A lawyer from Virginia who helped put away CIA turncoat Aldrich Ames, now leads a new fight: To keep eBay safe from fraud. He leads the Net auctioneer’s anti-fraud team.

eBay took a proactive stance against fraud in January last year. That month, Chesnut became the head of a newly formed department called Rules, Trust and Safety. Later in 2002, the company launched a software system called FADE (Fraud Automated Detection Engine.) Its objective was to try to spot signs of fraudulent auction activity before money changed hands.

Though eBay continues to add capabilities to FADE and other anti-fraud software, Chesnut won’t say much about what, exactly, the systems do to prevent fraud on the site.

But even after the introduction of FADE, and the establishment of the Trust and Safety Department, unscrupulous sellers still operate on the site. An Arizona couple suspected of swindling 510 would-be buyers out of more than $100,000 ran auctions on eBay between January and March of this year.

eBay has to perform a deft balancing act when it comes to battling scammers. The company doesn’t want to get overly involved in trying to sniff out prospective fraud because it would seem intrusive to honest buyers and sellers – and because it could render eBay legally liable for every transaction that takes place on its site.

One area where eBay has gotten consistently high marks is in collaborating with law enforcement. “We treat law enforcement [agencies] like a customer,” Chesnut says. “We make sure that they get the information they need to fully and fairly investigate cases.” And eBay leverages its experience with serial auction fraud – like the Jay Nelson case – to try to figure out how it can prevent future occurrences.

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