PayPal buys Fraud Sciences for $169M

PayPal, eBay's online payments division, will pay $169 million for an Israeli security company specializing in detecting online fraud, the companies said Monday. The deal should close within 30 days.

Fraud Sciences, a private company, has developed technology designed to differentiate between real and fraudulent transactions. That technology will be folded into PayPal's antifraud systems, which will be "significantly" improved this year, eBay said.

Fraud Sciences' chief operating officer, Yossi Barak, and founders Shvat Shaked and Saar Wilf will move to PayPal's technology and fraud management teams.

PayPal lets two users exchange money online via e-mail addresses. The ease at which people can transfer money has also made it one of the most highly targeted brands for phishing scams, where fraudulent Web sites mimicking real sites are set up in order to steal people's log-in details.

PayPal has taken other steps to shore up its defenses. Early last year, it began offering a keychain with a one-time numeric passcode that users enter in addition to their login and password. The passcode expires after 30 seconds, which greatly reduces a hacker's window of opportunity to get access to someone's account.

PayPal has also pushed for free e-mail providers to block e-mail sent without digital signatures. That would potentially mean fewer scam e-mails would land in people's inboxes, reducing the chance of fraud, although providers have yet to make a unified commitment.