Online Platforms: A Pick ‘n’ Mix for Fraudsters

Written by Jen McKeeman

31 March 2021

“Cats have a scam going - you buy the food, they eat the food, they go away; that’s the deal.”

Eddie Izzard, comedian.

Eddie Izzard's quote might seem glib but when you think about it, couldn’t he also be describing how bad actors behave when they land on your site or app? You provide the platform, they take advantage, they disappear and so it repeats.

An increasingly popular choice for businesses to remain competitive, online platforms essentially connect buyers and sellers. Since coming into existence about 25 years ago, there’s now a wide variety of digital platforms to choose from:

  • Service-oriented platforms (e.g. Airbnb, Uber, Deliveroo)
  • Transactional platforms (e.g. eBay, Amazon, Not on the High Street)
  • Knowledge platforms (e.g. Trustpilot, Mumsnet, TripAdvisor)
  • Social Media platforms (e.g. Twitter, Facebook, Instagram)
  • Media Sharing platforms (e.g. YouTube, Spotify, Vimeo)

All of these platforms create online networks to facilitate digital interactions between people, typically involving three parties - the platform, supplier and consumer. Bad actors can be disguised as either suppliers or consumers and aren’t always the criminal masterminds you might imagine. Far from being part of a wider criminal network, they could just be someone tempted to take advantage of an opportunity to save a bit of money. However, an individual’s opportunism becomes problematic when it’s repeated and copied.

The vast array of available platforms creates many lucrative opportunities and temptations for people to scam, dupe and cheat platform owners, suppliers and consumers. Whether you’re a platform like Reddit offering a forum for discussions or a marketplace such as Not On The High Street offering curated collections of gifts, it is likely that your platform will be targeted by similar negative behaviours.


It’s a human problem

Platforms rely heavily on trust to be successful. It goes without saying that ease of use, the facilitation of exchanges between users, ability to scale and the use of APIs to allow third parties to extend its capabilities, are all important factors contributing to a platform’s success. However, key to each of these factors is trust. Platform suppliers and consumers need assurances of its trustworthiness and security while platform owners need to trust the integrity of its users’ behaviours.  

Sadly where there’s a need for trust, there is scope for it to be broken. Trust is one of the distinguishing features of being human… as is temptation. So if there’s temptation to make some money, even by fraudulent means, bad actors won’t hesitate to take advantage of your platform.


Why have platforms thrived?

The popularity of platforms has risen dramatically over the past few years. The reasons for their growth has been largely down to two factors - disrupting traditional industries and unlocking new sources of value. And something we know that bad actors are good at is adapting to changing demand and markets.

Consider how Uber has disrupted the taxi industry since its founding in 2009. Figures for Q4 2020 showed 93 million people used Uber monthly, a 19% increase on the previous quarter. Look at how Airbnb has transformed the short-term accommodation sector since its inception in 2008, boasting 2.1 million hosts in 2021. Both companies were nominated as number 1 and 2 respectively on CNBC’s Disruptor List in 2016. These service-oriented platforms spotted opportunities to capitalise on network inefficiencies and take market share from less efficient operators.

Equally, both companies have found ways to unlock new sources of value by Airbnb renting out spare rooms and Uber using drivers’ own cars as a way to make money taking advantage of the popularity of flexible work patterns and the gig economy.


Taking a trust leap without fear of falling

The disruptions caused by Uber and Airbnb in particular required a specific type of interaction between suppliers and consumers - they needed them to take a trust leap. Trust leaps take us from a known behaviour or situation (e.g. staying in a hotel or taking a taxi) to something unknown (e.g. staying in a stranger’s home or travelling in a stranger’s car). The success of the platform comes down to how well they guide both parties through this process. 

Staying at a stranger’s Airbnb home for the first time demands a strong level of trust and on the part of the guest (consumer); that it’s a genuine listing, it will be as advertised and that the host (supplier) will be fair, honest and trustworthy. From the host’s perspective, they too need to trust that the guest will treat their home with respect, be fair, honest and trustworthy.

