📖 Free eBook: The Digital Services Act Explained. Get it here → ×

5 Common Online Marketplace Scams and How to Prevent Them


    Internet fraud is getting more and more sophisticated. And for online marketplaces – or any other platform that relies on User Generated Content – it’s often well-hidden or undetectable. Scammers are an increasingly resourceful bunch, so if there’s a system to be gamed, you can bet they’ll find a way to work it.

    However, with the right insight, awareness, and detection processes, site owners can keep their users safe – and stop scams before they endanger anyone.

    Let’s look at some of the most common online scam types to be aware of on your online marketplace, how you stay on top of them, and ultimately how to prevent them.

    Photo by Dylan Gillis on Unsplash

    Online shopping scams

    One of the most common types of fraudsters plaguing digital marketplaces, online shopping scammers usually advertise high-ticket items for sale at low prices. Typically, these include:

    • Mobile phones
    • Video game consoles
    • Laptops
    • Jewelry
    • Cars
    • Commercial vehicles and heavy equipment are on the rise.

    They may be advertised along with a believable yet fabricated story. This can be something like the fact they’re selling “excess stock” or that goods have “minor damages,” – for example.

    The reason scammers do this is to give some degree of credibility to their request for a partial payment upfront. Of course, they have no intention of selling any goods at all. They aim to dupe users.

    As a marketplace owner, it’s important to advise your users that if something sounds too good to be true, it usually is. It is also vital to warn them against sending any payment before obtaining any goods. They should also be wary of paying by direct transfer, using prepaid cards, or any requests to pay for goods using cryptocurrencies.

    How scammers operate on online marketplaces

    Here are a few tricks scammers use to cover their tracks.

    Purchase old accounts

    Scammers look for accounts that have a good reputation and buy them – to publish fraudulent ads.

    Ad modification

    Scammers submit mundane ads with real photos, prices, and reliable data. But once the ads are accepted, they change them – lowering prices and deleting/adding photos.

    Trojan ads

    Scammers create accounts and begin publishing conventional ads. Once a reliable precedent is set, they begin posting fraudulent ads instead.

    Change IP addresses

    This is when scammers continually change IP addresses to avoid being tracked.

    Multiple ad publications

    Scammers submit multiple ads in big quantities; to disguise their fraudulent ones.

    Dating and romance scams

    Dating scams are probably the best-known kind of online fraud – a topic we have covered extensively on our blog.

    While many of us have used flattering photos of ourselves in online dating profiles, there’s a big difference between presenting ourselves in our best light and creating a fake online identity.

    While TV shows and high-profile cases of this practice – known as catfishing – have raised awareness, it still remains a common issue on many dating sites.

    Essentially, romance scams work when a scammer (posing as an attractive man or woman) reaches out to a user and builds a relationship with them exclusively online – sometimes over months – before proceeding to either ask them for money or even to do favors for them: activities that could well be criminal.

    Why does the scam work so well? Catfishers do whatever it takes to win their targets’ trust. And once that trust is established, the target is too emotionally invested in questioning the scammer’s motives.

    While different official organizations – like the Online Dating Association – are doing more to raise awareness, dating sites themselves need to do more to highlight the dangers and behavior patterns fake users follow.

    For example, catfishers use many keywords and phrases to make themselves sound more credible. They may claim to be religious or work in a trustworthy job – like the police or military.

    A common struggle for many sites is that they’re not quick enough to remove scammers. Dating and romance scammers quickly move the conversation away from the site to avoid detection – sites need to prevent that from happening from scratch. Learn how you can create filters to detect and prevent personal details automatically.

    Fake charity scams

    Many of us are wary of so-called “chuggers” (charity + muggers) approaching us on the street asking for donations, and we’d be right to – given the recent news that one scam in London was so well-orchestrated that even those collecting cash didn’t know it was a shady operation.

    However, online – where donation platforms are becoming increasingly popular owing to their ease of use – how can those donating be sure their money ends up where it’s supposed to?

    Transparency is key. The more information a site offers about the charities they’re working with; how much (if anything) they take as commission; and how long donations take to reach each charity, the more trustworthy they’re likely to be.

    But what about online marketplaces and classified sites? Charity scams are just as likely here – particularly after high-profile disasters.

