Steve Woda's blog

The Problem: Sexting and Predators

It is hard for me to believe, but today is the nine year anniversary of buySAFE's birthdate.  Time sure does fly by when you are having a good time. 

When I left buySAFE a few months ago, I promised to keep you up to date on my next entrepreneurial adventure.  In the spirit of start-up birthdays, I thought I would share with you a few interesting details about my next venture.

Obviously, buySAFE was founded to make the Internet safer for online shoppers, and we did that for tens of millions of consumers.  This time around, we want to make technology safer for our kids (Fatherhood has a way of inspiring you to do such things).  Our new start-up is tackling two serious, prevalent and complex problems: Sexting and Predators.  The market simply hasn't provided any effective solutions for parents yet, and we intend to fill that gap.

The business was inspired by my brother, Tim Woda, who as the parent of older children, has had to confront these difficult issues directly.  It seems like every time I speak with a parent of tweens or teens, they express the same frustrations and fear about allowing their kids to use digital technologies.  Since there are more than 37 million kids in the U.S. and more than 1.2 billion kids globally between the ages of 9 and 17, I believe there is an interesting business opportunity here.

The following is a short video overview of the Sexting and Predator problems that parents face today.  If you have any feedback or suggestions, please feel free to leave a comment.  I welcome your assistance.  Also, please share this video with your friends and family.  I believe it is important that we educate parents to make sure they are fully aware of the digital dangers they must manage on behalf of their kids. 

I recognize that I haven't told you how we are going to attack these scary problems, but I will over the coming months.  I wanted to tease you first!  :)  Before telling you everything, we have to finish building out our product and raise a bit of capital to finance our public launch.  Both of these activities are ongoing (and going well), and I will share more as we make additional progress.

I will continue to provide you with regular updates here on this blog, but if you want to get more frequent updates, feel free to become a fan on my Facebook Fan Page.  I am using it to share my daily thoughts on this start-up adventure.  Thanks, and stay tuned!

A Little Challenge to the Private Sector

Today's post is provided by Joan Herbig.  Joan is the Chief Executive Officer for ControlScan, a leading provider of security and Payment Card Industry (PCI) compliance solutions designed exclusively for small- to medium-sized e-commerce businesses.

******************************************

I recently sent some employees to a seminar to get an industry-recommended security certificate. The seminar is aimed at providing education on the newest and hottest cyber threats.

With all the news of mega breaches out there, including one I just wrote about on www.esecuritydiva.com, it would seem as if an information-packed seminar such as this one would be packed with IT people, right? Actually, it was. But with public sector IT people. Private sector attendees were few and far between.

What’s going on here? This little piece of news could be a telltale:

Daily Roundup for 2008-04-21

• Report: Paid Search Top Acquisition Tool for Retailers - Adotas
  In a year of dismal retail sales projections, a recent report says Americans will continue to snap up clothes, computers and cars online. A Shop.org conducted by Forrester Research found that online retail sales should climb 17% this year to $204 billion.


• TheFind powers commerce in Elle's content community - Comparison Shopping Engine Strategies
  It's been said that content, community and commerce is the holy grail to Internet success, and that's just what TheFind is now doing. The partnership effectively creates a destination shopping site on Elle.com, leveraging TheFind's competency in lifestyle goods, piping in products from merchants that match ELLE's audience.

Daily Roundup for 2008-04-16

• Does Your Company Need a Chief Blogger? - Advertising Age
  It's a question marketers are still grappling with years after the first waves of corporate blogging flooded the web. But for better or worse, it seems corporate blogging -- and the title of chief blogger -- is beginning to hit its stride. Companies such as Coca-Cola, Marriott and Kodak all have recently recruited chief bloggers, with or without the actual title, to tell their stories and engage consumers.


• Brands Partner With Consumers Online - eMarketer
  These days, online consumers and companies are collaborating on a range of activities, including R&D, marketing and after-sales support.  Here are a few examples of how brands and consumers are working together online.

