Learn how to prevent online marketplace risks and ensure safety.
Operating a marketplace, much like numerous other activities, comes with a certain level of risk. Unethical or harmful actions, such as unfair or abusive behaviors, have the potential to drive away genuine merchants and customers. This article explores typical sources of risk in a marketplace.
Also, it focuses specifically on eCommerce and other digital markets. As part of this, we provide some tactics that Trust and Safety teams in online marketplaces can use to reduce risks. First, let's discuss further the concept of risk in online marketplaces, and its connection to the responsibilities of the Trust and Safety team in such platforms.
Also, it focuses specifically on eCommerce and other digital markets. As part of this, we provide some tactics that Trust and Safety teams in online marketplaces can use to reduce risks. First, let's discuss further the concept of risk in online marketplaces, and its connection to the responsibilities of the Trust and Safety team in such platforms.
Understanding Online Marketplace Risks
As marketplaces shift to the digital realm, they become more varied and user-friendly but are also exposed to different types of threats. External entities have the ability to target a marketplace's technology systems in order to disable or create disturbances, while assuming various identities, including multiple seemingly distinct individuals.
This may seem deceptively easy since physical identification papers, credit cards, and cash are frequently unnecessary. Handling risky or prohibited items may draw the authorities' interest, resulting in the potential closure of the marketplace.
This may seem deceptively easy since physical identification papers, credit cards, and cash are frequently unnecessary. Handling risky or prohibited items may draw the authorities' interest, resulting in the potential closure of the marketplace.
Examples Of Risks To Be Mindful Of When Using Online Marketplaces
Some risks that online marketplaces face are similar to those encountered by other types of marketplaces and businesses, including financial institutions, eCommerce, and other digital marketplace platforms. There are some typical types of risks in online marketplaces: their operations, effects on users and owners, and methods for Trust and Safety teams to reduce them.
Illegal Financial Activities
• Using counterfeit coupons or purposely taking advantage of mistakes in legitimate ones.
• Using a referral program to redeem a promotion multiple times beyond the permitted limit.
• Returning a product for a refund in a deceitful manner to benefit unfairly.
• Conducting transactions through alternative communication channels.
This diminishes users' trust in a marketplace when they witness individuals exploiting unfair advantages to gain an advantage. On a different level, it causes insecurity among marketplace users who are at risk of being exploited. An organization can lose business, especially to competitors, due to both of these factors. It might also subject marketplaces to scrutiny by financial regulators. However, there are several methods organizations can utilize to prevent this particular risk.
One way is to evaluate customers for signs of financial risk during onboarding. Another way is establishing policies that are easy to understand and adhere to in order to regulate what is permissible on the market. A third option is to use transaction monitoring and case management systems to detect fraudulent schemes. Then, another option is to provide users with a system to report instances of suspected financial crimes.
• Using a referral program to redeem a promotion multiple times beyond the permitted limit.
• Returning a product for a refund in a deceitful manner to benefit unfairly.
• Conducting transactions through alternative communication channels.
This diminishes users' trust in a marketplace when they witness individuals exploiting unfair advantages to gain an advantage. On a different level, it causes insecurity among marketplace users who are at risk of being exploited. An organization can lose business, especially to competitors, due to both of these factors. It might also subject marketplaces to scrutiny by financial regulators. However, there are several methods organizations can utilize to prevent this particular risk.
One way is to evaluate customers for signs of financial risk during onboarding. Another way is establishing policies that are easy to understand and adhere to in order to regulate what is permissible on the market. A third option is to use transaction monitoring and case management systems to detect fraudulent schemes. Then, another option is to provide users with a system to report instances of suspected financial crimes.
Functional Problems
Some users in the marketplace may attempt to disrupt the marketplace's usual operations. An instance includes creating multiple unrequested posts (known as "spamming") to promote without permission, or to distribute fraudulent schemes and false information. One individual may be taking control of someone else's account, or making changes to an account to make it seem like it belongs to someone else.
Another way to cause issues is by making numerous accounts that are alike or by sharing accounts with others (even selling them). These actions have the potential to lead genuine users to engage with the marketplace in ways that were not intended. In extreme situations, it may result in a single user or all users being unable to access the marketplace. This could result in issues like losing some users because of trust concerns or even having a marketplace deserted due to a lack of features or reliability.
