by: Adam Senour
The Initial Discovery
In April of 2004, I became aware of a company called iKobo as the result of a posting on Web Design Forums (http://www.webdesignforums.net), a website design discussion board. An individual who was new to the discussion board posted a series of comments regarding iKobo and its presence as a possible serious competitor to PayPal. Upon further research on the company, a series of other forum discussion board posts were discovered. Forum link examples can be found below:
The supporters of iKobo in these forums, as is seemingly the recurring trend, are new posters to the boards who elect to join and repeat various elements of the iKobo website (http://www.ikobo.com) ad nauseam. Said posts also contained affiliate hyperlinks and often made mention of iKobo's ten-tier affiliate program. For those of you who may not be familiar with discussion forums online, this is often considered to be a spam technique and may result in the poster being banned (as is the case in the Web Design Forums hyperlink above).
In some cases, customers claimed to be able to develop anti-fraud mechanisms using iKobo's Instant Payment Notification (IPN) system. An IPN system is merely intended to notify the customer of a payment having been made by one of their customers and, as such, cannot be used to determine fraud.
Ikobo Background
From the iKobo website (http://www.ikobo.com):
"Our goal is to make people's lives easier." - Founding vision of iKobo
Two immigrants who understood the difficulties involved in sending and receiving money internationally founded iKobo in January 2001. Two successful years later, iKobo Money Transfer is now the fastest growing money transfer company in the world - experiencing an exponential growth rate.
From the beginning the founding principles of the company have been:
Cost - Providing a valuable service at a fair price to the consumer.
Convenience - Allowing the customer to quickly and easily send money, while instantly receiving cash the moment it is sent.
Customer Service - Commitment to educating the consumer, providing live telephone support, and dedicating all available resources to ensure piece of mind when sending and receiving money. Our customer service philosophy is catering to one customer at a time.
The iKobo Money Transfer platform is designed to be the most secure platform in the world in order to prevent fraud and ensure that every customer transaction is protected. You can feel confident that your money is safe with iKobo.
The iKobo Team
Not much information is revealed, other than a feel-good description that can be best characterized as "glittering generality". The lack of information is a recurring theme across the iKobo website; in many cases, two seemingly different aspects of the site, such as "What is iKobo and How Does it Work?" and "FAQs", are identical.
The concept of iKobo's service appears to be very similar to that of PayPal, its closest targeted competitor. iKobo's system differs from PayPal in that the receiver is sent an I-Kard. The I-Kard is a VISA Electron/Interac card, which the recipient of funds may then take to a bank machine and make an ATM withdrawal. Because this is a VISA Electron card, it may also be used to purchase goods and service online; the recipient may alternatively elect to send money via his/her own I-Kard to other iKobo users.
The fees for iKobo services are very similar to PayPal's; 4% ($2.00 minimum) is deducted for each person-to-person transaction, and 2.9% + $0.29/transaction is charged to merchants. Unlike PayPal, there is an additional $1.50 deducted for each ATM withdrawal and no mention of a sliding scale based on volume for merchants.
Delivery options for the I-Kard vary in price; for many countries in Europe, the I-Kard may be shipped free of charge via express delivery. However, countries such as the United States and Canada, an express delivery charge of $9.95 applies.
IKobo accepts VISA and MasterCard, but not debit card or banking information.
iKobo caps customer sending and receiving at $200 USD per month; however, these limits may be raised at the request of the iKobo user if said user sends copies of various documents to iKobo (such as a driver's licence, utility bill, or note from a chartered bank indicating the customer's account is in good standing.) No explanation is given as to the usage of this additional information and why it is required.
Hypothesis and Experimental Plan
Based on the lack of information provided by both the iKobo website and its supporters, I was suspicious that iKobo was a disreputable service and that, as a sender, my money would not reach the intended recipient.
Therefore, I devised, with the help of one of my staff, a controlled experiment in which I would send the staff member $10 USD ($10 USD being the required minimum for the first iKobo transaction) through the iKobo system. The staff member would in turn, sign up as an iKobo member and attempt to determine if he received the I-Kard and was able to cash it.
In addition to the testing of the system, I would attempt to contact iKobo via the email address I obtained from a WHOIS lookup on the iKobo.net domain name (eohuche@ikobo.com), as well as support@ikobo.com. For the purposes of privacy, and to ensure that I would be able to assume this identity for future research, I used an assumed name for these purposes.