Daily Roundup for 2008-04-08

• Just What We Needed, Google on Speed - Google Everflux
  Is it just me or has Google gone into overdrive? As a professional full-time online marketer I have to keep my mind firmly placed on what Google is doing. As much as I try not to because Google has probably driven more people around the bend than Chrysler and Mercedes-Benz put together. Like any professional marketer, I monitor my numerous keywords on a daily basis - especially my major targeted keyword phrases that bring in the most sales and subscribers. For years now, I have had top rankings in Google for my chosen phrases; they move up and down, but mostly they don't leave the first page.


• Beam it up: Tiny projectors to magnify cell-phone cinema - Technology Review
  Recognizing that it is not much fun to watch movies on a tiny cell phone, a number of companies are racing to develop gadgets that project what's playing on the small screen onto walls, table cloths and other handy surfaces. ''Pico projectors'' that are small enough to carry around in a shirt pocket are expected on the market later this year. Eventually, the technology will be tiny enough to be built into phones and portable media players, the companies say.

Daily Roundup for 2008-04-04

• Google's Gamble
  Can fewer clicks on its search ads lead to more revenue for Google? That is the question investors, analysts, and the company itself are trying to answer. The debate was launched after a Mar. 26 report from researcher comScore (SCOR) showed a decline in the number of clicks from the prior month on Google's search-related ads. According to the research firm, clicks on ads declined 3% in February from the prior month and were up just 3% compared to last year. Some analysts cautioned investors against buying additional Google (GOOG) shares; Google's stock declined 3% on Mar. 27, to $444.


• Mashup Security - Technology Review
  Mashups--online applications that combine data and tools from different websites--are becoming increasingly useful. Although they started out as simple consumer programs, such as a tool that placed housing listings from Craigslist onto Google Maps, mashups have grown in complexity and are becoming popular with corporations, too. As a growing number of tools are released to help people easily build mashups, experts are also taking a look at how to head off the security risks.

Daily Roundup for 2008-03-25

• Region's Venture Capital Rank Slips - washingtonpost.com
  Regions of the West Coast and Midwest moved ahead of Washington as top destinations for venture capital in recent years, as the local venture economy grew more slowly than the national average, a Washington Post analysis shows. In 2001, the year the technology bubble popped, Washington ranked sixth among top destinations for venture capital, after Silicon Valley, New England, the New York metro area, Texas and the Southeast. Last year, it was ranked 10th, overtaken by the Northwest, San Diego, the Midwest and Los Angeles/Orange County.


• Hammering out Wikipedia's financial future, argument by argument - Technology Review
  Scroll the list of the 10 most popular Web sites in the U.S., and you'll encounter the Internet's richest corporate players -- names like Yahoo, Amazon.com, News Corp., Microsoft and Google. Except for No. 7: Wikipedia. And there lies a delicate situation. With 2 million articles in English alone, the Internet encyclopedia ''anyone can edit'' stormed the Web's top ranks through the work of unpaid volunteers and the assistance of donors. But that gives Wikipedia far less financial clout than its Web peers, and doing almost anything to improve that situation invites scrutiny from the same community that proudly generates the content.

Daily Roundup for 2008-03-19

• Woman to record industry: Stop spying
  A woman who claims the recording industry's anti-music piracy campaign threatens and intimidates innocent people has filed a new complaint accusing record companies of racketeering, fraud and illegal spying.


• Startup RatePoint bets that people want user reviews refereed - Technology Review
  One of the great things about the Internet is the way people post reviews on just about anything you are considering trying, whether it is a movie, a new restaurant or the local florist.  This also introduces one of the worst things about the Internet: trying to figure out which reviews to trust. Was that effusive praise written surreptitiously by the merchant? Was that anonymous online slam posted by a devious competitor?  The dilemma might be unavoidable in this age of abundant user-generated content, when we have to be smarter about separating signals from noise. But a startup called RatePoint Inc. begs to differ. It wants to play referee, giving consumers more clarity into a business' reputation and protecting the business from unwarranted blights on its credibility.

