Evan Schuman's StorefrontBacktalk

Maybe that’s exactly the point. Alibaba has been very successful as a trusted middleman—it handles almost 70 percent of China’s business-to-business E-Commerce, and its business is growing at 32 percent a year, according to Analysys International, a research firm in Beijing. Alibaba is also a $318 million company, which means there’s lots of room to grow.

But a little fraud can go a long way in tainting a fast-rising company’s reputation. And Alibaba’s sister company, the consumer E-Commerce portal Taobao, is a billion-dollar business that’s growing even faster. Saying to customers “Fraud? Who cares?” is a very effective way to send them somewhere—anywhere—else.

Burying scandals or security failures or even just operational problems is a common enough practice. Sometimes it’s a calculation: Is the damage from admitting the problem worse than the fallout from hiding it and later getting caught? Sometimes it’s just a matter of culture: Deny everything and hope for the best.

You can get away with that if you don’t depend on customer trust. In a brick-and-mortar store, for example, you can get by without much trust at all. Customers can see what they’re buying. They can walk out the door with it in hand. They can safely assume that if something goes wrong, that big pile of bricks will still be there the next day, and there will be an actual human being behind a physical customer-service desk to listen to a complaint.

True, plenty of customers trust retailers with personal information for CRM programs. Plenty more don’t. And no customer actually has to trust the retailer.

Now contrast that with E-Commerce: No products in hand; no big pile of bricks; no actual human beings in sight. It all depends on trust. And customers are much more likely to trust a big business when they believe the guys at the top will either defend that trust or walk the plank.

Are things really that much more fraud-resistant at Alibaba today? Probably not. The company is still investigating the mess. Rooting out connections to criminal gangs could take years.

But are Alibaba’s customers a little more comfortable knowing that a CEO’s sense of self-preservation is on their side? You can bet they are.