Individuals are taking control of their financial futures by joining online platforms to sell products and services. While these marketplaces provide economic opportunities for individuals, they also attract fraudsters who are eager to exploit them.
Gig platforms, sharing apps, and online marketplaces are prime targets for fraudsters posing as buyers, sellers, and service providers. Fraud on these sites costs billions in lost payments, and the true impact of identity theft is hard to measure. According to the Bureau of Justice Statistics, 23.9 million people had their identities stolen in the previous 12 months.
With the global sharing economy expected to grow by more than a trillion dollars and 62% of American adults working for gig platforms, it’s critical to build trust while protecting your business.
How Identity Fraud Harms Marketplaces
Fraudsters use deceptive practices on digital platforms to steal payments, identities, and financial information. Common methods include:
- Fake or identities, with false qualifications, histories, and reviews
- Stolen profiles and account takeovers
- Misrepresented or no-show goods and services
- Defrauding workers and providers of payments
- The sale of counterfeit products
The damage can go beyond the cost of direct losses by driving away both new and existing users. Unmitigated fraud on your site can devastate your brand’s reputation.
How Identity Verification Tools Can Help
Requiring users on either side of these platforms to verify their identities can deter cybercriminals and prevent fraudulent activities. A holistic identity verification (IDV) platform uses a combination of biometric verification, document verification, and password-based security, with multi-factor authentication (MFA) to help improve consumer trust and mitigate some of the biggest risks to your business.
These are five steps you can take to protect your online marketplace and your users.
1. Protect Your Brand with Biometrics and Liveness
Verifying accounts with biometrics and liveness detection can protect your brand and online community by ensuring the individual is physically present when opening an account. It also prevents account takeover fraud by verifying that people are not impersonating the account holder when trying to access an account.
Consumers will also feel confident about returning to your platform, knowing your verification processes safeguard users’ personal and financial information.
2. Verify and Onboard Users with Automated IDV
Make sure your users are real and that they have the ability to provide the services they plan to offer. With a smart IDV platform, you can easily confirm the authenticity of providers’work credentials like certifications or licenses.
With a streamlined IDV process that is instant and automated, you also minimize user friction that can lead to site abandonment.
3. Confirm the Identities of Partners
It’s important to learn about business partners by practicing Know Your Business
checks. This helps you ensure industry compliance and avoid fines. A KYB check may use an IDV platform to help with steps like:
- Verification of information like a company’s name, registration number, address, business type, and articles of incorporation
- Obtaining financial information like bank name, tax ID, financial statements, and audits
- Confirmation of business and industry-specific licenses and partnership agreements
- Verification of a corporation’s directors, owners, and Ultimate Beneficial Owners (UBOs)
- Reputation evaluation, including company history, reviews, legal findings, and regulatory actions
- Documentation of compliance due diligence, including risk assessment and anti-money laundering screening
4. Conduct Necessary Age Verifications
In industries and sales involving age-restricted goods and services, you can strengthen compliance via document verification and/or biometrics, like a simple selfie.
Advanced biometric methods like liveness detection in an age verification tool can even protect against spoofing techniques. These safeguards help you avoid legal and regulatory fines.
5. Reauthenticate Users
Requiring reauthentication for purchases and account changes helps prevent account takeovers. When users enroll with your platform, the IDV tool will verify their identity. Then, with consent, their encrypted biometric template is securely stored with a unique identifier.
When users return to use their accounts, they don’t have to go through the entire process again. They can take a selfie — which is checked by liveness detection and anti-spoofing technology — for fast reauthentication.
Stop Identity Fraud in Online Marketplaces and the Gig Economy
With a comprehensive identity verification system in place, online marketplaces can strengthen fraud protection and instill more trust and confidence in users. The right tool will also streamline the process so as not to deter consumers, vendors, or partners from using your site.
Start by choosing an industry-leading IDV platform that makes verification quick and painless.
Schedule a demo to see how simple it is to implement these safeguards for your platform.