Daily Roundup for 2008-03-07

• Sites With Anti-Fraud Sign Still Flawed - The Associated Press
  When a small padlock appears in the corner of your Web browser's address bar or the entire bar turns green, it seems like a powerful signal you're safe to proceed.  But experts say the SSL certificates those green lights signify — digital stamps of approval that Web sites buy to prove they're running a legitimate business and can send and receive encrypted data safely — don't provide the safety they seem to.  "They instill some sense of security, but that could be a dangerously false sense of security," said Paul Mutton, a researcher with UK-based security firm Netcraft Ltd.  The site itself could still be riddled with security holes for hackers to exploit. And the certificate could simply be bogus: Criminals have been forging them to get the padlock icon and dress up fraudulent sites.


• Web 2.0's Long Road to IPOs
  During the Web's heyday, a profitable Internet company nearing $100 million in annual sales while luring a million new customers a month would have found itself on the IPO fast track. But that's hardly the case for LinkedIn, a professional networking site that has cleared those hurdles and then some.  Instead, LinkedIn is hewing closely to the Web economy's new motto on initial public offerings: Easy does it. Founded in 2003, LinkedIn may not sell shares until some time next year. Likewise, social networking site Facebook, worth $15 billion on paper, may not go public until 2010,

Daily Roundup for 2008-03-03

• Lessons in building a better widget
  By giving an audience widgets that provide a service and make their lives more interesting or convenient your brand will be on its way to far more free real estate than you ever expected.  In helping brands develop widget presences, I can say that for brand managers and agencies alike, the first time through can be an emotional roller coaster. Early in the process, brainstorming sessions are filled with far-flung, fantastic ways to bring enterprise information into the everyday lives of the audience.


• Comparison shopping engines more important for some products than others - InternetRetailer.com
  Comparison shopping engines are an important part of the e-commerce channel marketing mix, Scot Wingo, CEO of e-commerce channel management services vendor ChannelAdvisor Corp., tells Internet Retailer. But they’re a better spend for some categories than for others, he adds.  Wingo says, for example, that comparison shopping engines are strong in categories such as consumer electronics, less so with products such as apparel and jewelry. That disparity is partially a function of how matching on the engines works. Consumer electronics products have a multitude of hard attributes that lend themselves to point-to-point comparison, for example, while jewelry and apparel selection relies more on a shopper’s subjective opinion.  That said, ChannelAdvisor customers spend anywhere from 15% to as much as 40% of their online marketing dollars on comparison shopping engines

Scam of the Month - Judge Judy Punishes an Idiotic eBay Fraudster!

In this "scam of the month", Judge Judy takes on an eBay fraudster and ultimately hands out the maximum punishment.  In spite of the fact that this scam seems audaciously ridiculous, it is actually quite common online.  Bottom-line, there are a lot of folks out there that lack any semblance of a moral compass.

My inspiration for starting buySAFE was a similar scam that I fell victim to on eBay during the summer of 2000.  The only major differences that I can point to are that I purchased a $400 PDA, and instead of taking the scammer to court with Judge Judy, I decided to instead start a company dedicated to making every online transaction trusted, reliable and risk-free... buySAFE!

Next time, I hope these two innocent victims limit their purchases to buySAFE merchants.  It will save them a whole lot of anguish and effort!

Watch this video.  It is quite enlightening.

Related articles:
"Judge Judy Episode on eBay Trust & Safety" on Psychohistory blog

Important eCommerce Trust and Safety Statistics

At the PESA Summit this past week, there was a lot of talk about how to improve e-commerce conversion rates. I believe there are three critical drivers for conversion: product selection, price, and trust. Each of these issues would provide substantial content for an article, but I thought I would dedicate today's post to a number of very important trust-related statistics.

If you have any doubt about the role of trust and buyer confidence in your e-commerce business success, please take a quick look at these stats.

