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The future of electronic commerce will be shaped by open, heterogeneous and complex structures, consisting of networked marketplaces. Software agents will interact and negotiate on behalf of their human (or organizational) principals. Principals will be able to implement fraudulent strategies in their agents, which cannot be countered by technical security alone. In the absence of a single correctional institution, agents will have to rely on social mechanisms for assessing reliability and reputation of other, unknown agents. The multi-agent system AVALANCHE is a prototype for an agent based secure electronic commerce marketplace environment. The reputation tracking mechanism, which is implemented in AVALANCHE's software agents, evaluates transaction behavior and influences partner selection and negotiation strategy in future transactions, while protecting the privacy of the participants. The successful result is an increasing expulsion of fraudulent agents from the market.