How to create a fraud prevention strategy in MarketPlaces

Learn the most important points to consider when building a powerful fraud prevention strategy in marketplace business models.

July 28, 2021
4 min read

When we talk about e-commerce fraud prevention, common sense often leads us to believe that the same strategy works in any scenario, but that is not the case when it comes to marketplace business models.

According to LexisNexis, the fraud in 2021 is more sophisticated and complex, and when we talk especially about marketplaces, identifying these behaviors can be even more challenging.

What differentiates the marketplace from other industries when we talk about Fraud Prevention are the various types of Fraud that can occur at the same time, in marketplaces.

It is important to keep in mind that when processing an online payment there are many different types of fraud that can happen, from the simplest to the most refined, made by any kind of person, from a single individual or even by criminal organizations.

And when we talk about marketplaces, the possibilities of fraud are even greater, as we are looking at a scenario in which fraud can come not only from the end user, but also from sellers on the platform.

Although fraud-detection technology is evolving fast to keep pace with e-commerce growth and new fraud attack approaches, EBANX can always can do more to protect your business.

The main types of fraud that we can identify in a marketplace are related to:

Fake Profile for Sellers or Fake Product

Common on large and highly visible marketplaces, this type of fraud recreates the profile of other well-known sellers in order to deceive consumers and profit from products that are not legitimate. In this type of fraud, we have an impact on the platform, on the seller who was copied and, obviously, on the consumer who bought a fake product or, in some cases, does not even exist. This kind of fraud also has reputational impacts on the marketplace, taking away their credibility by being related to questionable products and/or sellers or receiving complaints in websites such as ReclameAqui or TuQuejaSuma in all Latin American countries.

Advertising and Marketing Campaign Spoofing

This is one of the most common types of fraud we’ve identified in marketplaces, in which sellers create false ads or unrealistic promotions to entice consumers, but with no intention of fulfilling what was advertised.

Association of Seller and Customer Fraudsters

The most challenging type, as it is an agreement between the seller and said consumer is to take advantage of the marketplace platform. It is one of the hardest types of fraud to identify.

In order to create a fraud prevention strategy that is efficient in the marketplace scenario, we have to keep in mind that prevention must be done not only in relation to customers/possible fraudsters, but also in relation to sellers within the platform.

Therefore, we need to divide the strategy into two scenarios: considering the customer and considering the seller.

The most important points to consider when building a powerful strategy are listed below.

For the customer:

  • Knowledge of user behavior in this marketplace and in the processing market (knowledge of the country behavior it’s super important as well)

  • Recognition of suspicious patterns and feeding machine learning with this information

  • User authentication on the platform

  • Use of device fingerprint for user identification

To the seller:

  • Know your partner – validation processes for sellers who will use the platform

  • Seller ID – Unique identification of each seller

  • Monitoring of risky or high demand products

  • Use of device fingerprint to identify the seller

Showing EBANX Shield: a fraud prevention strategy

Learn all about EBANX top-notch fraud prevention strategy designed for the Latin American market

Furthermore, it is important to be aware of the signs of concentrations and patterns that may appear in transactions in a marketplace, both when looking at the customer and when looking at the sellers.

For this, machine learning with its algorithms continuously updated according to market trends is a fundamental part of the Fraud Prevention strategy. Ideally, protection systems with multiple barriers should be created to avoid suspicious behaviors from being approved.

Considering all, while marketplace fraud may seem more difficult and complex to deal with, it’s not impossible. Having constant updates on fraud trends, having market knowledge and having technologies available to build a complete and effective fraud prevention strategy are the keys to success in this type of operation, and one that EBANX is known for. Get in touch with us and know more about our anti-fraud solution: EBANX Shield.


Our annual study is out! Beyond Borders 2022-2023

Beyond Borders 2022-2023: How digital payments and e‑commerce are gaining traction in Latin America

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