• 55% of online shoppers say trustworthiness of the merchant is most important (vs. price, convenience, pleasure, other)
  (Source: Online Shopper Research Report, 959 respondents, August 2006)
  

• 65% of online shoppers buy only from sites they know and trust
  (Source: VeriSign Secured Seal Research Review 08/06)
  

• 72% of online shoppers are becoming more cautious when buying online
  (Source: Gartner Research, 5000 respondents, May 2005 survey)
  

• 73% of online shoppers are concerned about the item being misrepresented (inaccurately described, counterfeit)
  (Source: Online Shopper Research Report, 959 respondents, 08/06)
  

• 76% of online shoppers are worried about never getting their purchase
  (Source: Online Shopper Research Report, 959 respondents, 08/06)
  

• 81% of online shoppers are concerned about merchant return/refund policies not being honored
  (Source: Online Shopper Research Report, 959 respondents, 08/06)
  

• 84% of online shoppers are concerned about merchants not treating them fairly
  (Source: Online Shopper Research Report, 959 respondents, 08/06)
  

• 85% of online shoppers are concerned about identity theft
  (Source: TNS Research, 08/06) 
  

• And, amazingly, over 50% of all U.S. internet users still don’t buy online (even from Amazon.com!).
  (Source: Bear Stearns, September 2006)
  

With respect to this last statistic, "trust" issues are the primary driver of e-commerce non-participation. Amazingly, more than 50% of your potential customers will not buy online because they are nervous! Are you kidding me? That is a huge number, and obviously, the time has come for the e-commerce industry to take this issue seriously.

eCommerce's "Shoot the Messenger" Strategy

When it comes to online fraud, the e-commerce industry seems to hate looking itself in the mirror.  Specifically, e-commerce executives cringe at the mere mention of the existence of online fraud.  Their first reaction is almost always to blame the messenger for sharing tough information about the industry rather than actually tackling the core issues driving the online fraud that victimizes consumers for millions of dollars every day.

I ran across the following quote from Scot Wingo of ChannelAdvisor in this blog post regarding eBay's VP of Trust & Safety appearance on the Oprah Winfrey Show:

"Unfortunately it's never a positive when there's someone with Oprah's reach out there associating eBay+fraud so I think it was a net negative."

I have learned from experience that Scot Wingo is a very smart guy, and he has proven to be a vocal educator regarding the e-commerce industry.  When necessary, he has also had the courage to stand up and point out what isn't working in the e-commerce industry.  My interpretation of Wingo's comment is that Chestnut's appearance wasn't a good thing for eBay's short-term prospects or stock price.  I would agree with that.  However, I do not believe Wingo was suggesting that coverage and discussion of online fraud problems are a bad thing for eBay or e-commerce in the long-run.  If that was his suggestion, I would disagree with that.

Scot's comment did make me think about an alternative point of view that I have heard many times from e-commerce executives over the years. I often the hear the following question from execs almost verbatim: 

"Don't you think that by talking about online fraud you are blowing the issue up way beyond proportion and scaring consumers away from e-commerce?"

When I hear that question, I cringe because it displays a fundamental lack of wisdom.  Wake up everybody!

Today, more than 50% of all online surfers don't buy ANY merchandise online!  That is a ridiculously high number, and when surveyed, these non-buyer internet surfers overwhelmingly cite distrust of and nervousness about e-commerce transactions.  Is that because the industry talks about the online fraud problem too much?  No!  It is because online fraud is, in fact, a huge problem as reported by many sources including the Federal Trade Commission.  Almost everybody knows somebody that has been burned on the internet.  Don't you?  The 50% of internet surfers that avoid eCommerce do so because, to date, the industry hasn't solved the problem for consumers. 

The industry consistently takes half-steps so that it can tell the press and consumers that "we are doing something".  My honest opinion is that it is a bit of joke (You will want to tune in tomorrow for a very specific example that will probably shock you.), and any smart e-commerce executive knows that is true.

Buyer protection plans and merchant rating systems are simply not enough.  If, for example, eBay's Feedback Rating system and PayPal's Buyer Protection were enough to make it completely safe for consumers, why does Chestnut have to go on Oprah and explain the issue?  Well, of course, he wouldn't.

If a crime happens in your neighborhood, most people want to know about it immediately so that they can take specific steps to protect themselves in the future.  It is no different in your online neighborhood.  Ignoring the problem of online fraud and shooting any messenger that points out that a problem exists is not going to help solve the problem.

