Facts and figures about marketplace fraud and how to prevent it

The year 2020 was a year of changes. As the pandemic redefined our sense of normality, companies realigned their strategy. As physical stores remained closed, online marketplaces opened up unprecedented opportunities.

Driven by the needs of the pandemic, the online marketplace in India showed exciting trends:

• The digital footprint of Indian customers has multiplied in 2020. As a result, online marketplaces saw a surge in first-time buyers.
• The demand for CPGs (Consumer Packed Goods) is increasing. With new players entering the market every day, the market for CPGs is competitive. The online marketplace offered CPGs a unique opportunity for targeted marketing.
• Aside from the pandemic, several factors supported online marketplaces. Simple and secure payment gateways and integrated delivery methods made digital transformation easier for consumers.
• Big players started showing interest by investing in e-commerce. The interest gave the sector a much-needed confidence boost.
• Businesses have adopted the hyper-local e-commerce model.
• Online marketplaces also increased significantly in Tier 2 and Tier 3 cities. Tier 2 and Tier 3 customers drove festival sales.

Despite the ongoing upward trend, the online marketplace remains a unique space.

The social media marketplace offers unique opportunities. Unlike any other ecommerce site, social media allows sellers to invest in targeted marketing. It is personalized so buyers and sellers interact directly through the platform. But do these advantages also make the social media marketplace unsafe? Have you been scammed on Facebook, Instagram or Twitter? While the nature of the scam can vary, most shoppers have almost fallen victim to social media scams. Most social media sellers are legitimate and run a clean business. The simplicity of social media advertising allows brands and sellers to offer lucrative discounts. Even with casual browsing, the ads and offers are too lucrative to pass on. But if you’re looking for a good deal, remember to look out for the usual red flags. Social media fraud takes many routes.

The Journey of Digital Transformation and the Journey of the Online Social Media Marketplace:

Global e-commerce brands established their presence in India’s online shopping market. While India is yet to play a major role in the e-commerce sector, the market share is growing. The digitization of brands and the increase in mobile data and content consumption require brands to have a digital presence. Before this sudden digital transformation, traditional marketing methods, including ads in print media, were popular. In fact, many brands would agree that traditional forms of advertising are expensive and there is no way to trace an indication of the source of the advertising. But one ad on the largest social media marketplace has the potential to reach more than 560 million users. For SMEs, the benefit is greater. While traditional digital marketing channels offer 1000 to 2000 hits per month, major social media marketplace platforms help SMEs reach 800 million users.

However, when we think of social media platforms, we see them as casual browsing sites. But social media giants are enjoying an unprecedented amount of user data.

• Half of the world’s population, ie 59% as of 2022, is on social media. It offers sellers a one-minute and targeted marketing opportunity.
• As of 2022, 4.7 billion users are actively exploring social media platforms. Estimates show that in 2022, 227 million user profiles will be added to social media sites. Looking at the numbers, it’s no surprise that popular messaging apps have started using end-to-end encryption to protect user privacy.
• Content and influencer marketing is the buzzword today. Ads have shifted from image or content-based to video-based marketing. The trend has made online video sharing and social media platforms more popular. Today, video sharing and content creation sites enjoy more than 2.5 billion active users.

The history of online social networks can be traced back to the 1980s and 1990s. The era saw the birth of online chat rooms and bulletin boards for messaging. But the social media we see today has taken a form that none of us could have foreseen. Most experts would agree that the liberation from the laptop or desktop experience has ushered in a new era for social media and its users. Despite the transformation, social media remains committed to building and sustaining communities. It still entertains its users and helps them stay connected with friends and family. But with smartphones and high-speed internet, people can take their community and groups anywhere. The mobility of social media users brought a business opportunity to the world of entertainment and networking. Then came the time of apps. Social media apps on smartphones brought an always connected world. With better built-in phone cameras, real-time video-based transmissions became possible and popular.

The evolution of social media has made them irresistible to brands. The websites offered a better and easier way to communicate with customers.

• Social media is rich in trackable user information.
• Social media enables targeted marketing. So leads on social media have a higher conversion rate.
• Brands can interact and learn from customers and competitors.
• People have become more brand aware and conscious. Social media marketing allows shoppers to learn more about their beloved brand.
• Organic reach and a space for customer reviews make social media a trusted platform for business.

What more do brands want? Online marketplaces are everything businesses want, right?

When things look too good, there’s a downside. The online marketplace has been investigated for scams and fraud.

Unfortunately, the numbers for online marketplace fraud are staggering.

• Popular social media platforms are linked together. Brands can also link their websites to company pages on social media. This is how the shopping experience on social media is easy. But it’s also easy to list products on popular social media sites. Counterfeit products are part of the problem. Fraudsters can gain access to sensitive customer data. One might assume that popular social media websites have tools and techniques to protect users from scams and scams. But the protection it offers is limited. Most websites only protect their customers when the deal is made on the platform. But shoppers communicate and pay outside of social media. So what happens if there is no delivery? If the sale is a private deal, is the seller regulated? Many social media sites offer little protection when the sale is offline. Scammers lure customers into chatting or calling privately. The online marketplace offers everything from fake electronics to fake housing listings. You may not receive a refund if you do not use payment processing through the Platform.
• Reports show that in 2021, 1 in 4 people will fall victim to malicious and fake ads on social media. The scams undoubtedly cost users financial losses. But will they still be able to trust social media ads?
• A new report estimates the losses customers have suffered from social media scams. It was reported that more than 95,000 buyers saw a total loss of over $700 million.
• Fraud related to online purchases accounted for 45% of all social media scams reported in 2021. 70% of the time, people never received the goods they paid for.
• Even e-commerce giants are not safe from counterfeit products and scammers. A 2020 report highlights the problem of counterfeiting and possible solutions. According to the report, there were 6 million attempts to create fake accounts on a popular e-commerce website in one year. The website detected 2 million products and blocked them from reaching customers. An e-commerce giant reported 10 billion fake listings. A robust verification process, while successful, is not enough. Experts continue to discuss whether the protection tool does not do enough.

Preventive measures are cheaper than reactive measures. But are the existing protective mechanisms on online marketplaces sufficient?

Some e-commerce sites are already taking steps to combat counterfeiting and allow brands to have more autonomy over their products on the platform. Such initiatives allow brands to pre-emptively remove counterfeit products. For most of these actions, the technology uses machine learning and branded product data to counterfeit flag products. But none of the tools cover all platforms on online marketplaces. Consequently, the responsibility for preventing counterfeiting lies with the brand. NO-Tool offers end-to-end protection on all platforms. Additionally, most of the users and small brands don’t know how to report fakes on online marketplaces, especially social media.

Holistic approach as a way into the future:

The internet is huge and online marketplaces are new and complicated. Many companies are now embarking on the path of digital transformation. Manually detecting fraud and counterfeiting is an impossible task for brands. AI and machine learning have made great strides.

With counterfeits on online marketplaces becoming more prevalent, we need innovative tools.

We need tools that are intuitive and easy to use. Tools that automatically detect counterfeits encourage customers to be more vigilant. In real-time, automated anti-counterfeiting tools can detect fake sellers, fraud, impersonation and duplication. Brands can’t spend too much time spotting fakes on marketplaces as they scale their business.

The digital transformation journey is incomplete without anti-counterfeiting technology to protect your brand on online marketplaces.

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