5 types of fraud that e-commerce should be aware of

5 types of fraud that e-commerce should be aware of

With a population of 265 million, Indonesia is an attractive market potential for the e-commerce industry. However, like other industries, e-commerce does not escape the risk of fraud. Although e-commerce applies advanced technology, the perpetrators always strive to seek opportunities by committing fraud in order to get a profit.

The followings are five types of frauds that e-commerce in Indonesia should watch out for:

  1. Sellers fraud

There are always opportunities that can be used by mischievous sellers to dredge profits at the expense of others, for example, fake discounts. The sellers mark up the price of the item and give an unreasonable amount of discount to make the impression of a huge discount. Another example, is the buyers have sent the money for the items they bought, but the sellers never send the ordered items. In this case, e-commerce needs to strictly screen its sellers and monitor from time to time the sellers’ accounts in order to prevent this kind of fraud.

  1. Employee fraud

Employee fraud is globally endemic. The world of e-commerce in Indonesia was shocked recently by the employee fraud that took place in one of the giant e-commerce during the flash sale moment. A number of employees caused the users to be unable to get goods in a fair way. This act caused a loss not only to consumers but also to the company’s brand.

The theft of goods or assets by employees is not the only risk that has been faced by companies all over the world. The Employee can also try to redirect consumers’ money to their individual accounts. Companies can actually minimize the risk of fraud caused by internal factors by tightening the employee recruitment process.

  1. Fake review

Don’t underestimate the strength of a testimonial or review of services or products. Online shopping is not like a conventional one where consumers can meet face-to-face with the seller and see firsthand the offered products. Other consumer reviews are the mainstay of a consumer in assessing a product or service sold online before deciding on a purchase. Unfortunately, not all reviews are honest.

Bing Liu, a professor of computer science from Chicago Illinois University, USA, revealed that about 30% of reviews for certain products are fake reviews. As for the results of the investigation of the Cornell research team, there were 10% of product reviews were considered fake. The e-Commerce in Indonesia may need to learn from Amazon’s effort in coping with this fraud. The e-commerce provides a review column for consumers who have purchased products on the platform and require them to include photos of the purchased product when providing a review.

  1. Delivery fraud

Not once or twice have we heard the news of consumers who are upset because the items ordered do not come even though the purchase money has been transferred to the sellers. After being investigated it turned out that the items were taken away by third-party couriers. e-commerce can collaborate more closely with third-party couriers to prevent this fraud. In this case, the courier usually compensates consumers.

  1. Transaction fraud

According to Foster’s report in 2015, Indonesia ranked highest in e-commerce transaction fraud (35%) compared to Venezuela (33%), South Africa (25%), Brazil (11%), and Romania (10%). Fraudsters do various ways to cheat; one of them is identity theft.

Identity theft is often carried out in a mode called ‘triangle fraud’. The fraudsters usually create fictitious accounts in certain e-commerce, attracting potential customers with various promos, encouraging them to make transactions, and stealing customers’ personal data – usually credit card information. To prevent this kind of fraud, the platform should have an SLL certificate and implement a two-factor authentication method in the transaction process with consumers.


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