In the long-run, Oprah's coverage of online fraud is a very good thing for eBay, e-commerce, online merchants and consumers!  Let me say that again... Disclosure, coverage, and discussion of the online fraud problem will help and inspire the industry to identify solutions that will be critical to the success of this industry in the long run.

The minute an effective, comprehensive solution to online frauds is adopted, consumers will buy merchandise on the internet like never before.  The minute we stop blowing smoke and we start solving the problem will be the minute e-commerce starts to tap into the ~100 million internet surfers who we can't currently count as customers.

Consumers want us to make it completely safe for them to buy online.  We owe it to folks to do just that. Don't shoot the messenger!  Understand the problem.  Discuss and debate it.  Then solve it!

Proposed solution to e-commerce-related fraud:
A trusted, objective, regulated third party needs to investigate the backgrounds, history and financial stability of online merchants and then, if the third party is willing to endorse the merchant, the trust & safety company needs to put its money where its mouth is by fully protecting consumers for any deviation from the promised terms of sale.  Obviously, that is what buySAFE does.

Related blog posts:
"buySAFE Invited By French Government to Help Stop Online Sales of Counterfeit Luxury Goods" by Travis Brown
"Stop Worrying! How to Solve the eCommerce Trust Problem. (A must read if you sell or buy online!)" by Jeff Grass
"What's Wrong With eBay? It's Simple Economics" by Steve Woda
"What is a 'Market for Lemons'?" by Steve Woda
"What's Wrong With eBay? It's Simple Economics" by PowerSeller King

buySAFE on The Today Show!

The past few days have been quite exciting here at buySAFE.  Last week, buySAFE was featured on The Today Show.  The "Designer Duds: Fake or Real?" segment, reported by Today's consumer affairs reporter Janice Lieberman, discussed the growing e-commerce problem of counterfeit luxury goods.  As expected, buySAFE was showcased as a terrific solution to the counterfeit goods problem.

Counterfeit/fake/stolen goods are obviously becoming a major issue for e-commerce, but in my opinion, this problem is actually a symptom of a much larger, more important, fundamental problem... Online, buyers have a very difficult time discriminating good sellers/product from bad sellers/product.  The REAL problem is that the Web suffers from major information asymmetry issues.  That is why bad guys are successful at defrauding consumers. 

Please think about my diagnosis for a moment... If consumers could tell the difference from the good guys and the bad guys, would shoppers ever unknowingly buy a counterfeit item?  Of course not!  Fraud happens because of information asymmetry.

I think you will find the "Designer Duds: Fake or Real?" news segment very interesting.  However, as you watch this clip, please understand that the counterfeit/fake/stolen goods fraud problem is due to a more fundamental e-commerce problem... Buyers can't reliably tell the difference between the good guys and the bad guys!  In economic terms, this is called information asymmetry, and it is causing legitimate, professional merchants millions of dollars each and every day.

Kudos to Jeff Grass, buySAFE's CEO, for a job well done!

Related blog posts and e-commerce articles:
"Designer Duds: Fake or Real?" by Janice Lieberman on The Today Show and iVillage.com
"buySAFE Invited By the French Government to Help Stop Online Sales of Counterfeit Luxury Goods" by Travis Brown on the buySAFE blog
"eBay Bonding Service buySAFE Featured on Today Show" by Ina Steiner on AuctionBytes.com
"buySAFE Appearance on 3/20/2007 Today Show" on AuctionBytes.tv

Stop Worrying! How to Solve the eCommerce Trust Problem.

Jeff Grass, buySAFE's CEO, recently posted a comprehensive article on the eCommerce Trust problem, and how buySAFE is specifically designed to tackle this big issue.  Jeff does a great job of laying out the requirements for effective online trust and safety solutions, and I thought you might enjoy the read.

"Stop Worrying! How to Solve the eCommerce Trust Problem. (A must read if you sell or buy online!)" by Jeff Grass on buySAFE's blog

If you have any thoughts, insights, or comments on Jeff's article, I would be very interested in hearing from you.