This is why marketplaces need to have systems in place to identify and respond to activities that are intended to intentionally create disturbances. Policies should be in place that clearly state disruptions are prohibited, and individuals will face consequences for engaging in such behavior (including account penalties that cannot be circumvented by creating a new account). It is crucial to have user reporting mechanisms and contingency plans in place to protect users during disruptions.
Another way to cause issues is by making numerous accounts that are alike or by sharing accounts with others (even selling them). These actions have the potential to lead genuine users to engage with the marketplace in ways that were not intended. In extreme situations, it may result in a single user or all users being unable to access the marketplace. This could result in issues like losing some users because of trust concerns or even having a marketplace deserted due to a lack of features or reliability.
This is why marketplaces need to have systems in place to identify and respond to activities that are intended to intentionally create disturbances. Policies should be in place that clearly state disruptions are prohibited, and individuals will face consequences for engaging in such behavior (including account penalties that cannot be circumvented by creating a new account). It is crucial to have user reporting mechanisms and contingency plans in place to protect users during disruptions.
Listing of Prohibited or Regulated Goods and Services
Certain marketplaces have restrictions or heavy regulations on specific types of products and services. This encompasses intellectual property that a user falsely asserts ownership of, or neglects to properly attribute to another entity. It also covers items that are misrepresented or fake. Regulatory agencies or law enforcement often oversee such types of products.
Permitting them to operate in a marketplace not only compromises customer safety but also exposes the marketplace to significant legal risks. Marketplaces need to clearly state which items are permitted or prohibited from being listed, as well as the conditions for listing them. They also need to have methods for quickly detecting and removing such listings, like scanning for specific words and letting users report prohibited items.
Permitting them to operate in a marketplace not only compromises customer safety but also exposes the marketplace to significant legal risks. Marketplaces need to clearly state which items are permitted or prohibited from being listed, as well as the conditions for listing them. They also need to have methods for quickly detecting and removing such listings, like scanning for specific words and letting users report prohibited items.
Harmful Behavior
Some examples are:
• Promoting violence towards or motivating violence against other users.
• Publishing graphic sexual or violent material, particularly involving children.
• Promoting, endorsing, or celebrating unlawful or harmful actions.
• Revealing someone's private information (or blackmailing them) without their consent.
• Sharing material to bully or incite hostility towards an individual or community.
• Speaking with an abundance of vulgar language.
Just as with illegal or regulated items, marketplaces should outline prohibited behaviors and consequences for users who participate in them. They should also have mechanisms to swiftly identify and remove such type of content. This should involve options for users to report abusive behavior on their own. However, marketplaces need to exercise caution in this matter because, in certain situations, certain behaviors may be seen as abusive while in others they may not be.
Marketplace administrators must adjust activity monitoring tools and sometimes perform manual reviews to account for both the content and its presentation. They need to establish a process for users to appeal punitive measures so they can provide explanations. This assists a marketplace in maintaining user trust by avoiding frustration and driving away users who occasionally break minor and unintentional rules.
• Promoting violence towards or motivating violence against other users.
• Publishing graphic sexual or violent material, particularly involving children.
• Promoting, endorsing, or celebrating unlawful or harmful actions.
• Revealing someone's private information (or blackmailing them) without their consent.
• Sharing material to bully or incite hostility towards an individual or community.
• Speaking with an abundance of vulgar language.
Just as with illegal or regulated items, marketplaces should outline prohibited behaviors and consequences for users who participate in them. They should also have mechanisms to swiftly identify and remove such type of content. This should involve options for users to report abusive behavior on their own. However, marketplaces need to exercise caution in this matter because, in certain situations, certain behaviors may be seen as abusive while in others they may not be.
Marketplace administrators must adjust activity monitoring tools and sometimes perform manual reviews to account for both the content and its presentation. They need to establish a process for users to appeal punitive measures so they can provide explanations. This assists a marketplace in maintaining user trust by avoiding frustration and driving away users who occasionally break minor and unintentional rules.
Manipulation Of Feedback
Numerous marketplaces incorporate rating and review systems for customers to provide feedback on their preferences and experiences regarding products and services. Some systems for feedback also enable merchants and customers to share their experiences when interacting with one another. Regrettably, users occasionally misuse these systems for different reasons.
• Sending unsolicited messages in a repetitive and bothersome manner.
• Falsely boosting reviews for their own benefit or for favored merchants.
