Two top managers are leaving the business-to-business site Alibaba.com after an investigation found widespread fraud on the site, some of it allegedly involving Alibaba staff.
Alibaba is a global exchange site, where businesses and suppliers can connect. It has experienced rapid growth but lately has been plagued by complaints of fraud and theft. Alibaba's parent company also operates China's largest domestic retail site, Taobao, where businesses and individuals sell to consumers.
The company said today that CEO David Wei and COO Elvis Lee were both resigning after an internal investigation found that at least 2,300 sellers on the site had committed fraud, sometimes with the help of the Alibaba sales staff.
The company said the senior managers weren't involved in the fraud but felt that they should take responsibility for it.
The controversy revolves around the “Gold Supplier” credentials that sellers can display on the site after they go through a verification process. But Alibaba said that about 100 employees were “directly responsible” for allowing some scam artists to circumvent the verification process.
As a result, some buyers ordered parts or finished goods from what they thought were verified, reputable businesses. Some never receive the orders and others complained their orders were incomplete or otherwise unsatisfactory.
Most of the fraud victims lost less than $1,200, Alibaba said.