Web 2.0 Expo: PayPal Says Online Fraud Rising in Recession

EBay’s (EBAY) PayPal kicked off the Web 2.0 Expo in San Francisco Wednesday with a frightening presentation on the “arms race” between online fraudsters and online retailers and shoppers.

Online fraud is becoming so lucrative, said Katherine Hutchison, PayPal’s senior director of global risk management, that it has developed into an industry with specialized players that hire each other in areas such as harvesting credit card numbers and freight forwarding. “A single professional thief doesn’t have to have all of the skills needed to commit fraud,” she said.

Here’s one trick: Fraudsters use telephone services designed for the deaf to get an operator with a friendly (and middle-American) sounding voice to make calls on their behalf to a call center. “The telephone operator could realize this is very likely to be fraud, but they are legally blocked from saying anything other than what the person placing the call tells them to say,” said Hutchison.

Old techniques to track down fraudsters are becoming less helpful, she added.

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