The Naked Supplier

To paraphrase Winston Churchill, in cyberspace everyone is a riddle wrapped in a mystery inside an enigma behind a firewall. Knowing for sure that the customer or supplier you're dealing with is in fact who he or she claims to be has never been more...


Business partner verification is nothing new. Dun & Bradstreet, for example, has long made its database of more than 60 million businesses worldwide available to clients to identify potential partners and verify credit and payment histories. In fact, Hansen says that BidBuyBuild's customers would go offline to use Dun & Bradstreet or a similar service to check up on potential partners. But because they did their verification offline, the exchange's customers viewed such a check as an extra step that interrupted the flow of the online transaction process. The feedback coming from our sales force was that people would use the site more if we had some kind of authentication capability, Hansen explains.

Enter GeoTrust, a Portland, Ore.-headquartered startup that began offering an online identity service late last year. Beginning in October 2000, BidBuyBuild customers have been able to validate the identity and creditworthiness of a potential partner with a few clicks of a mouse, giving them immediate access to such information as the partner's performance and payment history, business policies and practices, and standard terms and conditions.

The story of how GeoTrust President and CEO Jonathon Jothy Rosenberg came up with the concept for GeoTrust is becoming the stuff of Internet legend. His wife, a physician's assistant for patients with AIDS, commented to him one day that much of the information available on the Web about the disease was pure quackery. Why, she asked, couldn't he come up with a way to verify that a Web site was legitimate and authoritative? Rosenberg, who has a Ph.D. in computer science from Duke University, took up the challenge of online trust and, in 1999, joined GeoTrust, then a year-old company, to help develop a suite of identity software especially for e-marketplaces called Safe Market.

GeoTrust worked with Ernst & Young's Center for Trust Online to develop an appropriate trust model  for e-commerce, and Safe Market combines software and vetting services. When a company registers with an online marketplace that is using the Safe Market service, it self-discloses certain financial and background information that goes into a digital profile set up by GeoTrust. The company also declares which of its executives have signing authority.

GeoTrust then draws on a number of outside sources to vet the company, including Open Ratings, a supplier-performance rating service; SGS, an old-line Swiss verification, testing and certification company that provides access to information gathered during site visits to companies around the world by SGS inspectors; and Equifax Service, the e-commerce division of Equifax that provides B2B authentication services.

At the end of the vetting process, GeoTrust issues a digital certificate  that authenticates the company's corporate identity for the purposes of e-commerce transactions through the online exchange that is using Safe Market. Potential partners can verify the company's creditworthiness and other information by accessing the company's trust profile online, and transactions involving the company produce a legally valid digital receipt setting forth the terms of the deal. GeoTrust backs up its digital identity validation service with a warranty, underwritten by Lloyd's of London, which provides for compensation, should a company that relies on a GeoTrust authentication get burned. As a result, participants in online exchanges can conduct e-commerce transactions with greater confidence.

GeoTrust charges a set annual fee of $180 per company vetted on a particular marketplace using the Safe Market suite. Rosenberg says that the fee is annual because of the follow-up work that GeoTrust performs to keep the authentication up to date. The marketplaces using Safe Market may  or may not pass the fee along to their customers, and they may or may not require that their participants submit to GeoTrust verification.

Hansen says that BidBuyBuild has gotten good verbal feedback regarding the site's use of GeoTrust services. Significantly he notes that, based on his observations, smaller enterprises those that are not household names or well known in an industry seem to have the most to gain from registering with GeoTrust, since the authentication process lends them legitimacy as potential partners. According to Hansen, BidBuyBuild views the GeoTrust functionality as part of the exchange's competitive edge in an increasingly aggressive online market. Still, Hansen says BidBuyBuild has not been able to nail down the impact that Safe Market might be having on the site's traffic. So much about trust is hard to quantify, he notes.

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