From reports in the media, and possibly personal experience, we know that bad actors attempt to scam Airbnb guests by posting fake listings to properties that either don’t exist or they don’t own. Their actions result in cheating platform users and negatively affecting the platform’s trusted reputation. Questionable Uber drivers have been known to ask passengers to re-request their ride, blaming problems with the app which actually causes surge pricing to come into effect, costing you 35% more! 

Consider also the example of Deliveroo, a well-known service-oriented food delivery platform earning US$1 billion in revenue in 2019. A takeaway restaurant in Manchester using Deliveroo to fulfil orders saw an increase in requests for refunds during lockdown from customers claiming they hadn’t received their food. The restaurant owner said that looking at the postcodes involved it was likely they were students trying to scam free food from Deliveroo not realising the repercussions their scams would have on the independently-owned restaurant, its staff morale and business practices. The restaurant in question, like many others, have now had to implement stricter procedures to confirm deliveries - such as drivers sharing routes, photographs to be taken of the food being handed over and other additional paperwork. 

The delivery platform says in its restaurant FAQs: 

"On occasion, like many other businesses, we experience ‘bad actors’ that use our platform for fraud and abuse. We’re continually evolving our systems to detect this activity to benefit our partners. We have a dedicated team of agents assigned to resolving refund claims and a decision-making tool to detect harmful activity. We aim to block re-offenders and have introduced SMS verification to aid this."

Restaurant owners don’t know if refunds have been awarded until they get their monthly invoices from Deliveroo. This shows that your business model could be under threat from opportunistic fraudsters just as much as your platform. 


Any opportunity to game the system means your platform will be a target

Since many platforms rely on user-generated content, for example eBay, TripAdvisor, YouTube, Discord and Fiverr, they are open to the threat of negative behaviour and actions of users.

Craigslist, one of the top 20 sites in the US, is an online classified ads platform created in 1999, now generating more than US$1 billion yearly in revenue. Making the search for apartment rentals, second hand cars or unwanted concert tickets very easy has unfortunately made it even easier for scammers to operate too. Apartment owners and would-be tenants have been targeted using various popular scams. For instance, fraudsters posing as anxious renters ‘mistakenly’ transfer too much money by cheque or money order for their security deposit and then ask the landlord to transfer the excess back. Unknown to the landlord, the cheque/money order was no good in the first place and so whatever money they wire back is actually their own.

Popular social media platform, Reddit, is no stranger to scam tactics either. With a recognised loaning community on their subreddit r/Loans, users are welcome to loan each other money on mutually agreed terms. Needless to say, repayments don’t always go to plan, resulting in users’ financial loss and diminished trust in the Reddit community and platform as a whole.


Frequent and repetitive services are at risk from bypass

Platforms of all types can experience a particular threat called bypass whereby bad actors try to encourage users to continue their transactions off-platform. Platform ‘leakage’, as it is also known, is particularly likely for platforms that deal with repetitive, frequent transactions where suppliers can build a relationship with the consumer and look to cut out the facilitator (i.e. platform) over time. It’s risky for the consumer and harmful to the platform too. Once diverted off-platform, there are no assurances or guarantees for consumers’ user experiences. In such circumstances, despite the platform no longer having an involvement, the consumer may think negatively of the platform should they subsequently have a bad experience off-site. 

Fiverr, a popular online marketplace for freelance services, had 2.4 million active buyers in 2020. Suppliers advertise their services on the platform, ranging from ‘Call of Duty coaches’ appealing to teens wanting to improve their gaming skills, to graphic designers looking for side projects. Some suppliers look to transact off-platform by encouraging their buyer to complete the transaction elsewhere to avoid paying Fiverr’s 20% commission. There are even threads on knowledge-sharing platform, Quora, about how to avoid the Fiverr service fee by transacting off-platform! Individually, these suppliers won’t think they’re doing much harm but their collective negative behaviours impair your platform’s growth and adversely affect your business.


