Tuesday, January 08, 2008

Online Fraud and social network

Hom important is online security? It is very important. Just read an interview with Max Levchin, the cofounder of Paypal. He said the biggest competitive advantage for Paypal is it knows how to deal with online fraud. Now I experienced it in the real life.

I have been doing researching on buying a used car. The site my friend recommended me is Craigslist, which is very popular in U.S. for the listing of various selling stuffs. I look for the cars I am interested and usually write to the email listed in those posts. One day, I found a Lexus car in a good shape but very cheap price. So I wrote to the guy, and got a very detailed email. This guy named Tom sounded very sincere. and the pictures of the car looked perfect. Here is some of the quotes:

"I am now located in London, UK and I feel very comfortable using a service like eBay. I need to know if you are interested to buy my Lexus because I want to use their service. I just moved here a couple of months ago and I can't use it here because it is a left side wheel car. The car is still registered in the States. It might look strange but my price for it is $4, 000.00 in US dollars. If you want it I can arrange a shipping process with Lufthansa (paid by me and my wife) for you to receive it in less than 3 days. Shipping will not cost me that much, as my wife used to work for Lufthansa here and now, although she is not working there anymore, she still has great discounts with the company. That is why i offered to pay for shipping. With all this being said and in order to get this started please let me know your delivery info (where to send the car to) and your full name. "

I almost fully trust him, before I started a little search on Ebay. Since this guy would like to use Ebay, then there must be some post from him already, and I would like to see the bidding price right now. Then something unexpected happened. I found a piece from a U.S. dealer in midwest of the country posted the exactly same pictures of this car. Totally the same pictures from the same angle and in the same places. It means at least someone, either Tom or this Ebay dealer, is cheating. So I wrote to Tom on this, and nobody replied me on this.

So now I got to the conclusion. Tom is cheating. Since there is no feedback on Craiglist, I would never who tells the truth and who is cheating. The only thing I could do is to try my good luck and do more research.

How to solve the problem of online fraud? Paypal uses technology to solve this problem. There is another way, through social network. People will give feedback or even rate the sellers who are honest, and discredit those cheating people. I have the experience in looking for a auto mechanic shop on Yelp.com, and people's recommendation does provide a lot of insightful information. (You could even learn who out of the dozens of repairers you should go to in a specific auto shop). There maybe cheating too, but the power of a wide social network is so strong that you are unable to hide your bad online behaviors. Someone will always point you out.

That's how the real society works, and the same to the "virtual society".

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