# Marketplace Risk ## Common Scams & How to Prevent Marketplace Fraud Online marketplaces like Amazon, eBay, and Etsy are here to stay; with more users flocking to these services for convenience and ease-of-use. And a key priority for those businesses is to [minimize marketplace risk](https://www.unit21.ai/blog/marketplace-risk). This involves protecting the business and its marketplace users from not only financial crimes such as fraud, but also other abuses that can make users feel unsafe or unwelcome. Here, we’ll discuss what platforms can be classified as marketplaces, as well as some of the common forms of fraud and other abuses they need to guard against. We’ll also discuss the role of [Trust and Safety](https://www.unit21.ai/trust-safety-dictionary/trust-and-safety) teams in keeping marketplaces secure, and offer some strategies for them to do so effectively. ## What is an Online Marketplace? An online marketplace is a digital platform that facilitates the exchange of money, goods, or services. Sometimes the platform itself will provide goods or services for sale to its users. Other times, it will serve as an intermediary, assisting with transactions between customers and merchants. ## What is Marketplace Fraud? Marketplace fraud is when a person or group intentionally acts dishonestly to take advantage of – or disadvantage – a marketplace or its users. This could include stealing sensitive information, making purchases with other people’s money, or posting fake feedback to manipulate users’ reputations. ### **What Does Marketplace Trust and Safety Mean?** Marketplace Trust and Safety refers to tools and processes aimed at protecting the functional integrity of a marketplace. That includes keeping user accounts, information, and interactions safe. This generally consists of setting rules on what kinds of activities are or aren’t allowed on a marketplace, and then monitoring for, [investigating](https://www.unit21.ai/trust-safety-dictionary/fraud-investigation), and taking action on violations of these rules. Online marketplace Trust and Safety includes protecting against illegal financial activities carried out through marketplaces. These include various forms of fraud, as well as money laundering and terrorist financing. But it also involves shielding users from improprieties not necessarily related to finance. These include: - Spam or misinformation spreading - Harassment, bullying, or threats - Posting explicit content (improperly) - Unauthorized sharing of personal information - Encouraging or soliciting illegal activities - Glorifying dangerous or self-destructive behavior - Disrupting the normal activities of the marketplace or its users ## Common Marketplace Scams to Watch For Bad actors use many different types of marketplace scams to trick users into giving up sensitive information or to buy things at other people’s expense. Here are seven common marketplace scams that marketplace fraud prevention teams should be aware of. ### **Triangulation Fraud** [Triangulation fraud](https://www.unit21.ai/fraud-aml-dictionary/triangulation-fraud) involves a [fraudster](https://www.unit21.ai/trust-safety-dictionary/fraudster) setting up a fake store on a marketplace, then listing goods for sale that other legitimate merchants are selling. When a customer orders a product from the fraudster’s store, the fraudster uses stolen payment information to place an order for that product from a legitimate seller and have it shipped to the customer. The person whose payment information was used for the transaction will likely file a chargeback request for the fraudulent purchase. So a merchant targeted by this scam can lose the money paid for an item – which goes to refund the fraud victim – as well as the item itself. ### **Overpayment Scams** This type of marketplace scam involves a criminal paying a seller more than an item is worth using either fake or stolen payment details. The criminal will then ask the seller to refund them the difference through a different payment method – usually, one that’s difficult to trace or reverse, such as a [wire transfer](https://www.unit21.ai/fraud-aml-dictionary/wire-fraud) or cryptocurrency transaction. ### **Bait-and-Switch** This type of scam happens when a fraudster lists an item for sale, usually at a lower-than-average price to attract buyers. Once a customer purchases, the fraudster makes up complications about the order to get the customer to pay more money needlessly. Usually, they will ask to be paid the extra in forms that are difficult to trace, like gift cards. ### **Phishing Scams** There are many marketplace scams and schemes that fraudsters will use to steal users’ sensitive information. Sometimes they will pose as a marketplace employee or other authority figure and claim that they need this information to process a transaction or verify an account. ### **Giveaway, Referral, and Promotion Abuse** Many marketplaces offer promotional incentives for doing business with them. Unfortunately, fraudsters can unfairly take advantage of these programs in many ways. They can use [fake, stolen, or modified coupons](https://www.unit21.ai/trust-safety-dictionary/coupon-fraud); create [duplicate accounts](https://www.unit21.ai/trust-safety-dictionary/duplicate-account) or broadcast promotional codes to redeem promotions an unintended number of times; or [take over accounts](https://www.unit21.ai/fraud-aml-dictionary/account-takeover-fraud) to steal promotion rewards from legitimate users. ### **Google Voice Scams** These scams involve a fraudster attempting to gain control of a marketplace user’s phone number. They may do so by asking a user for their phone number as contact information, then registering that phone number with a VoIP service provider. When the user receives a verification code for the registration, the fraudster claims that they sent it for another reason, and asks the user to confirm the code for them. ### **Fake Property Rentals** This scam targets property rental marketplaces. Fraudsters create fake listings, hoping to lure in customers who can’t immediately visit a property to inspect it. ## Marketplace Fraud Prevention : Safety Tips to Follow Here are seven marketplace safety tips that Trust and Safety teams can use to detect, investigate, take action on, and ultimately prevent abusive marketplace activity. ### **Verify Identities Using Customer Onboarding** One of the biggest contributors to fraud on a marketplace platform is the ease with which bad actors can create duplicate or impersonation accounts. Marketplaces should also employ further KYC measures, such as due diligence and [transaction monitoring](https://www.unit21.ai/products/transaction-monitoring). ### **Use Transaction and Event Monitoring** It’s important for marketplaces to monitor transactions, as some can have certain inherent qualities that raise suspicions. ### **Leverage Automated Case Management** Many cases of suspicious or abusive activity in a marketplace could occur simultaneously. Even better is to use a [case management solution](https://www.unit21.ai/products/case-management) like Unit21’s. ### **Prioritize Cases with Alert Scoring** Alert Scores allow Trust and Safety teams to use a marketplace’s data on how suspicious activity alerts are handled – both historically and in real-time – to rank how likely an alert corresponds to actual abusive behavior. ### **Use Link Analysis to Identify Fraud** Especially when working at scale as part of [fraud rings](https://www.unit21.ai/trust-safety-dictionary/fraud-ring), fraudsters often have to reuse credentials for setting up duplicate or impersonation accounts. ### **Educate Users to Protect Themselves** One way to get users to trust a marketplace is for a Trust and Safety team to be transparent about what kinds of abuses users are likely to encounter. ### **Allow Customers to Report Scams** Trust and Safety teams should include a marketplace fraud reporting mechanism as part of the platform’s interface.