Analysis: How eCommerce platforms are combating the rising level of scams

The Singapore Police Force (SPF) has reported earlier this week that at least SG$41.3 million lost to scammers in the first three months this year. Among the cases reported, eCommerce scams ranked first with 1,159 cases, which was 116.2% increase when compared to the same period in 2019. According to SPF, at least SG$1.3 million was cheated from January to March 2020, with the largest sum cheated in a single case being SG$175,000.

SPF reported that 48.7% of the reported eCommerce scams were carried out through Carousell, while 17.9% were via Facebook and 15% via Shopee. Lazada and Alibaba were also used as transactional platforms for 6.6% and 1.4% of the reported scams respectively. The top five most common items involved in the scams were COVID-19 related items (such as face masks), game consoles, phones, Apple airpods, and tickets. SPF said the rise of eCommerce scams comes during the circuit breaker period, where scammers may be taking advantage of the increased demand for such products.

The rise in eCommerce scams is not surprising, with it ranking first as the top type of scams since 2018. In light of this, eCommerce platforms have ramped up efforts in recent years to combat the issue.

Carousell has been posting safety tips on its platform to educate users on what to look out for and how they can transact safely on Carousell. Having monitored the spike in scams involving electronic products, it also created a specific post on safety tips for purchasing games and gadgets, which was issued in collaboration with SPF. According to Su Lin Tan, Carousell’s chief of staff and vice president of operations, these safety tips are further supported with a banner on its home screen, push notifications, prompts that appear in direct messages to users, internal ads on listings, in-app notifications, as well as its social media channels. Additionally, users are also alerted when they chat with potential bad actors that are currently under investigation by the team.

Similarly, Shopee has also put in place measures to help educate and guard consumers against being scammed.  According to Zhou Junjie, chief commercial officer, Shopee, it sends out periodic push notifications to educate its users on how to identify and protect themselves from scams. To remind its consumers not to make transaction outside its app, warning pop-ups will appear in the in-app chat feature if and when Shopee detects a seller attempting to route buyers outside the app for transactions. Shopee also protects consumers for any purchases made on its platform with Shopee Guarantee. The feature protects the users by holding payment to sellers in escrow temporarily, until buyers confirm the receipt of orders.

Meanwhile social media platforms such as Facebook and Instagram too have increased their investment in social selling. In 2016, Facebook launched its Marketplace feature, which allowed Facebook users to buy and sell items via the platform. Since then, it has been using automated detection to spot and remove potentially fraudulent accounts on its platform. In Q3 2019, the social giant said it removed 1.7 billion fake accounts globally, 99.7% of which were detected using advances in machine learning before they were reported. Facebook also has a specific team of reviewers who are trained to take down scams. When its systems flag that an account is likely associated with scam behaviour, it will prompt the account owner to complete certain actions to show that they are not operating a fake account. The account can’t be used to reach other users on Facebook until the owner completes the actions.

Another measure Facebook has adopted is to require users to connect on Facebook using the name they go by in everyday life. This is to so that users can hold one another accountable, and aids in creating a safe environment on the platform. Facebook also encourages its users both on its Facebook and Instagram app to report any fraudulent behaviour. Users on both platforms are urged to report any accounts that are not authentic, and cautioned against clicking on suspicious links as well as revealing their personal information online.

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Measures that eCommerce platforms should take

Ecommerce platforms have set these measures to safeguard its consumers, but is it enough? Founder of eCommerce and SEO consultancy Stridec, Alva Chew told Marketing that eCommerce can look to communicate with its consumers warning signs to look for in probable scam listings more conspicuously. Agreeing with Carousell’s specific safety tips for games and gadgets purchases, Chew said one way that eCommerce platforms can heighten education about scams is to feature more prominent messaging across listing pages of categories most commonly susceptible to scams (e.g. electronic gadgets and entertainment).

Chew added that eCommerce platforms can leverage their mailing lists and send out periodic educational material to educate consumers on the signs to look out for, instead of just focusing on promotional content. Platforms can do this via livestreaming on social media platforms on a regular basis, given the rising prevalence of livestreaming in recent months. “They could also create and run some ads to bring more awareness to the consumer audience. Video ads that involve a sketch depicting typical scam scenarios could be useful here,” Chew said. 

Beside educating its consumers, eCommerce can also tackle the problem from the merchants' side. According to KZ, CEO of Digital Commerce Intelligence, a data and insight company that provides AI-driven eCommerce market share data and intelligence for brands and retailers, platforms should increase their vetting efforts for sellers onboarding its platforms. He added that certain eCommerce platforms may be tempted to influx their new seller growth numbers during this time, but it is certainly not a wise move. KZ is of the view that platforms should not have any decline in the quality standard checks to ensure the safety of the end consumer.

Additionally, he said brands have the responsibility to constantly audit who’s selling their products online and add their own pressure to the eCommerce platforms on whether certain sellers are allowed to market their products or not. When it comes to educating consumers regarding scam behaviours, KZ noted that education takes time, so although this is something that platforms should do continuously, it will not solve the imminent risks arising from the current increase in scams due to COVID-19. “At a time of crisis, [platforms] should take drastic measures which, in this case, can be translated in additional auditing and policing measures," he said, adding that brands should also adopt these measures as they can suffer the biggest harm at the end of the day in such scam cases.

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