Online trading site eBay Australia has installed new software to help reduce fraud, following moves by its other sites to crack down on dodgy sellers.

Earlier this week eBay's chief executive Meg Whitman told shareholders at the company's annual general meeting in the US that the new software was helping the auction site make "major strides" in reducing fraud.

Kaye Dewar, community development director at eBay Australia, said the Fraud Automated Detection Engine (FADE) had been used in Australia for a number of weeks.

FADE is an internally developed application, which the company began testing about six months ago. The software collects data from defrauded customers, tracks it in a central database, and then predicts which new sellers are likely to be illegitimate.

Dewar said FADE alerted the company of potentially fraudulent sellers, allowing it to look more closely at both the listing and the seller.

EBay Australia won't reveal how many potentially fraudulent sites it has halted. Dewar added that she couldn't go into much detail about how the system worked, because of compromising the protection of its member base.

"We've got zero tolerance for fraud," Dewar said. "We use a variety of fraud detection tools and mechanisms that have been effective at detecting potentially fraudulent sellers."

Whitman said the technology has already helped eBay reduce its fraudulent sales rate, which she said is at less than one-tenth of one percent. Whitman said the software's ability to spot criminals will get better as the database of fraudulent sales grows.

But eBay spokesman Kevin Pursglove emphasised that FADE would not automatically bar sellers based exclusively on their geography, merchandise category or other demographic information. "We know we've got to be careful," Pursglove said after the shareholder meeting in the US. "The reality is that everyone starts at zero, with a clean record."

eBay tightly guards data about fraud and doesn't disclose lists of hot spots for fraudulent sales, Pursglove said.

Anecdotal evidence suggests that a disproportionate percentage of fraud happens from sales that originate from sellers in Eastern Europe. Pursglove also said that higher-priced items, such as computers and other electronics goods, have a higher rate of fraud than collectibles such as Pez dispensers and Beanie Babies. Technology products, ranging from Sun Microsystems servers to Dell Computer laptops and a variety of smaller electronic gadgets, constitute the largest category of goods sold on eBay.

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