This month, consumer group Which? shared research that found finance fraud is rife across secondhand marketplaces. Can ecommerce platforms stem the tide?
Earlier this month, leading consumer group Which? released its survey of 1,300 buyers, finding 32% of respondents were scammed on secondhand marketplaces in the space of two years from January 2022 to January 2023.
Sites in which fraud was reported to be prevalent included Depop, Shpock and Preloved, with problems also discovered at industry giants Amazon and eBay.
In the first six months of 2023 alone, 77,000 fraud cases were reported, 66% of the total reported figures.
The most common scam included consumers receiving incorrect or nothing, while counterfeit goods and empty packages were also reported.
The survey highlights the growing scale of authorised push payment (APP) fraud and reinforces the need for ecommerce marketplaces to scale their anti-fraud efforts.
Can secondhand marketplaces stem the tide of APP?
It’s clear, the rise of APP fraud cannot be disputed. But, what can secondhand marketplaces do to stem the tide?
Maciej Pitucha, VP of Data Intelligence at Mangopay, says the findings from Which? represent a stark reminder that consumers must remain vigilant against increasing fraud.
“Marketplace operators need to make a concerted effort to stay ahead of fraudsters’ evolving strategies,” he continues.
“As third-party intermediaries, platforms require more robust fraud protection than traditional e-commerce as their two-sided ecosystems increase the fraud surface area.
“Fraud can happen from both the seller, selling fake items, and the buyer, who may use fraudulent details to purchase items.
“Now, we’re also seeing some fraudsters leverage AI technology to automate their operations and create fake identities, documents and checkout pages, among other things, in a faster and hard-to-detect way.”
The fintech innovations leading the battle against fraud
With AI now an emerging tool for fraudsters to conduct their malicious activities in more efficient and seamless ways, businesses must fight tech with tech if they are to turn the tide.
Maciej adds: “Generative AI can be extremely useful in this context, enabling the development of advanced biometric authentication techniques such as deep-learning powered facial and voice recognition systems.
“By integrating these high-tech authentication methods, businesses can prevent unauthorised access and protect their customers.”
Indeed, striking fintech partnerships in the fraud and ID verification space can be vital for secondhand marketplaces looking to sure up security for their customers and protect the integrity of their brand.
Earlier this year, we spoke to ID verification company Sumsub’s Chief Customer Officer, Inna Lyubashevskaya, about the perks of leveraging anti-fraud solutions via third parties.
“Every business case is unique and requires thoughtful consideration about whether to handle identity verification internally or through outsourcing,” she told us.
“While internal solutions have their merits, the compelling advantages of outsourcing, such as significant cost reductions and customisable options, often outweigh the benefits of an in-house approach.”
Other fintechs are leading the charge against fraud by releasing AI-based solutions to fight fraud – Revolut being among the most recent with the launch of its AI scam detection feature in February this year.
When it comes to secondhand marketplaces, Maciej says it’s “imperative they are working with marketplace-specific fraud detection and prevention providers” to sure up their platforms.
For Maciej, the need for secure secondhand marketplaces extends beyond consumer protection alone, as he sees these platforms as a “crucial part of powering a circular economy for a greener future”.
Finance technology has been the driving force for secondhand marketplaces’ success in delivering quality customer experience and ease of payment. Now, these platforms must scale their anti-fraud to ensure consumers stay safe, and reputations remain untarnished.
