January 28th, 2008 at 9:00 am

    Oh yea,

    “Shouldn’t the more proper acquirer be Google (obviously, for anti-clickfrauds..) ”

    Yea, but Google makes more money off of letting the click fraud happen. Until absolutely necessary, they’ll keep turning a blind eye.

    Why spend $170m on something that will cut your revenue?

  13. truf

    January 28th, 2008 at 9:40 am

    1. Invent fraudulent ways to scare people online.
    2. Show up with an anti-fraud system and new company name.
    …
    …
    …
    6. Profit by selling your company for $169 million dollars.

    Why didn’t I think of this as a business model. Oh that’s right, I’m not Jewish.

  14. Bokon Too Koonet

    January 28th, 2008 at 9:45 am

    Revenues were about $10M, growing at about 22% monthly. Most of the customers were mid-tier e-commerce players.

    Another acquisition of an Israeli company for way too much money.

  15. Bokon Too Koonet

    January 28th, 2008 at 9:54 am

    @13

    a. you are stupid….and being jewish probably wouldn’t have saved you
    b. online fraud is a real problem
    c. the problem is that there is a perception that israeli technologies are somehow superior. The political circumstances surrounding that society requires them to push this perception when it comes to their military capability, though recent historical events have shown it is more bark than bite.

    This also manifests itself in the way their technology and companies are pushed and perceived. People really need to take a step back.

    They are producing a lot of good things, but let me tell you, as a whole i’ve seen too much hot air, and empty promises to substantiate most M&A deals involving Israeli and middle-eastern companies.

  16. Zach Weisman

    January 28th, 2008 at 10:49 am

    @15

    Its hard to bark when you wear a muzzle to make sure you protect innocents.

  17. Zach Weisman

    January 28th, 2008 at 10:51 am

    Its hard to bite as well. If you look at recent historical events it is not capabilities or ingenuity that are limited. Morality and public opinion have rendered certain forces impotent.

  18. Zach Weisman

    January 28th, 2008 at 10:52 am

    But thats enough political speak for a techblog. I agree with you that perception and image can be deceiving…

  19. Anthony Vargus

    January 28th, 2008 at 11:00 am

    Wasn’t this the paily.com scam out of Israel? I heard that they just shafted all those people on paily.com and started up again in California under the name Fraud Sciences.

  20. truf

    January 28th, 2008 at 11:02 am

    Thank you Anthony Vargus.

    @15

    Read the rest of the comments please.

  21. Schticky Stan

    January 28th, 2008 at 11:08 am

    eBay and PayPal have developed quite a bit of internal tools for fraud detection. This may be more of a goodwill gesture to the public than a technology breakthrough for eBay/PayPal. I am sure they will get some new tools/technology but the impression they are sending is probably what they were really looking for.

  22. Tally

    January 28th, 2008 at 11:10 am

    Guys, it’s an inside job. The new president for Paypal knows the VC firms for FS and his first act of president is to help out his friends by buying some no-name fraud company. BTW, some factoids, 1) revenues weren’t $10M a year, they were $1M their last year, 2) It wasn’t $169M all in, but that was based on performance expectations which will never be met because they just alerted all their customers they were closing their doors and killing off any revenue streams and finally: 3) “Bokon Too Koonet” means “to put in one’s as*s”, so I don’t know how to even begin to respond to that one.

  23. sd

    January 28th, 2008 at 11:32 am

    good move, new CEO.
    responsible buy.

  24. SalesDrivenMarketing.com

    January 28th, 2008 at 12:30 pm

    I hope this can help revive Ebay. Seems like a lot of pro sellers are migrating over to Amazon because many of them are upset at the lack of sales they’re generating from Ebay. I know my company is generating a lot of business from Ebay sellers looking to compensate their decrease in Ebay sales through other advertising means.

    http://www.SalesDrivenMarketing.com

  25. guest

    January 28th, 2008 at 12:36 pm

    This seems like an affordable way for the new CEO to raise the stock and signal to investors that Ebay is getting tough on fraud. We will see what happens.

  26. Jacky

    January 28th, 2008 at 12:51 pm

    How is $170M affordable? Isn’t that 170x revenue?? Seems like another bad deal for ebay, must be nice to have so much cash to burn on nada.

  27. Marizpan from Toledo

    January 28th, 2008 at 1:26 pm

    @22

    it actually means stick it in your a$$… close though

  28. Jason

    January 28th, 2008 at 1:49 pm

    Jacky, you can’t look at it by the revenue Fraud Science alone makes. You look at it by how this is going to benefit Ebay by increased usage of it services, stock , etc. People see ebay getting tough on fraud, then people start using it more.

  29. Jeff

    January 28th, 2008 at 1:52 pm

    It amazing they dont or cant build their own solution for less than $165M

    http://www.yupnup.com

  30. XFX

    January 28th, 2008 at 1:53 pm

    God not eBay again. Their site is full of scams.

  31. Learner

    January 28th, 2008 at 2:09 pm

    https://www.paily.com/

  32. Nedloh312

    January 30th, 2008 at 4:28 am

    The thing is, this is more of a publicity stunt, if they made the software themselves do you think so many people would hear of it? Thats why they spent so much, cheaper than advertising but better.

  33. Unfallversicherung Vergleich

    February 19th, 2008 at 6:38 pm

    Your opinions are very interesting

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