    As a result, site owners must advise their users to exercise caution when those requesting funds…

    • say they’re from a charity they’ve never heard of
    • won’t or can’t give all the details about who they’re collecting for
    • seem to be pushing users to donate quickly
    • say they only want cash or wire transfers (credit card is much safer)
    • claim donations are tax-deductible
    • offer sweepstakes prizes for donations

    When working with charities, online marketplaces, and classified sites should ensure that rigorous security checks are in place. For example, as phishing is a common fake charity scam, it’s crucial that any relevant in-platform messages that link to an external ‘charity site’ are detected early on.

    Employment scams

    Online fraud and employment may sound fairly unlikely, but it’s much more sophisticated than many might think.

    There are numerous ways scammers abuse online marketplaces and classified sites, and most of the time, they’re looking to either extract money or steal your identity (more on that below too).

    One of the most frequent employment-related scams is a fake job posting looking for people to handle “payment processing.” The scammer may find CVs/Resumes online, or they may post on credible boards – such as Craigslist.

    The trick being played out here is one where the proceeds of crime are handled by the user (for a small commission) and transferred back to the fraudster – which is essentially using the ‘employee’ to launder money.

    Another common job-related scam is one where “recruiters” coax candidates into paying for additional job training or career development courses – or when an “employer” asks candidates to cover the costs of a credit record check.

    In all cases, employment-focused marketplace owners must be acutely aware of anyone asking users to impart finance-related information or money.

    However, these requests may not materialize until the conversation has been moved to email – away from the site – so those operating job boards must put some form of prevention and moderation effort in place.

    Identity theft

    News on BBC’s website that a young journalist had a job application withdrawn by someone pretending to be him – via email – is alarming but not uncommon. However, impersonation takes on a new meaning when linked to identity theft.

    While the most likely scenario of identity theft is an online data breach, internet shopping also puts users at risk. According to Experian, 43% of online identity theft happens during the peak holiday shopping season (Black Friday onward).

    Many scammers use familiar tricks – like phishing – to steal personal details, debit and credit card details, and social security numbers, using them to buy goods (often high-priced items in bulk), to claim refunds from ‘faulty’ items, or to open accounts in other peoples’ names to mask other fraudulent activities.

    Scammers can buy stolen identities on the dark web very cheaply. And it’s not uncommon for fraudsters to advertise usually high-priced items at low prices for quick sale on marketplaces… and then steal shoppers’ credit card details.

    While general advice is routinely given to consumers – such as vigilance over website security, visiting preferred stores directly rather than clicking search engine links, and not storing card details online – online marketplaces must prioritize monitoring and prevention too.

    Preventing scams on online marketplaces

    With so many ways in which scammers can benefit, it’s clear that they’re not going to stop anytime soon.

    This means that in an environment where trust is a limited commodity, the pressure increases on e-commerce sites, online marketplaces, and classified websites to maintain it.

    While official bodies, governments, and consumer rights groups, as well as Facebook (as reported in TechCrunch) and other tech champions with considerable clout, are informing and empowering users to recognize and take an active stance against suspicious activity, online marketplaces also have a responsibility to detect and eliminate fraud.

    As marketplaces scale and achieve a network effect, they must adopt more stringent cybersecurity protocols to protect their users – multi-factor authentication, for example. Similarly, mapping user behavior can help site owners to identify how genuine customers navigate it – giving them the intelligence they can use to benchmark suspicious activity.

    Essentially, the better you know your users and how they behave, the more emphasis you put on transparency as a prerequisite for joining your community, and the greater the deterrent. But as discussed, there are ways for scammers to mask their behavior.

    However, a solid content moderation setup is the most effective way to prevent fraudulent activity on online marketplaces. While this could be a team or person manually monitoring the behaviors most likely to be scams, as a marketplace grows, this process needs to function and maintain at scale

    Enter machine learning AI – a moderation solution trained to detect scammers before posting fraudulent content. Essentially, this works by feeding the AI with data to recognize suspicious behavioral patterns and can, therefore, simultaneously identify several possible fraud threats.

    At Besedo, we fight fraud by giving marketplace owners the tools – not just the advice – they need to stop it before it is published.

    All things considered, scammers are merely opportunists looking for an easy way to make money. The harder it becomes to do this on online marketplaces, the less inclined they’ll be to target them.

    This is Besedo

    Global, full-service leader in content moderation

    We provide automated and manual moderation for online marketplaces, online dating, sharing economy, gaming, communities and social media.

    Form background