For marketplaces, the risk of seller fraud is growing. As fraud schemes become increasingly more sophisticated and threat complexity grows, it’s getting harder and harder to detect and prevent fraudulent activity. It’s even more challenging when you’re operating in emerging or “risky” markets — those countries and regions where fraud is known to be most prevalent and difficult to combat.
I recently sat down with Elizabeth Upton, head of merchant operations at Tophatter, to talk about compliance and fraud in the world’s seemingly riskiest markets. Our conversation explored the ways that marketplaces and digital platforms are handling risk when expanding to lucrative new markets.
Tophatter, like many of Payoneer’s clients, approaches growth with an eye to minimizing risk. Upton said that one of the marketplace’s biggest challenges in risky markets is quickly scaling operations while retaining quality. Tophatter often catches activity such as sellers creating multiple accounts and shipping fraud.
Upton says that Tophatter is taking a two-pronged approach. The company has proactively introduced CAPTCHA into the user registration flow, schedules auction lots based on account health and offers order payment upon delivery. It has also extended some sellers to a 60-day payout cycle and is assessing fees for misleading products and policy violations.
Tophatter reacts quickly to any perceived threats, suspending or closing accounts for violations, putting holds on payments if any malfeasance is suspected, refunding sales for shipment fraud, and charging sellers a penalty fee for any order resulting in a bad customer experience.
Tophatter, along with many other leading marketplaces, works closely with Payoneer to detect and prevent fraud, minimize risk and ensure regulatory compliance.
Upton cited KYC checks as one reason Tophatter feels confident working with Payoneer. Payoneer verifies all merchant accounts, lessening the need for Tophatter to have in-house resources. If the Tophatter team has any questions about a user, they can get information and status updates directly from Payoneer.
Tophatter worked with Payoneer’s risk team to develop an automated email report flagging any sellers who register using a payment account that is already in use by another registered merchant. This enables the marketplace to immediately flag accounts, before these sellers transact on the platform. Upton commented that Tophatter also worked with the Payoneer risk team in 2018 to conduct a thorough review of all Tophatter payees on Payoneer and identify any suspicious accounts to suspend or shut down.
Today, Tophatter is working with Payoneer to develop a system that will monitor bad actors across multiple platforms within the Payoneer network. This will allow Tophatter to prevent fraud before it occurs.
Tophatter has also found Payoneer useful when investigating the validity of fraud claims. Payoneer is able to track any transactions that have taken place, to either support or disprove claims of fraudulent activity.
The intricacies of the threats faced by each marketplace are unique. But while there is no one-size-fit-all solution to address the risk mitigation and compliance needs of every marketplace, having a strong compliance program in place can circumvent potential challenges in both the risk and regulatory realms.
Payoneer partners with the world’s leading digital brands to solve their biggest international risk and compliance challenges. Working in tight collaboration with our clients allows us to offer sophisticated detection and better enforcement, tailored to the specific needs of each client while drawing upon our extensive cross-platform network of data. With this data, we can identify and target common repeated fraud patterns, connecting the dots to detect highly sophisticated fraud ring activities that threaten clients across our ecosystem — and keeping our customers compliant with the regulatory requirements in every country in which we do business.