PayPal, a wholly owned subsidiary of eBay, is set to acquire Fraud Sciences Ltd., a privately-held Israeli company, for approximately $169 million. Fraud Sciences develops advanced anti-fraud software which will help PayPal in its continuous fight against cyber crimes. The acquisition will close within 30 days.

"Integrating Fraud Sciences’ risk tools with PayPal’s sophisticated fraud management system should allow us to be even more effective in protecting eBay and PayPal's hundreds of millions of customers around the world," said Scott Thompson, President of PayPal.

While PayPal claims that less than one percent of all transactions are fraudulent, that is little comfort to those who have been defrauded. PayPal lets users exchange money online via e-mail addresses, a system which has also made it one of the most highly targeted brands for phishing scams. Fraudulent Web sites mimicking real sites are set up in order to steal people's log-in details, who are lured there by fake e-mails.

Last October, Yahoo, PayPal and eBay have teamed up to fight against fraudulent e-mails. Thanks to DomainKeys e-mail authentication technology, Yahoo said that Yahoo Mail will offer to its customers a safer e-mail experience.

Fraud Sciences has allegedly developed a technology that differentiates between real and fraudulent transactions with unprecedented accuracy, the company claims.

PayPal resulted from the 2000 merger between Confinity and X.com, both launched in 1999. PayPal became the first dot-com to IPO after the September 11 attacks and was acquired by eBay for $1.5 billion in 2002.

Fraud Sciences founders Shvat Shaked and Saar Wilf and Chief Operating Officer Yossi Barak will join PayPal's technology and fraud management teams, while the Israeli company's President and Chief Executive Gadi Maier will offer strategic and operational support during the transition period.