Online Marketplace Fraud Reveals What’s Changing – and What Isn’t

Iremar Brayner talks about online marketplace fraud and what that tells us about fraud in general.

A lot of people have said a lot of things about how changing technology, especially in the realm of AI, is changing fraud. But while the tech is changing, a lot of the techniques aren’t. That’s because most fraud doesn’t start with tech. It starts with human emotions. This look at online marketplace fraud reveals what’s changed recently – and what aspects haven’t changed.

See Inside Modern Fraud with Iremar Brayner for a complete transcript of the Easy Prey podcast episode.

Iremar Brayner is a fraud prevention professional with over a decade of experience across a variety of industries. He currently leads G2A, the largest digital entertainment marketplace in the world. He didn’t start out intending to go into fraud prevention. His first job was customer service at a bank. Eventually, he was promoted to the department responsible for foreign customers. One of his responsibilities was reviewing suspicious transactions. Later, he went to law school, and eventually realized that he would rather go back to fraud prevention. And he’s been doing that ever since.

In law school, there is a lot of focus on the psychological side of things. And fraud is normally attached to something emotional. People are more likely to be scammed when there are emotions involved. If your favorite band is in town but you can’t afford tickets, for example, you’re more likely to overlook warning signs when you find secondhand tickets cheaper. The same happens with romance scams – if you think you’ve found the love of your life, of course you’re going to lend them money. This law background helps Iremar understand the psychological reasoning behind fraud.

There’s an emotional side of fraud because people are more likely to be scammed when there’s something emotional involved.
Iremar Brayner

Working with Online Marketplace Fraud

G2A’s focus is specifically on digital content. This makes it an attractive online marketplace for fraud for different reasons. Some of the products, like gaming gift cards or cash gift cards, are very easy to cash out. And the average price for each product is pretty low. This is attractive for fraudsters to “test” stolen financials. They can make a small purchase to see if the card works before going on to bigger, more expensive things.

Another type of fraud that’s happening more right now, not just with online marketplace fraud but in fraud generally, is so-called “friendly fraud.” Over time, it’s harder and harder for fraudsters to get and use stolen info. So some fraudsters have started to buy things using their own cards, then call their bank and say that it was a fraudulent purchase and they don’t recognize the transaction. If it works, they get their money back and get to keep the thing they bought.

One thing G2A has to watch for specifically is around things that are new and exciting. For example, a lot of people around the world are looking forward to the release of the video game GTA VI. When it releases, that will be big, and since G2A sells video games, they’ll have to pay attention. It will be very attractive for regular users who want to play the game. It will also be very attractive for fraudsters because they can easily make money on it if they buy it. Whenever something like that happens, it’s big for business, but they also need to be alert for fraud.

Online Marketplace Fraud on Both Ends

One of the challenges of managing fraud in an online marketplace is that you have to deal with risks on both sides of the sale. Fraudsters can come in as both buyers and sellers. On the seller side, G2A uses a Know Your Customer (KYC) process to verify the seller is legitimate and are going to actually deliver the thing they’re offering. They also monitor the number of complaints sellers get.

On the buyer side, they monitor the transactions in real time. They made the decision some time ago to move away from manual review. A manual review process pauses the transaction while a human reviews it to see if it’s legitimate or not. But that’s frustrating from the customer side. Imagine being a teenage boy trying to buy a new video game. You don’t want to buy it and then wait up to two days for someone to verify you’re a real person. You’re just going to buy it somewhere else at that point. But moving to an automated review process, the customer can have a decision in seconds instead of days. It keeps the marketplace safe and improves the experience.

Online marketplace fraud prevention is a challenge because as a society, we want frictionless transactions and instant gratification. But that also makes things more susceptible to fraud. There has to be a balance between speed and safety to get enough protection without compromising the user experience. Iremar and G2A have been working a lot on automation and AI to increase speed and efficiency while still keeping things protected.

Adding AI to the Process

When people talk about AI and fraud, it often sounds like AI is going to completely change the fraud game and we’re going to start seeing things we’ve never seen before. But most of what it’s really doing is just letting fraudsters do more and bigger things with less effort.

What AI is doing on the fraud side is just making fraud more scalable.
Iremar Brayner

For example, social engineering has always been part of fraud. Now it’s just changed forms. Ten years ago, people got phone calls from fraudsters pretending to be bank representatives and asking for info. Now they can do the same thing through fake social media accounts. These scams haven’t really changed much with the rise of AI. It’s just gotten much less obvious when something is fraudulent.

Online marketplace fraud reveals that the foundations of fraud haven't changed, just the tools and efficiency it's done with.

Scams are the same, pretty much … it’s just more difficult to tell whether something’s true or not.
Iremar Brayner

AI may be making it more easy to commit fraud, but defenders can use AI against AI. Some people wonder if that means we can cut out the manual intervention process entirely and just let the machines battle it out. But that’s not what Iremar believes. AI helps G2A automate what should be automated. But especially with fraud, it always needs a human touch. G2A will continue to use real people to do what only real people can do. The best defense against AI-powered fraud is AI + human defense.

