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5 Essential Ways to Protect Marketplaces from Holiday Fraud

DataVisor Threat Blog

By Swetha Basavaraj December 11, 2018

Photo of Swetha Basavaraj

about Swetha Basavaraj
Swetha is a senior product manager at DataVisor. She has a diverse experience of over 10 years leading teams in various capacities such as a product manager, entrepreneur and engineer to launch new B2B products in Yahoo, IBX (now Tradeshift), VolvoCars and IBM. Her past and current work has focused on building scalable enterprise products using latest technologies including machine learning.

It’s the holiday season and buyers and sellers both are ready to shop, lock-in lucrative deals and enjoy the festive season. It is also the season for bad actors to ratchet up their game. Every year there is more than $50 billion in damage in the marketplace. This is because while a marketplace offers rich features in its platform for buyers and sellers alike, these features can become an opportunity for fraudsters to commit fraud. Additionally, all shopping seasons are not equal. The sophisticated fraudster of today uses tactics different from those used in the previous shopping season. In DataVisor’s recent Fraud Index Report for Q3 2018, we observed that fraudsters are good at evading signals and have a flexible backend infrastructure so that they can change up quickly. Fraudsters have access to highly dynamic and resilient network infrastructures at their disposal and can bypass basic rules and traditional fraud solutions.

It is worthwhile to note that the holiday season provides fraudsters a fertile ground to attack. Apart from availability of more opportunities:

  1. It is easy to attack during this time of the year because a marketplace wants to capitalize on the high spirit of holiday season and makes its platform frictionless to use.
  2. A regular buyer tends to display unusual activity making it difficult to detect an anomaly. Also, reporting of fraudulent activity is low in this season because consumers are busy or out.
  3. There is also scarcity of resources within fraud and safety teams. The spike in traffic makes it easy for fraudsters to hide behind the surge. Therefore, while the need is for greater vigilance during such a time, the reality is otherwise.

A fraudster can have different goals to commit fraud:

  • Monetary fraud: This can take the form of transaction fraud, promotion abuse, gift cards and triangulation fraud.
  • Reputational damage: This takes place through fake reviews, fake ratings and seller-buyer collusion.
  • Scam/other damage: Fraudsters scam a user by listing a product that does not exist or by posting a counterfeit item.
  • Attention: This takes place by putting out appropriate content and spam.

Here are five ways you can protect your marketplace this holiday season:

#1 Focus on fraud types that have a monetary/financial impact

Fraudsters are here to make money, so focus on fraud types that have a direct monetary impact. They would have already created their fake accounts or conducted account take over (ATO) much in advance, and would have likely tested the accounts for detection by buying or selling small ticket items to make sure they go undetected. So currently they are incubating and waiting to attack. Using their existing accounts, fraudsters carry out promotion abuse and gift card abuse using multiple card testing or using stolen credit card details (obtained from the dark web) causing chargebacks. All these types of frauds cause loss to the businesses, especially to the seller.

#2 Do not ignore fraud types that affect the integrity of the platform

While it is common to have checks and balances in place to prevent or detect fraud that would cause direct monetary impact, business shouldn’t just look at cost of business. Good fraud detection is more than just preventing loss. It is about increasing revenue by allowing more of the good customers through and delivering a hassle-free shopping experience, especially during the critical holiday shopping season. Customer trust and confidence, as well as experience, is at stake if you are unable to prevent this type of a fraud. Therefore, instead of looking at a point solution (for example one that reduces chargebacks only), consider a holistic solution that can address monetary issues plus keep brand reputation intact.

#3 Your fraud solution should adapt to new and evolving fraud patterns

It is easy for fraudsters to hide behind the surge in traffic and go undetected. They have access to many sophisticated tools and are well prepared. Many solutions in the industry today depend on old labels and train their models based on historical patterns. While it’s good to know the past trends, your solution cannot rely on that solely. A proactive solution that can adapt to the constantly shifting attack patterns adds real value to curb unknown and known fraud.

#4 Have an efficient review system to empower fraud moderation teams

The fraud team is a sales enabler, as much as it is a fraud prevention team. Due to the vacation season, there may be a resource crunch so you could prioritize work according to the business needs. Productivity of the moderators is also important, therefore, automate some of the processes based on the fraud score. Moderators should be aware that buying patterns change during the holiday season and remain cautious when taking actions. Real time detection is an absolute must and evaluating solutions with holidays in mind.

#5 Plan for a fraud solution that helps you focus on serving your customer

Prepare for the holiday season and not just for inventory, shipping and staff but also for effectively managing fraud. Invest in a good fraud prevention solution that helps you realize the tremendous opportunity presented by the busiest time of the year.

DataVisor provides a holistic solution to solve all the use cases for marketplaces both for sellers and buyers. It supports protecting the marketplace through the entire cycle, right from account opening to all activities after account opening by monitoring these accounts. It uses unsupervised machine learning (UML) to correlate fraudulent and suspicious patterns across billions of accounts in real-time. This approach works without historical ‘labeled’ input data to detect new and previously unidentified fraud and abuse patterns on day one.

Want to learn more about protecting your marketplace during the holidays?

For more, watch a recording of our webinar on 5 Tips to Keep Your Marketplace Safe.


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