How to Spot High Risk Sellers on Your Marketplace

Written by Chris Downie

05 October 2022

There’s no doubt that the future of e-commerce will be dominated by marketplaces. In 2021, marketplaces accounted for 67% of all global e-commerce sales - an 18% jump from 2020. 

With recent announcements from major brands, such as Macy’s, Boots and B&Q, shifting from an e-commerce to marketplace model with third party sellers, these established multi-channel retailers are helping drive the consumer shift to marketplaces. 

Unfortunately, bad actors see their lucrative potential too. Viewed as a low risk, high return channel for fraudulent behaviour, fraudsters know every trick in the book to exploit the convenience marketplaces afford consumers and the ‘business’ opportunity they provide.

As a marketplace operator, you want to attract as many sellers and buyers to your platform as possible, whilst at the same time keeping the fraudsters away. However, balancing growth with customer trust and safety can be difficult, with these competing goals. 

Trust and Safety teams are focussed on fraud prevention, while Growth teams want to increase sign-ups. So, what’s the best approach to balancing risk and growth? The answer is continual seller monitoring. 


What is continual seller monitoring and how does it help?

Continual seller monitoring refers to reviewing the day-to-day activity of sellers on your marketplace to understand where your potential exposure to fraud lies. Consider the example of someone calling to your home to read your electricity meter. They show you their id badge at the door on the way in but are you 100% sure you want to leave them unattended while they read the meter? Perhaps their id is genuine, but what if they’re a bad actor? 


Layers of fraud detection measures are needed

Identity verification checks are an essential part of your onboarding process. However, they are only one vital component of a robust procedure. While too much friction at the point of sign-up can lead to higher levels of onboarding churn, bad actors can still slip through the verification process using fake, paid for or stolen credentials. 

Continual monitoring enables you to build a picture of seller behaviour over time, once they are operating on your platform, and identify those that are acting suspiciously post onboarding. You can then tailor friction accordingly, while letting genuine sellers transact safely and easily. 

This helps keep your Trust & Safety team happy that there are more fraud detection measures in place and your Growth team content that ‘Knowing Your Customer’ doesn’t also mean ‘Killing Your Conversion’.  

Continual monitoring can help you identify the following signals of high risk sellers:

  • Changes to the account - every time there are changes made to a seller’s profile (e.g. email, postal address, phone number, password reset) there’s the potential for fraudulent behaviour such as account takeovers
  • Poor reviews - monitoring seller reviews can indicate why customers are dissatisfied - e.g. counterfeit goods, fake listings, good not delivered or not as advertised, or scams
  • Overly positive reviews - if a seller’s reviews are overly positive and sound too good to be true, they could be fake, incentivized or ‘paid for’ reviews from review selling companies
  • Signs encouraging bypass - bad actors keen to divert your customers off-platform can use phrases like ‘DM me’ and provide a WhatsApp number to conclude transactions outside of the safety of your marketplace
  • Customer Service - speaking to your customer service team can highlight specific issues, for example a high number of returns or chargebacks for certain sellers can be an indicator of fraudulent behaviour. Chargebacks are a huge global issue costing merchants US$125 billion annually in lost revenues.

Of course, it’s not feasible for you or your teams to manually monitor large amounts of data daily. This is where using technology that will monitor your sellers every day, and help you automate at scale, is a key tool in your armoury to fight fraud. 


AI fraud detection technology designed for volume and scale

Artificial intelligence processes large volumes of data very efficiently, making AI-enabled monitoring solutions ideal for handling data at scale and supporting growth. Daily monitoring of your marketplace for signals of negative activity gives you reassurance that you’re keeping your users safe while minimising friction. 

At Pasabi, we use AI technology to help our customers identify patterns of negative behaviour, eliminate bad actors, fake reviews, fake accounts and ultimately decide who they can trust. ID verification is just the start; we’re here for the rest of the journey.

Interested to find out more?  Check out how we can help marketplaces like yours to understand where your potential risks lie and how you can best protect your marketplace health as you grow.

Image Credit: Jon Tyson