Wake Up With buySAFE on The Today Show

It’s been a lot of fun (not to mention a lot of hard work ;-) to see buySAFE grow from an idea in my head into a company that is changing the face of e-commerce. Knowing how far we’ve come makes it exceptionally rewarding when major, national news outlets cover buySAFE and the impact we are having.

One such news outlet – The Today Show on NBC – will be including buySAFE in a story that will run tomorrow, March 20 shortly after 8:00 a.m. Consumer reporter Janice Lieberman spent the day at buySAFE headquarters last week as part of a piece about the prevalence of counterfeit luxury goods being sold online. With consumers often unknowingly buying knockoff merchandise, it’s tough to know how to protect yourself from becoming a victim.

Fortunately, buySAFE solves this problem. By certifying that a merchant is trustworthy and reputable, identifying the merchant with the buySAFE Seal, and taking the extra step to guarantee the transaction, buySAFE ensures a safe, smooth transaction for consumers every time. Rather than worrying about having bought a fake, shoppers that buy from a buySAFE Merchant can rest easy knowing that they’re dealing with one of the safest merchants anywhere.

I encourage you all to tune in the Today Show tomorrow, March 20th at 8:00 a.m. to see how buySAFE is making e-commerce safer and more efficient for everyone involved.

Auction Fraud Tops FBI's 2006 Internet Crime Report

As reported by Fraud, Phishing and Financial Misdeeds, auction fraud continues to be a huge problem.

The FBI has released its 2006 Internet Crime Report, and 45% of the Internet crime complaints in 2006 were for auction fraud.  You can read the Internet Crime Report here.

I have to be quite honest.  I am pretty disappointed in our Internet industry.  I believe there are too many folks willing to ignore this issue in the interest of making millions of dollars in profits.  Consumers continue to bear the brunt of the industry neglect, and in my humble opinion, the thinking is too short-term.  If these problems continue to get worse, it could permanently damage and alter the ecommerce landscape.

What do Digg and eBay Have in Common?

Written by Guest Blogger, Lauren Davis - Georgetown Law student

What do Digg and eBay have in common?  Their rating systems are under assault by the fraudsters, and in some cases, this mischief is undermining the systems' credibility and effectiveness.

There has been a great deal of buzz surrounding a recent article in Wired magazine. The piece, entitled “Herding the Mob,” notes that online retail sites, such as eBay and Yahoo Auctions, and social bookmarking sites, including Digg, del.icio.us, and Reddit, share a common problem: the gaming of their community-based systems.

MySpace is Your Space. EverybodySpace.com

Written by Guest Blogger, Marc Morel - Director of Product Management, buySAFE

Web 2.0 has been ruling our world for several years now. We have all been posting, rating, blogging, podcasting, and commenting on everything from politics to the latest ball game we went to watch. This is power to the masses. And the world got better. But, did it really? I am not so sure...

International Visitors Drive eBay Traffic

This AuctionBytes article by Lissa McGrath is a couple of months old, but I find it to be quite fascinating. 

During this past holiday shopping season, about 70% of eBay's website traffic came from beyond the United States' borders.  Wow!  Obviously, the international Internet is the real deal in 2007.  I haven't spent any time independently analyzing this traffic data, but if true, it provides a fascinating view of how the eCommerce marketplace is evolving.

eBay and Seller Certification

Skip McGrath is the CEO of Auction Seller's Resource - a terrific newsletter for professional eBay merchants and for those folks aspiring to make a living on eBay.

Skip recently posted a series of interesting articles on the subject of seller certification on eBay.

Part 1
Can Seller Certification Bring Buyers Back to eBay

Part 2
eBay Selling Tools To Build Your Business by Preventing Fraud

Skip has done a nice job of laying out a number of things to consider, and I encourage you to give his posts a read. 

