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Romania home base for EBay scammers

The auction website has dispatched its own cyber-sleuth to help police crack fraud rings.

December 26, 2007|Ian Wylie | Special to The Times

RAMNICU VALCEA, ROMANIA — This small industrial center in the foothills of the Carpathian Mountains is not Albena Spasova's favorite destination. Driving the twisting highway makes her ill. Once she arrives, danger lurks.

U.S. Secret Service agents escort her, for her safety. Over the last two years, they have kept watch on dozens of trips, some lasting weeks, others months, as she has spent long days foraging through case files with local police and long nights holed up in one of the town's few hotels, with her windows locked.

"You don't know who to trust there. You can't use the hotel phone line. When you step outside, you can spot the local hackers in their cars, circling around," said Spasova, 33. "The Secret Service agents always book my accommodation and make sure I'm in a room next to them."

Ramnicu Valcea is an improbable capital of anything, but this obscure town is a global center of Internet and credit card fraud. And Spasova is an accomplished online fraud buster, helping to take down cyber-crime gangs across Romania. She isn't an FBI agent, though, nor a Romanian police officer.

Spasova works for EBay Inc.

No one, it turns out, does Internet auction fraud like the Romanians. Bulgarians specialize in intellectual property theft; Ukraine is a leader in online credit card crime; the Russians have a profitable niche in Internet dating fraud.

But when it comes to online auctions, particularly for big-ticket items such as cars that can yield $5,000 a scam, Romanians own the game. Romanian police estimate that cyber-crime is now a multimillion-dollar national industry, as important to organized criminals here as drug smuggling or human trafficking.

The Internet Crime Complaint Center, a partnership between the FBI and the National White Collar Crime Center, ranks Romania fifth in its table of naughty nations. But most experts agree that doesn't give Romanian criminals their due. Much of the cash being made on auction fraud reported as originating in the U.S., Canada, Britain, Spain or Italy is actually being picked up in those countries by Romanian money mules. An EBay fraud ring busted last year in Chicago, for example, has been traced to Pitesti, Romania.

EBay, which doesn't even operate a site in Romania, won't talk dollar figures but acknowledges that the country is the No. 1 source of "professional fraud." On a November 2006 visit to the Romanian capital, Bucharest, FBI Director Robert Mueller said the vast majority of Internet fraud committed on "one prominent U.S. online auction website is connected to Romania or Romanians."

That poses a problem for EBay. The San Jose-based auction giant has built its popularity and staked its reputation on self-policing feedback. Its system depends on buyers and sellers trusting one another -- to send money and to deliver the goods. Yet EBay users are the daily targets of phishing scams, spoof e-mails and fake listing attacks. Such schemes don't cost EBay any money. But some of its customers pay dearly. And they expect EBay to do something about it.

"The fraudsters need to know we're coming after them," said Rob Chesnut, Spasova's boss and a former federal prosecutor who set up EBay's Trust and Safety division. "EBay doesn't have a product. We are in the trust business: making people feel comfortable doing business with someone they don't know," he said. "If the bad guys have no fear of prosecution, they will continue to try to defraud users. So there has to be a cost to trying."

Computer experts

Romania is a grim place in more ways than one. Former pro-Nazi regime, then Soviet outpost, then weird Communist dictatorship and now developing nation: Per-capita income here is just one-third the European Union average. Fearing a flood of cheap labor, most European countries have barred or restricted Romanians from job hunting in their countries.

The country is dotted with shuttered factories, such as the Aerofina plant on the outskirts of Bucharest, opposite a potholed parking lot. This plant once built missile launchers and ejector seats for the Romanian air force's MiG-15s.

These days, though, there's something different going on here. Spread across the factory's dimly lighted third floor, 30 young Softwin computer programmers tap softly at their keyboards, tuning up the antivirus engines that power BitDefender, a software package starting at $25 that detects new computer viruses and releases programs to fight them.

In the last two years, BitDefender has been named a "Best Buy" by PC World magazine and garnered other kudos from Consumer Reports and the website TopTenReviews. IBM was impressed enough that it recently inked a deal to integrate BitDefender's anti-spyware and anti-virus smarts into its own virus prevention system.

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