• Slandering rival merchants to damage their reputations.
• Forcing merchants to comply with requests outside their policies through bribery or extortion.
• Keeping goods hostage from clients.
This complicates merchants' ability to establish reputations in the marketplace that accurately represent their true abilities. It also causes customers to be cautious about relying on ratings and reviews or trusting merchants in general. This absence of transparency may result in delays in business operations, or even lead to users abandoning the platform. To address this issue proactively, the risk team should work together with the product team.
They should create a feedback system that considers potential manipulation. It is beneficial to clearly state and uphold regulations about unauthorized methods of utilizing a feedback system. Keeping an eye out for questionable behavior, such as fast, computerized, or untraceable actions, can provide assistance as well. Also, providing a way for users to report suspected cases of feedback manipulation is typically a good plan too.
• Sending unsolicited messages in a repetitive and bothersome manner.
• Falsely boosting reviews for their own benefit or for favored merchants.
• Slandering rival merchants to damage their reputations.
• Forcing merchants to comply with requests outside their policies through bribery or extortion.
• Keeping goods hostage from clients.
This complicates merchants' ability to establish reputations in the marketplace that accurately represent their true abilities. It also causes customers to be cautious about relying on ratings and reviews or trusting merchants in general. This absence of transparency may result in delays in business operations, or even lead to users abandoning the platform. To address this issue proactively, the risk team should work together with the product team.
They should create a feedback system that considers potential manipulation. It is beneficial to clearly state and uphold regulations about unauthorized methods of utilizing a feedback system. Keeping an eye out for questionable behavior, such as fast, computerized, or untraceable actions, can provide assistance as well. Also, providing a way for users to report suspected cases of feedback manipulation is typically a good plan too.
Best Steps For Handling Marketplace Risk
Keeping up with the numerous threats organizations encounter makes managing marketplace risk a continual challenge. Here, we discuss some key features to consider when choosing an online marketplace risk management solution.
Identification And Evaluation Of Risks
The reality is, that risks are always evolving—and the risk team should adjust their strategies and tactics accordingly. In order to effectively address the major threats facing your organization, teams must be able to conduct successful risk assessments and accurately pinpoint risks from the beginning. Teams must trust in a strategy that enables them to identify, evaluate, and rank risks according to their potential impact on their online marketplace.
Scoring And Prioritizing Alerts
Alert scoring systems offer clear values on fraud and compliance risks, enabling teams to quickly evaluate the most significant threats. These scores can be utilized by risk and compliance teams, prioritizing the most important alerts to effectively manage risk and use resources efficiently for optimal outcomes.
Monitoring Of Transactions And Data
Regrettably, a large portion of risk management is based on reacting to situations rather than proactively preventing them - risk and compliance teams aim to detect fraud instances and respond to them. This makes it extremely challenging to effectively stop fraud and safeguard your marketplace.
Thankfully, tools for monitoring transactions and data enable teams to analyze both customer behavior and transactions, giving them the ability to prevent fraud before it occurs (or during the process). Accurate data monitoring provides risk and compliance teams with the necessary information to anticipate fraudulent behavior and prevent it from occurring.
Thankfully, tools for monitoring transactions and data enable teams to analyze both customer behavior and transactions, giving them the ability to prevent fraud before it occurs (or during the process). Accurate data monitoring provides risk and compliance teams with the necessary information to anticipate fraudulent behavior and prevent it from occurring.
Reporting Of Suspicious Activity
Reporting suspicious behavior to the appropriate authorities is an essential aspect of ensuring the safety of an online marketplace. This guarantees that illegal behavior can be tackled and, if needed, taken to court. If this step is not taken, financial crime will never be completely eradicated. It is mandatory for organizations to report any suspicious activity according to the law.
Not complying could result in significant fines and penalties, and will only enable this behavior to continue in the market. Utilizing a system that simplifies and automates reporting of suspicious activities will help you comply with regulations and guarantee that all incidents are tackled as needed. It will also release risk and compliance team members from less critical tasks to focus on more important ones.
Not complying could result in significant fines and penalties, and will only enable this behavior to continue in the market. Utilizing a system that simplifies and automates reporting of suspicious activities will help you comply with regulations and guarantee that all incidents are tackled as needed. It will also release risk and compliance team members from less critical tasks to focus on more important ones.
