Marija Solovjova, Head of Fraud AML transactions Disputes Oversight, Certified Fraud Examiner, Ecommpay
The variety of shopping opportunities and payment types on offer has exploded in recent years – the shopping experience now meets the consumer where they are and the payment journey need no longer be onerous. Social shopping, in particular, has increased in popularity with the purchase journey simplified through popular apps such as Instagram and Pinterest. These platforms are an easy way for consumers to discover unique or interesting products. In fact, social purchases are set to reach over £2.4 trillion in revenue globally by 2028.
However, with research finding that two-thirds of all online shopping scams now start on social media platforms like Facebook and Instagram, it’s more important than ever for payment service providers (PSPs), businesses, and their consumers to be aware of the risks and how to spot fraudulent activity.
Detection and prevention start with the PSP
In order to mitigate the risks of social shopping fraud, PSPs have a huge part to play when it comes to offering a payment system for a social media platform. By ensuring that the payments service is secure, social platforms are one step closer to closing the gap on this type of fraud.
This involves introducing methods that have been shown to work in regular eCommerce channels. Everything starts from the understanding of the specific risks related to the strategy, portfolio and products of a particular institution, and this is no different with social shopping platforms. Based on this understanding, PSPs should implement systems and controls that are appropriate to the specific risks presented, while also using the latest available technologies and legal opportunities to create a smooth experience for the customers.
For example, looking at security, social shopping platforms often fail to have the same level of security and fraud prevention measures when compared to traditional eCommerce sites. This works at a huge advantage to fraudsters who can then bypass simple security systems to steal data and personal information either directly from the social media account of the potential customer, or via phishing and other methods.
This means including Know-Your-Customer and Anti-Money-Laundering measures, as well as adhering to Strong Customer Authentication (SCA) regulatory requirements is essential. Additionally, this can also mean collaborating with other PSPs to create effective security frameworks specific to the platform, as well as by working closely with the social platform to remove fraudulent sellers.
However, just as PSPs are constantly required to innovate their systems to make sure it is up to date and security compliant, consumers also need to ensure they have the minimum level of education needed to not fall into any fraud traps when shopping in these channels – both of which are constantly evolving.
Working with businesses and their consumers
Both the small businesses selling on social and the social platforms themselves have a responsibility to their customers or users when it comes to protecting them against fraud. They are an important intermediary between the PSP and customer that can both defend against fraud but also educate.
Knowledge of what to look out for is essential so shoppers don’t fall prey to misinformation, and buy a product or service that isn’t genuine. Social shopping often includes user-generated content – which can easily be manipulated by scammers to create fake reviews and customer-interactions. Additionally, some accounts pose as legitimate sellers and/or businesses but actually offer fake products or services. So, as a customer, research is key.
Businesses need to work with social platforms to understand how they can align. Whether that’s through account verification or extra security checks, making it easier for customers to spot legitimate businesses over a fraud attempt is paramount. Before making a purchase, customers should take the time to research both the product and the seller. If something is too good to be true, it often is.
When it comes to personal information, platforms and businesses should be urging shoppers to be very cautious when entering it. Alongside this, offering a payment system that is firstly recognisable, and isn’t planted on a questionable URL will help your customers determine if a purchase is safe to pursue. Customers should always double check the URL of websites sent over by sellers before clicking them, as sometimes a click is all it takes for them to gain access to your personal information.
Finally, all parties should work together to report any suspicious activity. Whether it is the PSP or social platform monitoring activity, businesses keeping an eye out for look-alike accounts, or savvy shoppers doing their due diligence before a purchase. In the case that something slips through these lines of defense, if you think you are about to, or have, fallen victim to social shopping fraud, it’s important to report it to relevant authorities and let your bank know. This will help to prevent others from falling victim to the same scams.
With fraud cases rising, it’s important for all parties to remain vigilant and bolster security measures. PSPs can therefore play a key role in helping to prevent social shopping fraud by looking inwardly at the systems they have implemented, as well as outwardly, working both with customers, businesses, and the platforms to ensure all parties are protected.
