Consumers lost some $430 billion to fraudsters via online platforms in the past two years, and that figure shows no sign of declining.
Fraudsters are prolific on eCommerce sites, and online marketplaces that cater to individual buyer and seller relationships have especially unique challenges when it comes to keeping them at bay. These marketplaces must vet both sides of a transaction, as well as catch more pervasive forms of fraud, such as account takeovers or false product listings.
In the latest Payments And The Platform Economy Playbook, PYMNTS analyzes the fraud and risk challenges that marketplaces are facing, as more consumers seek out P2P marketplaces over traditional eCommerce sites.
What’s New In The Platform Econo
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Fraud can create harsh consequences for platforms that do not have adequate protections in place — or, moreover, for platforms that do not take steps to fully reassure consumers. Even eCommerce giant Amazon can feel the repercussions of fumbling the response to a fraud event, with victims of cybercrime reporting a loss of trust in the platform.
One area at greater risk of fraud is the travel industry, including ridesharing and homesharing platforms, as well as hotel and third-party booking sites. These platforms are seeing a rise in false logins and transactions, with nearly 10 percent of attempted logins on travel sites coming back as fraudulent, according to one recent study. One of the most concerning forms of fraud on these sites is policy fraud, where fraudsters reuse coupons or introductory products offered by platforms like Uber to consistently snag free rides or other services.
Magecart attacks are also on the rise among marketplaces. This type of fraud is when stolen credit card information is used to make fraudulent purchases, which are then used as a starting point to steal more personal information, such as card details, from the larger platform. These attacks are becoming more prevalent, with 17,000 sites experiencing a Mag
ecart or eSkimming fraud event in the month of July alone.
For more on these and other stories, visit the Playbook’s News and Trends section.
False Properties, AI And The Fraud Control Challenge
Online platforms need to make sure that product listings on their sites are properly verified, as the fallout from failing to do so even once can have devastating effects. This is especially true for facilitators of products or services, such as homesharing rentals, where potential buyers could be stranded in an unfamiliar city in the case of a false listing, or sellers could be cheated out of potential revenue. Managing the isolation and removal of these false listings is key to user trust, according to Chung-Man Tam, CEO of P2P business travel booking site 2nd Address.
To learn more about the false listing problem, and how platforms can work to resolve it, visit the Playbook’s feature story.
The Security Versus Satisfaction B
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Marketplaces have more to worry about than just false product listings, however. Fraudsters are employing a variety of new tricks and tools, designed to skim data and funds from both buyers and sellers on these platforms.
That is a problem for marketplaces not only because of the loss of revenue, but because consumers tend to lose trust in marketplaces that have suffered such fraud events. Marketplaces need to figure out how to ward against these new types of fraud quickly to keep customers satisfied and safe.
To learn more about the fraud challenges that marketplaces are facing as the sharing economy grows more competitive, visit the Playbook’s Case Study.
About The Playbook
The monthly Payments And The Platform Economy Playbook, a PYMNTS and Yapstone collaboration, aims to help platform payment decision-makers identify and manage the risks and rewards inherent in optimizing their operations and navigating real-time challenges.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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