I believe Seller Certification is part of the answer for eBay (and eCommerce in general), but my big fear is that a bunch of eBay marketing folks will get together and roll out a new "seller certification" program, and that the program will fail to actually do anything meaningful for buyers or the economic health of the eBay marketplace.  Tough, effective "seller certification" programs actually require that you have to tell some sellers that they CAN'T be "certified".  In my experience, marketing folks don't like to tell current or prospective customers that they can't do business together.  Tough, effective certification programs are designed to limit the players on the field, and this is usually counter to everything the marketing folks think about each and every day.

eBay Feedback Farms Undermine Feedback Ratings System

Last week, Ina Steiner documented the basic story of 'Feedback Farms' on eBay.

I have to be honest, these scams continue to amaze me, and one has to conclude that these scams are damaging and undermining the entire feedback/merchant rating system.  If fraudsters can so easily create feedback/merchant ratings in the thousands, then buyers will have to increase their vigilance online.  From a buyer's point of view, it continues to be more and more difficult to truly discern good from bad.

Add Your Phishing Emails to the Phishtank

Phishtank is an interesting new anti-phishing service that recently launched to the public.  Brian Krebs of the Washington Post reviewed Phishtank, and I agree with many of his assessments.

The service is a great idea, and I like many facets of it.  I have always been a big fan of leveraging the collective knowledge of the community to identify and fight the bad guys.

My one issue with the service is the fact that they publish the URLs of the malicious sites on their home page.  People are pretty naive, and there are lots of people that will find this interesting and decide to visit these sites in their browser.  The problem is that these sites often attempt to exploit browser flaws, and surfers can fall victim to them by simply viewing the websites.  Obviously, publishing the URLs of the suspected malicious sites is not a great idea.

Still, I encourage you to check out the Phishtank (don't visit the malicious sites though), and if you find a suspicious website, make sure you add it to the Phishtank.

"Opportunities and Threats of Online Auctions" - An Interesting Case Study

I ran across a case study this morning that discusses the opportunities and threats of online auctions, and it specifically focuses on the online auction site, eBid.   

The author is Khurram Memon of DeMontfort University.  I believe that as you continue to wrap your head around what is currently happening with the eBay marketplace and what you can expect with other eCommerce channels in the future, this will be an interesting case study for you to read.

Related blog posts, case studies, and presentations:

• "What is a 'Market for Lemons'?" blog post
• "What's Wrong With eBay? It's Simple Economics" blog post
• "buySAFE. Creating and Profiting from the Bonded Seller Advantage " case study by Dr. Eric Clemons, The Wharton School, University of Pennsylvania
• "Building Buyer Confidence: The Economics of Information Asymmetry & Signaling" presentation at 2006 MIVA Small Business Conference
• "Everyone's a Critic. Not So Fast" blog post by Jeff Grass, buySAFE

What is a "Market for Lemons"?

I have had a number of eBay merchants write me about a post that I made earlier this week suggesting that eBay seems to be displaying the early signs of a Market for Lemons problem (Some would argue it is far beyond the beginning stages, but I will let you debate that with your comments below).

Without focusing on eBay or eCommerce in general, it has been requested that I illustrate a simple example of how a "Market for Lemons" develops.  Obviously, there is a lot of academic research on this subject (I posted a Wharton case study by Dr. Eric Clemons earlier this week, and you won't want to miss it since it discusses eBay's challenges in greater depth.), and almost everybody has heard the "Market for Lemons" term utilzed at some point.  Wikipedia provides a basic overview of the Market for Lemons economic concept, so I won't regurgitate what you can read elsewhere.

In short, the "The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a paper written by George Akerlof in 1970 that describes what happens to markets that suffer from information asymmetry problems.  Ultimately, Dr. Akerlof won the Nobel Prize for Economics in 2001 (along with Michael Spence and Joseph Stiglitz) for his analysis of markets with information asymmetry.  While I was at Wharton, I was fascinated by the implications of this research on eCommerce marketplaces.

What's Wrong With eBay? It's Simple Economics

What's wrong with eBay?  Before I answer this question, you should download this Wharton case study by Dr. Eric Clemons of The Wharton School, University of Pennsylvania.  Dr. Clemons is one of the world's most renowned experts on information economics, and this case study is currently being taught at Wharton this semester.  It goes into great detail discussing eBay's current challenges, and I believe you will find it insightful.

Okay back to the question...  What's wrong with eBay?