Fake content can do as much harm as financial scams

Another temptation for bad actors and a challenge for online platforms is fake reviews. Reviews are a vital part of consumers’ purchase decisions with 2020 figures from business review platform, Trustpilot, showing almost 9 out of 10 consumers read reviews before making a purchase. This highlights the importance of providing accurate and authentic reviews. 

In February 2021, Trustpilot published their first Transparency Report, revealing that 2.2 million fake or harmful reviews had been removed from their platform last year. They are very aware of the need to be proactive in fighting fake reviews as authenticity and trust underpins their business model. Companies try to ‘game the system’ using fake positive and negative reviews to their advantage. By buying or writing positive reviews for their organisation, they positively boost their rating, whereas posting negative reviews on competitors’ profiles negatively biases consumers against them.


Negative user behaviours are the biggest threat

Regardless of your sector or platform or challenges being faced, we see that the threats come from repeated patterns of negative user behaviour. Whether you’re fighting fake reviews, challenged by counterfeits or trying to defeat spam and scam, all of these nefarious activities follow similar patterns of user behaviour. 


Regulatory changes mean it’s time to act

There have been significant regulatory moves to protect consumers’ rights recently with the Shop Safe Act 2020 in the US, the Digital Services Act (DSA) in the EU, and the Online Safety Bill in the UK. Despite being a US initiative, the Shop Safe Act affects sellers in every country, directly or indirectly, incentivising platforms to set best practices and penalising repeat offenders to protect consumers. The Digital Services Act in particular, clarifies that online platforms will not be liable for illegal content which they detect themselves, something Pasabi's platform is designed to assist with.

In the UK, the Competition and Markets Authority (CMA) continues its investigation into major websites that display online reviews, determining their responses to fake and misleading reviews.

In line with the Online Safety Bill, Ofcom will be able to impose fines of up to 10% of a company’s annual global turnover on those that have failed in their duty of care to protect children from being exposed to illegal material. They will also have the authority to block services found to be non-compliant from being accessed in the UK. The ‘duty of care’ rules are intended to cover a variety of online platforms from marketplaces to media sharing, social media and gaming platforms.

Such regulatory changes will no doubt add significant pressure to platforms, forcing a need to take illegal content seriously and to proactively take measures to combat it.


Pasabi focuses on behaviours

The good news for online platforms is that Pasabi’s AI technology platform has been designed and developed with behavioural patterns at its core and this allows us to tackle the challenges in an effective and meaningful way.

We take on the fraudsters by using artificial intelligence, machine learning and behavioural analytics to identify patterns of negative behaviour. Our analytical approach uncovers the digital fingerprints left by bad actors on your platform and elsewhere to surface the most prolific offenders and groups for online removal and offline legal action. We use clustering algorithms to find correlations between data points across multiple platforms - marketplaces, social networks and e-commerce sites - surfacing many types of threatening activity from fake reviews to unauthorised selling, spam & scam and counterfeit.

Our solution uncovers the scale of the challenge, prioritises the biggest threat, provides evidence for takedowns and legal action where necessary and results in a more trusted and authentic user experience. 

For example, working closely with the Legal, Fraud & Investigations and Content Integrity teams at Trustpilot we have been able to provide unique insights into their data, allowing them to gather evidence with a high degree of verified accuracy to pursue misbehaving companies and individual fraudsters at scale. 

Our platform can be incorporated into your brand protection teams’ existing workflows, either integrating with your existing CRM and case management tools or providing an API for bespoke integrations. This empowers your teams with technology and allows you to focus your resources where they’re most needed.

If the challenges outlined resonate with you and you would like to find out more about how we can help your platform combat counterfeit, fight fake reviews or uncover unauthorized sellers and stop the fraudsters from helping themselves, get in touch - we’d love to hear from you.

Photo by Vinicius Amano