Mitigating Fraud in an Online Marketplace

A lot of steps to mitigating fraud in G2A’s online marketplace are about awareness and monitoring. In the past, fraud managers have focused on fraud rates, chargeback rates, payment approval rates, and payment decline rates to check if something is wrong. But technology lets fraud professionals now do that monitoring even earlier. Big spikes in activity are one warning sign. If a specific product’s sales triple suddenly when it’s not a new release and there haven’t been any sales campaigns, there’s something going on. It’s not even necessarily fraud. But even if nothing has been reported, it’s still good to investigate.

Iremar can’t disclose all of the steps G2A takes to reduce money laundering around gift cards on their online marketplace. But there are a handful of different tactics. One very basic one is following international payment system regulations. Just checking to make sure nobody in the transaction has been sanctioned can go a long way. Another one is setting limits on how much one person can spend daily, weekly, or monthly. And a third is doing extra monitoring or setting extra restrictions on products or categories that tend to be riskier.

If these processes find something weird, there’s a flow of decisions to go through that include asking for additional information. If someone is buying 200 gift cards in 24 hours, something is wrong. Just because something is wrong doesn’t necessarily mean it’s fraud. But it does mean it’s unusual and needs investigated.

Fraud Challenges Vary Across Industries

Iremar is currently fighting fraud in an online marketplace, but he’s worked in multiple industries. And each industry has its own fraud challenges. One unusual one that he worked at was a ride-hailing company. You could call a car, and someone would drive you from point A to point B. When he first started at the company, he was a little confused. It’s pretty obvious what kind of fraud you’re watching for at a bank, but he wasn’t sure what kind of fraud anyone could try by requesting a car ride.

But there are fraud techniques for every industry, even though they vary. In ride-hailing, a big one is drivers abusing incentive campaigns. If you are a driver, you might get a bonus if you refer so many new drivers to the platform. Some drivers would send the referral link to themselves and try to create more accounts to get that bonus without actually referring anyone. Another one is drivers renting someone else’s driver’s license or signing up under someone else’s identity so they can drive for the service without having a valid driver’s license. It’s a different type of fraud, but still fraud. And on the passenger side, the most common one is paying for a ride with stolen credit cards.

Iremar also had the opportunity to work for a different kind of online marketplace, that one focused on luxury items. Fighting fraud there was challenging because the average transaction value was very high, and the customers were used to buying those kinds of things. It was an interesting experience, and still high-risk. Iremar has learned a lot about fraud looking at these different industries.

Protect Yourself from Fraud in Online Marketplaces

If you’re using an online marketplace, whether it’s G2A or not, you should take some steps to protect yourself. And when it comes to fraud protection on an online marketplace, the basics still work.

The biggest one is to buy from reliable sources. This is crucial if you’re buying something expensive, but always important. Iremar also recommends checking the refund policy. If you’re spending that money, you need to make sure you have options if it doesn’t arrive or isn’t what you thought you ordered.

Another fraud protection that is very basic but still works is to make sure the price makes sense. It’s normal to get excited about finding a good deal. But if you find what you want for half the price that it’s listed for everywhere else and it doesn’t seem to have any obvious reason for being so much cheaper, be cautious. It might be cheap because it’s a fake or because it doesn’t exist at all.

Finally, never share your credentials or personal info with anyone. If you’re using a reputable online marketplace, there’s no good reason why someone would need that information. Keep it to yourself and you’ll stay safer.

Protecting Yourself as a Seller

As a seller, the best way you can protect yourself from buyers claiming what they got was different than what they ordered is to focus on the item description. Talk about what it is, all the details and colors, and document all damage and wear if it’s second-hand.

If you’re selling something physical that you have to ship, make sure you have the shipping info and tracking number. That way, if a buyer claims they didn’t get it, you can see when it was delivered, or if it’s still in transit and if so where.

If we’re not talking about people buying things with stolen credit cards, the top complaint is not receiving the item. You can avoid this by having that tracking information. The second most common complaint is that the item wasn’t as described. And that is almost always related to the seller not describing it well.

Protecting Yourself from Fraud in General

A lot of fraud-fighting advice doesn’t just apply to online marketplace fraud. Iremar got to witness an interesting attempted fraud. He was at home with his mother when she got a WhatsApp message. The person claimed to be Iremar and used one of his pictures, and said that he was struggling and needed $100. His mother asked if he sent it. He pointed out that since he was right there, he would have just asked her in person.

This was a type of social engineering. If you get a message from your kid saying they’re in trouble and need money, many people would send it right away. Iremar told his mother if it happens again, she should call him before sending any money. And that’s good advice. If someone is asking for money, no matter who they are or how well you know them, don’t send it until you actually hear their voice. That can be manipulated too, unfortunately. But adding that extra step can go a long way to protect you.

If a person is asking for money … doesn’t matter who the person is, just do not transfer the money until you actually talk to the person, hear the voice.
Iremar Brayner

The attempt on his mother was targeted, too. It wasn’t generic – they knew his name and used his photo. Iremar knows a lot of people who have experienced the same, especially with social media. It’s easy to find a picture of someone and add it to a WhatsApp account. It’s even harder when scammers take over a genuine account. So it’s essential to be cautious all the time and verify before you get caught in a fraud.

Learn more about Iremar Brayner’s work and connect with him on LinkedIn.