We recently conducted a short survey with peer to peer platforms in the sharing economy and the results were very interesting. We were keen to learn about their knowledge of, and experience with, fraud prevention solutions to mitigate risk and keep their users safe from fraudulent activity on their platforms.
Bespoke versus Off-the-shelf platform technology
Of those surveyed, 36% use a third party platform infrastructure, whilst the remaining 64% developed their own bespoke platform. Off-the-shelf platforms, such as Sharetribe or Bubble, provide platform owners with fast and convenient access to a readymade plug and play solution. However, the ability to design and create your own bespoke platform can allow more flexibility to build a platform to your specific requirements.
What steps have you taken to deal with fraud on your platform?
When asked what steps they had taken to deal with fraud on their platforms, 27% said they were working with external providers, while almost one-fifth of respondents said they had not yet considered the issue. Of those not yet addressing the issue, 9% stated they are too small for it to matter and 18% planned on tackling it in-house when it arises. Interestingly, of those businesses that built their own platform, just over one-third said they had already taken steps to mitigate against it.
Awareness of providers of fraud prevention solutions
Our survey showed that 36% of respondents were not aware of any providers offering fraud prevention solutions. Underlying the statistics for those that are aware of technology solutions providers and have already taken some measures to deal with fraud, is the prevalence of upfront ID verification and payment fraud detection solutions. These can be described as point solutions tackling an issue at a specific point in time, e.g. when a user first comes onto a platform or at the point a financial transaction takes place. However, such solutions do not monitor ongoing user behaviour once on the platform.
Absence of ongoing monitoring
In fact, none of the respondents mentioned solutions for ongoing monitoring of users on their platforms. From our recent discussions with early stage P2P platforms, it appears that risk is often weighed against the financial cost of implementing a fraud prevention solution with the perception of not being ‘big enough’ to warrant it. At the very early stage, other features, such as having detailed search functionality or providing a frictionless onboarding process, can command more focus and budget.
Keeping users safe requires daily monitoring
ID verification and payment fraud detection solutions are an important part of risk management for platforms. However, a combination of such practices along with ongoing daily monitoring is necessary to keep users safe and identify infringements. Fraudsters are relentless at looking for security weaknesses, opportunities and tricks to game the system and find their way onto a platform. Once there, platforms leave themselves open to illegal content, fabricated reviews, fake products, and scam and spam which can harm their users, damage their reputation and ultimately curtail their growth.