eBay buying Fraud Sciences

eBay (NASDAQ: EBAY) announced this morning that its PayPal unit is buying Fraud Sciences Ltd. for $169 million. Fraud Sciences is a company based out of Tel Aviv, Israel, and the deal is expected to be finalized within the next 30 days.

While eBay has not made any comments on how the acquisition would impact its 2008 numbers, it should help to reduce some concerns over eBay fraud, and possibly increase the number of transactions for the struggling company. The tools and analytics that Fraud Sciences will bring are expected to help enhance fraud management on both eBay and PayPal.

Users have had two main complaints about eBay recently: high fees and high fraud risk. The company said last week that it would be announcing a new fee schedule shortly to address the first concern. With today's news, the online auctioneer is addressing the second main concern.

As Meg Whitman's tenure as CEO is coming to a close, new CEO John Donahoe is definitely not wasting any time trying to bring the old eBay back to life. Just how successful Donahoe will be at restoring confidence in its long time customer base remains to be seen, but for sure he has taken two big steps in the right direction.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer