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Why and how should retail deal with e-commerce frauds and fake reviews ?
By Terence Ng
Terence Ng is currently a Senior Analyst in Coresight Research , focusing on research related to B2B and B2C surveys , US retail technology startups , the Metaverse and Chinese consumers . Prior to joining Coresight , Terence worked in international research agencies such as Nielsen and Ipsos , HK retail conglomerate AS Watson Group and the HKSAR Government assisting in the Ocean Park Rethink initiative .
Rising prevalence and seriousness of e-commerce frauds
E-commerce fraud occurs when scammers intercept a commercial transaction on an e-commerce store , such as stealing another person ’ s payment details , to have personal or financial gains . Other common types of e-commerce fraud include fake account registration , account takeover , platform abuse and payment fraud .
With an increasing e-commerce penetration , the rise of super apps and social media usage , e-commerce frauds also grow in incidence . Take Malaysia as an example , 68 % of its reported commercial crime cases between 2020 and 2022 May involved online fraud , according to Acryl Sani Abdullah Sani , Inspector-General of Police in Malaysia . According to Experian ’ s Global Identity & Fraud Report , nearly 1 in 4 consumers have been victims of online fraud . In Indonesia , more than half ( 51 %) claimed have experienced fraud incidents on social media sites . According to a Stripe Inc survey , online frauds are now becoming more complex , are more prevalent that before the covid-19 pandemic , and are also becoming more sophisticated at the same time . The issue will get even worse during peak shopping seasons .
How retail can cope with e-commerce frauds
Grab is one of the major Southeast Asia players that invested significantly in tackling fraudulent transaction attempts . In 2019 , Grab launched GrabDefence to protect app users through its suite of tools , empowered by machine learning and numerous datapoints collected in real-time .
To cope with e-commerce frauds , brands and retailers can leverage AI , which can facilitate the redesign of business strategies and better prediction of attempted frauds . AI can also reduce the need of manual review , prevent fraud attempts and facilitate real-time implementation of changes on-demand . Apart from investing in AI , there are also few ways for brands and retailers to detect potential e-commerce frauds , including frequent site security audits , setting limits on purchases to minimize merchant errors , and monitoring the website for suspicious activities .
There are red flags which brands and retailers can be aware of , including unusually higher order volumes and increase in amount of low value orders , different credit cards used by the same customers , unusual IP locations , repeated declined transactions and different billing and shipping addresses being used by the same customer . Consumers should also be vigilant online to avoid fraud , including checking the legitimacy of a payment site , as well as avoiding clicking on suspicious content and links online . Through implementing such measures , brands and retailers can enjoy better customer experiences , lower operational costs and increased sales revenues .
Fake Reviews is a Prominent Issue
Further to e-commerce frauds , fake reviews is another important issue brands and retailers must not ignore . With lockdowns taking place in the past , reading online reviews has become a main gateway to learn about products . According to a survey by SEO platform BrightLocal , 77 % of consumers regularly consider reviews when making a purchase , and 75 % say that reading a positive review is the top factor that makes them feel good about a business . In fact , fake online reviews is a costly issue , influencing $ 791 billion of e-commerce spending annually in the US , $ 6.4 billion in Japan , $ 5 billion in the UK , $ 2.3 billion in Canada and $ 900 million in Australia , according to a study . Indeed , consumers will be more likely to buy lesser quality products due to fake reviews , costing more money for each dollar they spend .
Ways to Cope with Fake reviews
Noting the prominence of the issue , TripAdvisor has begun releasing its transparency report since 2019 to outline steps on fighting fake reviews . In its most recent report released in 2021 , about 3.6 % reviews submitted to the site in 2020 were determined to be fraudulent . And out of those submitted fake reviews , Tripadvisor said it prevented 67.1 % from ever making it onto the platform . Amazon has also been discouraging fraudulent reviews by suspending high-profile sellers for using banned techniques to get reviews . On a country level , the Indian government is looking actively into the issue , with the Union Ministry of Consumer Affairs , Food and Public Distribution saying the government would build a framework to combat fraudulent reviews on e-commerce websites .
For brands and retailers to spot fake reviews , they should critically consider the source of their reviews , check the dates of reviews if there are many coming in the same date , and also if they are all extreme ratings ( i . e . one star or five star ). They can also do something like “ this customer is a verified purchaser ” to indicate they bought on same site they left a review , offering extra credibility . They can also warn its customers or educate their customers how to spot fake reviews . E-commerce players can also play a role to be responsible for customers by revealing how they choose the most relevant reviews for display .
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