History of Trust & Safety
How it all began
Trade Me had been going a full four years before it faced its first substantive fraud threat.
In early 2003, an unsavoury character used two bogus Trade Me memberships and a website he had made himself to defraud 18 honest folk out of $14,000.
The offender had assumed that given Trade Me itself wasn’t being defrauded that we wouldn’t take it personally. He assumed wrongly.
Trade Me supplied the evidence trail to Police and in 2004 our recently appointed Police Liaison officer appeared as the key prosecution witness in the trial of the suspect, Haydon Simon.
Simon faced 20 charges of obtaining by deception and three charges of dishonestly using a document.
While Trade Me had worked with the Police before, this was the first time we had actively been involved in a prosecution.
After a week-long trial, Simon was found guilty on all 23 charges and sentenced to two and a half years in jail, an unusually tough sentence for a fraud offender.
The Trade Me team and our members, via the message boards, took pride in the fact that when someone had tried to rip off members of their community, there had been severe repercussions.
Getting the Simon prosecution through the system showed us that, with well compiled evidence, it was possible to put scammers in jail.
It also showed that when Police were provided with comprehensive demonstrations of offending and well documented evidence they could confidently act swiftly.
Trade Me began to concentrate more on the design and build of tools and programming tricks which would identify scammers (and those who had a high probability of being scammers), and prevent offences from happening, rather than being purely reactive.
In 2005 we took a fresh look at this area, and adopted the name 'Trust & Safety' to reflect the broader approach we would be taking.
We moved to a four pronged approach; prevention, investigation, redress/prosecution and increased analysis of the environment offending takes place in.
This is how we do it
Prevention involves working hard to divert offshore scammers, and profiling higher risk domestic types before they have a chance to undertake dodgy activity. In time this resulted in a 24 hour policing team monitoring site activity in real time.
Investigation involves a team of professional investigators who pick up the confirmed scammers and non-delivery of items identified by our internal policing team or through member complaints.
The investigators work with members and Police to compile evidence and prepare investigation files.
Redress and prosecution means exactly what it says. First we try to get redress for our members, in terms of their money or property, and then ultimately we seek to get a successful prosecution, ideally with as tough a sentence as possible.
For its first five years Trade Me operated an international marketplace where anyone could be a member. While this was great in terms of the size of the potential market, it limited the effectiveness of site regulation.
In simple terms, if the offender was located anywhere other than New Zealand or Australia, there was little we could do, which wasn’t ideal.
So in August 2005 we decided to restrict Trade Me membership to New Zealanders only (with the exception of Australians with New Zealand bank accounts and international sellers who meet specific requirements by arrangement).
Keeping it local
Now able to concentrate on domestic scammers, we began utilising the Police units closest to where an offender was located. The rationale here was simple but crucial to getting action from the resource-stretched Police.
In a typical scenario a fraudster might sell non-existent items to members located in Dunedin, Christchurch, Wellington and Auckland, but actually be based in Levin.
There is little point in approaching the Police in those four centres, to try and apprehend someone in Levin - it just gets messy.
What we started to do was to identify the perpetrator ourselves, put together an evidence trail, then co-ordinate all the victims to lay their complaint with an officer at the Police Station closet to where the perpetrator lived.
Then Trade Me would seek to provide that investigating officer with the most complete file we could, acting as a pseudo file-manager to make the job easier for them to hit the ground running. This strategy has had excellent results.
Amending the Crimes Act
In 2006, realising that a lot of traditional crime was likely to migrate online, and the courts needed the horsepower to deal with this, we threw our weight behind a movement to amend the Crimes Act 1961 to recognise that.
Eventually this resulted in two grunty provisions being slotted into section 249 of the Act around accessing a computer system to cause loss (or intending to do so), which brought with it the ability to deliver sentences of up to seven years.
These amendments, accompanied by an increased understanding within the judiciary of the critical role ecommerce plays in the New Zealand economy, gradually saw sentences involving online offending take a tougher line.
In 2006, we also saw the first custodial sentence under section 249, with a young Auckland offender named Mark Hayes who had undertaken a multi-layered Trade Me scam involving identity theft, fraud and bank account hacking.
Hayes pleaded guilty to 91 charges of accessing a computer system for a dishonest purpose and was sentenced to two years 11 months in jail.
Building a relationship with the Police
Through our willingness to engage and assist investigations on behalf of our members, Trade Me has built up a close working relationship with the Police.
This was formalised in 2005 with a Memorandum of Understanding – the first such arrangement entered into between the Police and a corporate entity in New Zealand.
The results of our activity and relationship with the Police have started to speak for themselves. From the first successful prosecution back in 2003, Trade Me started to see the successful prosecutions it was involved with heading north.
In 2004 the company participated in 11 successful prosecutions, and this grew to 50 by 2007, 58 in 2009 and 65 in 2011.
The lesson here for offenders is that they will get caught and be held accountable for their actions.
Trust & Safety is not just about cyber crime
From a single staff member in 2003, Trust & Safety has steadily grown in numbers and capability, and now consists of 11 staff. Duties range from Police liaison, credit card fraud prevention, intellectual property work, Government liaison through to active investigation of a wide range of potential offending.
Although working with the Police to catch bad guys is some of the more headline grabbing work that we do, the Trust & Safety team carries responsibility for looking out for a wide range of issues on the site.
In 2007, Trade Me started up its Intellectual Property Rights Programme. The programme seeks to balance the intellectual property rights of brands and other rights holders against the legitimate rights of individuals to sell genuine products on the site.
From humble beginnings, the programme now contains over 800 brands working closely with Trade Me staff to protect their intellectual property rights and ensure counterfeit products are not sold on the site.
Around the same time in July 2007, Pay Now was launched. Trust & Safety was given responsibility for preventing fraud through the facility. Pay Now has developed over the years into a world class secure-payment facility and is now the safest way to buy and sell on Trade Me. It’s a pretty quick way to get your goods too!
Government liaison has always been an important part of the Trust & Safety team’s work. The team has a history of working closely with regulators such as the Commerce Commission and the Ministry of Business, Innovation and Employment (formerly the MED), to help ensure professional traders on the site comply with legislation such as the Fair Trading Act and the Motor Vehicle Sales Act.
The team regularly works with around 30 different agencies to assist compliance, provide evidence to assist investigations, participate in enforcement activities and collaborate to promote public safety.