eBay's online payment service PayPal agreed to acquire Fraud Sciences Ltd. in a cash transaction worth approximately $169 million. Fraud Sciences is a privately-held Israeli company with expertise in online risk tools.

Fraud Sciences was founded by two Israeli intelligence specialists in 2001, is funded by BRM Capital, Redpoint Ventures and other US and Israeli investors, and launched its service in April 2006. The company told Businessweek in an October 2007 interview that it helps small Internet retailers reduce the number of rejected orders deemed suspicious. "In the first nine months of operation we approved $45 million in legitimate revenues that in the past would have been thrown out," CEO Gadi Maier told the magazine (http://www.businessweek.com/globalbiz/content/oct2007/gb2007102_071913.htm).

Fraud Sciences uses a secretive technique called "identity proofing" that involves establishing whether a buyer is a real person and is who he says he is by analyzing digital footprints scattered around the Internet. eBay said the acquisition fits into its recently announced plans to significantly improve trust and safety across its sites in 2008.

The acquisition is subject to certain conditions and is expected to close within the next 30 days.