Alibaba.com to Audit All Paying Members to Combat Fraud

Alibaba.com Ltd. (1688), operator of China’s biggest online commerce site for business owners, will audit all exporters that pay the company to market their products after some buyers were defrauded.

The company will visit the facilities of all paying members of its China Gold Supplier program over the course of a year, Director of International Marketing Linda Kozlowski said at a briefing in Hangzhou, east China today. The “onsite check” will help lower fraud on Alibaba.com’s website, she said.

Alibaba.com, used by companies including Wal-Mart Stores Inc. to find suppliers, lost customers last quarter after tightening screening of vendors to address concerns about the reliability of its website. The Chinese Internet company is also offering product inspection and escrow payment services to help boost protection for buyers, Kozlowski said.

The new checks “won’t be a drag” on customer growth, Kozlowski said. Alibaba.com won’t need to hire more people for the customer audit program, she said. Complaints from users have declined 77 percent this year, Kozlowski said.

Subscribers for the Gold Supplier program for Chinese exporters fell by more than 4,200 in the quarter ended June to about 112,000, Alibaba said last month. In the previous three months, the company lost more than 4,800 Gold Supplier members.

More than 2,300 vendors used Alibaba.com’s website to defraud buyers, and about 100 employees were responsible for letting sellers create bogus storefronts, Alibaba said in February.

Separately, parent Alibaba Group Holding Ltd. plans to offer English-language support for its Aliyun operating system for mobile devices, Wang Jian, head of the company’s cloud- computing division, said today. The Aliyun product will focus mainly on the China market, rather than overseas, he said.

Alibaba Group didn’t collaborate with biggest shareholder Yahoo! Inc. on cloud computing, Wang said. The U.S. investor has no “real” cloud technology, he said.

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net.

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