Top 10 Tips to Avoid Phishing Scams and Identity Theft

Earlier this week, I posted on the subject of eBay and PayPal phishing email scams.  It is impossible to completely protect yourself from the bad actors, but I wanted to share with you my recommendations on how to protect yourself from these types of scams.  The following are my top 10 tips on how to avoid phishing scams and identity theft:

1) Never click on the hyperlinks in emails
The text you see as an email hyperlink may be cloaked or hidden.  The cloaked hyperlink could take you to a website that you weren't planning to visit.  If you aren't completely sure of the source of the email, you should simply retype the URL directly into your browser.  This is one of the best ways to avoid fake hyperlinks and the threats associated with phishing emails.

How To Avoid PayPal Fraudsters

Ted Richardson at Fraud, Phishing and Financial Misdeeds had a great post last week on "The Art of Defeating a PayPal Scammer - Part II"  It is a good read, and Ted's tips are right on.

PayPal provides users a number of educational resources including "How to Spot a Spoof".  Also, eBay's Senior Vice President of Trust & Safety, Rob Chestnut, has written an eCommerce Safety Guide that I have found interesting as well.  You can listen to Rob Chestnut in this BusinessWeek interview, "Fighting Fraud on eBay".

In spite of all the work Rob Chestnut has done over the last few years to combat eBay frauds, emails that appear to come from eBay and PayPal continue to one of the biggest risks to online surfers in 2006.  I personally receive a half dozen fake eBay or PayPal emails a week, and I am not alone.

According to The Arbor Networks Security Blog, eBay and PayPal were the #2 and #3 targets of phishing attacks in the first quarter of 2006.  I have seen other stats that are less severe, but obviously, eBay and PayPal phishing emails are a major risk to consumers.

Obviously, the point here is to be careful when surfing online and reading your email.  I will provide you with my specific tips for avoiding phishing scams later this week.

The Virginia Joint Commission on Technology & Science (JCOTS) Cybercrimes Advisory Committee

I was recently appointed to the Commonwealth of Virginia’s Joint Commission on Technology & Science Cybercrimes Advisory Committee. The general purpose of the advisory committee is to study and advise on key cybercrime issues under consideration by JCOTS and by the Virginia legislature.

The focus for this year’s advisory committee is computer trespass and cell phone spam.
Specifically, we will be studying HB 254 (2006) and HB 1354 (2006) during the 2006 legislative interim.  We will work to determine what changes need to be made, if any, to further refine these bills.

HB 254 ammends the Commonwealth's existing computer tresspass statute by adding three provisions prohibiting certain forms of spyware. In addition to the three provisions, there was a proposed amendment exempting certain software providers from the three spyware provisions.

HB 1354 attempts to prohibit unsolicited text messages (spam) sent to wireless devices in the Commonwealth. However, both the CAN-SPAM Act and the Telephone Consumer Protection Act (TCPA) regulate certain types of messages sent to wireless devices. This advisory committee will need to determine what types of messages the state may regulate and if there is a sufficient need for regulation at this time.

During our first meeting in late July, the Cybercrimes Committee also discussed ideas on how to combat eCommerce fraud, pharming, phishing and MySpace.com safety problems.

I was very impressed by both the legislators and the citizen advisors. There are a lot of smart folks in Virginia thinking, proactively, about how to make the Internet a safer place for all of us, and I will keep you up to date on our work over the course of the year.

The Cybercrimes Advisory Committee consists of the following members:

Virginia Legislators:

• Senator Ken Stolle
• Delegate Cosgrove

Citizen Members:

• Michael A. Aisenberg, VeriSign
• Patricia Boggs, Cyveillance
• Charles Curren, AOL
• Steve DelBianco, Association for Competitive Technology
• Anne Gavin, Microsoft
• Thomas W.J.C. McCrystal, Creative Perspectives
• Russell E. McGuire, Virginia Office of the Attorney General
• Adam Ruttenberg, Cooley Godward
• Gerry Stegmaier, Wilson Sonsini Goodrich & Rosati
• Steven L. Woda, buySAFE

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