BidPay.com's Fraud Detection System Uncovers International Online Auction Fraud Ring.

Business/Technology Editors

NEW YORK--(BUSINESS WIRE)--Sept. 21, 2000

BidPay.com, one of the most prominent person-to-person online auction payment services has uncovered a large Indonesian group hiding behind phony domain registrations.

The group is using stolen credit cards to target sellers offering their items for sale with online auction sites such as eBay, Yahoo, Amazon, MSN and a number of other online eCommerce sites.

Through their proprietary Fraud Detection System, BidPay has been able to detect these attempted fraudulent transactions. In addition to detection, BidPay has collected a considerable amount of data on this group. Realizing that this Indonesian fraud ring was having a fair degree of success with this scheme against other online merchants, BidPay did not stand idle.

Steve Chin, President of BidPay said, "When it comes to online fraud prevention, we have no competition. We have been cooperating fully with eBay and the other auction sites in combating these scam artists. As a result, our assistance enabled many of the fraudulent accounts to be closed down before sellers suffered any losses. We have also reported our findings to Network Solutions and understand they are conducting their own investigation."

In further efforts to deal with this problem, BidPay has been working closely with a special Internet fraud division of the Indonesian National Police. Based in large part on the data provided by BidPay, the Indonesian Police are now in the midst of a full-scale investigation. BidPay has also given detailed information to both MasterCard and Visa International in the hope that they will be able to trace the source of the stolen credit card numbers this group has been using.

It is believed that this Indonesian fraud ring is a highly organized group consisting of approximately twenty individuals who run the scam on a full time basis. Apparently, this group establishes domains names as fronts so they can appear as having legitimate email addresses. Using this facade, they place orders with unsuspecting sellers on auction sites or with online merchants directly. "The defrauders have access to a list of stolen credit card numbers and enter the orders using the actual cardholders' names and addresses, but using one of the email addresses from the illegally registered domains. They then wait to get a confirmation from the online seller and ask that the item purchased be sent to a relative or business associate in Indonesia," said Marek Bradbury, Vice President of International Operations for BidPay.

The scope of the problem was not fully understood until it was discovered that this fraud ring involved more than 500 domain registrations. As many as two thousand more have already been registered with the intention of defrauding online merchants. Marek Bradbury noted that, "It is fairly obvious to us that the scale and scope of this runs into the tens of millions of dollars. Accordingly, we have spent hundreds of hours tracking this group and are doing our best to alert all the potentially affected parties on how to take steps to detect this group's operations. What amazes us most about this group is how bold they are. They have actually set up a number of eCommerce web sites where they are selling the items they have obtained using this scheme and in the process are collecting new credit card numbers to further their efforts from innocent buyers."

BidPay.com was founded in March of 1999 and is headquartered in Silicon Alley in New York City. BidPay.com is the original online auction payment system and the largest issuer of Western Union money orders on the Internet. With over 450,000 active auction listings, BidPay has seen its market share increase by over 500% this year alone and is currently even with eBay's own payment service Billpoint. and expects to surpass Billpoint before the end of the year.