Attempt 1 - Registration and Sending Money Via MasterCard
On July 6, 2004, I registered as an iKobo user. The registration process was a two-step process.
Step 1: Step 1 asks for minimal information name, country of origin, email, password, confirm password, two security questions (Mother's Maiden Name, high school, first job, etc.) There is an option to opt out of any future solicitation from iKobo and other third parties; however, this option is only accessible via a Javascript popup window that results from the clicking of a hyperlink that was significantly smaller than the rest of the text on the site.
Upon submission of this form, an email is submitted containing a hyperlink. The user, upon clicking the hyperlink, is taken to Step 2.
Step 2: The user is provided with a form that asks for additional information (address, phone, date of birth.) For some reason, a disabled form field containing country code is included. At this point, the user is registered and may proceed to the credit card entry form to enter a payment.
Payment Form: This is, for the most part, a standard payment form asking for name, address, and credit card information via a Secure Socket Layer. However, there were three abnormalities with regard to this form:
For each credit card used on the iKobo system, an initial small amount is added to the transaction to determine if the sender does indeed possess the credit card. iKobo sends a daily reminder to the user to confirm that the transaction did go through and to check his/her credit card statement to find and verify the amount. If this amount is not verified within 5 days, the transaction is cancelled.
In the case of my MasterCard, nothing had happened for a two-day period, although I did receive the reminders daily. As a result, I contacted support via the iKobo Live Chat option.
Support Chat with Penny Wang, July 8, 2004
The following chat log was copied and pasted directly from my web browser, and is shown unedited with two exceptions:
1. The HTML bold tag for Penny's name kept showing up as "B>", possibly an indicator of manual typing.
2. Personal information such as an email address has been blocked out for privacy and future testing reasons.
Penny: Thank you for choosing iKobo. My name is Penny. How may I help you today?
You: Hi Penny.
Penny: Hello
You: I tried doing my first send two days ago, but I still haven't received the deal from my MasterCard where the small amount is supposed to be on it yet.
Penny: what is your email address?
You: (email address provided, although I had to enter this in to use the Live Chat).
Penny: For security purposes I will need for you to verify your two security questions
You: Okay.
Penny: your mothers maiden name and name of high school
You: (information provided)
Penny: thank you
You: No problem.
Penny: you have up to five days from when the transaction was made to verify the small amount
You: Okay.
Penny: sometimes it may take up to 72 hours for the amount to show
You: Okay.
You: Why so long?
Penny: have you tried calling your credit card company today?
You: Yup.
You: They said they didn't have anything recorded.
Penny: you would need to ask them if there was any small charges made or any pending transactions that have not yet posted
You: Okay. I did that, and they said no. So I guess I still have to wait then.
You: What happens if it goes past that time frame and nothing gets posted to my account?
Penny: you may want to contact us before the fifth day if the amount has still not shown
You: Okay.
You: And then what?
Penny: and we will extend for two more days
You: Okay.
Penny: usually it should already be posted
Penny: once you have obtained the amount you will need to log into your ikobo account
Penny: click on 'verify account' and enter in the amount your credit card company has told you
You: Okay.
Penny: since you are using a mastercard and we have been having some difficulties in processing those, there may be a possibility that after you verify the amount it will cancel the transaction
You: Thanks.
You: Difficulties?
Penny: if that happens then wait a couple of hours and log back in and try to send the money again. This time it should go through and you do not need to verify the mastercard again
Penny: for the mastercards yes, we are experiencing some slight difficulties and we thank you for your patience in this matter
You: How would I cancel the first one then, so that I don't get charged twice?
You: Oh wait, never mind. I misread what you said.
Penny: once you verify the small amount it will be credited back into your account
Penny: the one that is cancelled will not go through
Penny: so you would not be charged
Penny: does that make sense?
You: Yeah, it does.
Penny: Was there anything else I can assist you with today?
You: So there will be no charge at all until the transaction goes through on my MasterCard.
You: No, that was it.
You: Thanks.
Penny: yes
Penny: your welcome
Penny: Thank you for choosing iKobo and have a nice day! : )
Penny: Please email feedback@ikobo.net in regards to my service. My name is Penny Wang. Thank you for your time in this matter. : )
You: Okay. Thanks.
Article conitnued in Part 2.