Evan Schuman's StorefrontBacktalk

Trust is at the center of E-Commerce. In a physical store, the customer can see the product and walk out with goods in hand; online, it’s all a matter of trust until the merchandise finally arrives. So when the CEO and COO of Alibaba.com—China’s giant business-to-business E-Commerce player—resigned on Monday (Feb. 21) in a fraud scandal, it certainly didn’t feel like a move that would increase the level of trust anyone would have in doing business online. But that may be exactly wrong.

After all, Alibaba CEO David Wei and COO Elvis Lee quit after an investigation said they weren’t involved in the fraud that cost Alibaba customers $1.7 million. That’s right, $1.7 million, not billion. And Alibaba is in China, not Japan; top Chinese execs don’t routinely leave as “the honorable thing to do” when they’re not personally guilty. Assuming they really are clean, why make that extraordinary gesture? Could it be that they want to demonstrate to customers that Alibaba has skin in the game—all the way to the top?

The rough details of the fraud are pretty clear: Starting in late 2009, about 100 sales employees “‘willfully or negligently’ helped organize Chinese criminal rings establish Alibaba.com ‘Gold Supplier’ storefronts so they could pose as legitimate businesses in order to defraud buyers,” according to an Alibaba statement on the fraud investigation.

The statement continued: “Alibaba.com requires would-be vendors to provide business registration documents to set up storefronts on the site. But fraudsters subverted the Web site’s verification process by submitting fake papers, sometimes with the help of Alibaba.com sales staff, the investigation found. Once established on the site, the phony suppliers, usually offering small lots of consumer electronics at very low prices, went on to take orders from several thousand overseas consumers and small businesses who paid up front but never received any merchandise.”

Alibaba founder Jack Ma called the mess a systemic breakdown of the company’s “culture of integrity.”

But wait a minute: The average fraud was less than $1,200. About 1 percent of suppliers and less than 2 percent of Alibaba’s salesforce was involved in the fraud. That’s the scandal that caused CEO Wei and COO Lee to walk the plank?

To U.S. E-Commerce players, that sounds crazy. CEOs don’t resign over a fraud unless they’re caught at it. A sex scandal, sure. Terrible financial performance, probably. But a mere $1.7 million in fraud? C’mon, who cares?