How to Avoid Bogus Buyers and Protect Your Online Business
No one, absolutely no one, likes getting scammed out of their hard-earned money.
And it doesn’t only happen to customers. It happens to businesses as well, often in the form of bogus buyers.
What is a bogus buyer? If this is the first time that you’re hearing of the term, then lucky you. Your business probably hasn’t encountered one yet. But that doesn’t mean that you will never deal with one ever. So it’s best to be prepared.
A bogus buyer is a customer who transacts with a business with the intention to scam. This can happen in several different ways.
Common ways a bogus buyer operates
1. A customer shares an intent to buy, reserving a product and making it so other customers cannot purchase it. Then, they either cancel the reservation after an unacceptably long period of time or do not make contact again. This means not only were you not able to make a sale, but you also lost the chance to sell your product to a more willing and legitimate buyer.
2. A customer places an order but refuses to receive it when delivered due to various reasons such as a change of mind, lack of money, or supposed dissatisfaction with the product. This leads to a loss of sale and multiple delivery fees to be shouldered by the seller.
3. A customer buys and receives an ordered product, only to falsely claim having received a damaged product or a wrong variation of it. They then request a full or partial refund, with or without the return of the product to the seller.
However they do it, bogus buyers are bad news for businesses.
This is especially so for ecommerce. Bogus buyers on online selling platforms are hard to apprehend given how the transactions are done remotely.
Payments may not be upfront, and so easier to withhold, especially for online stores that offer cash on delivery (COD) or payment upon delivery, whether through cash, debit card, credit card, e-wallets, etc.
Moreover, it is harder to verify the condition of the product when it arrives at a customer’s door as a seller’s control over their product stops after handing it over to a courier. Claims of damage can only be supported by evidence from the customer. And if they are a bogus buyer, meaning one with the intent to do fraud, then the seller can be in hot water.
To make things worse, with the prevalence of the belief that “The customer is always right,” it can be especially hard for business owners to get back what they’re owed or reach a compromise that is favorable for them.
This is a hard reality for business owners worldwide. Even large companies like Grab and Food Panda struggle with bogus buyers, with some instances of order scam even making it to the news. These incidents diminish their profits, hurt their employees, and damage their reputation and relationship with their business partners who have trusted them to securely deliver their products.
Learning how to deal with bogus buyers should be a priority
Given how damaging bogus buyers can be to a business’s profits and reputation, putting measures in place to avoid them should be a business priority.
While profits can be earned later on after getting scammed, a damaged reputation is not as easy to fix.
Let’s say you’re a reseller, a service provider (ex. courier), or simply a business that mediates between another business and its clients. Being unable to fulfill your duties because of scammers leads to your business partners possibly losing their trust in you. And trust, once lost, is hard to regain. It might even take years and a lot of effort. Moreover, trust is essential in developing partnerships that sustain a business in the long run.
Many online business owners, especially those who operate on social media, try to avoid getting scammed by telling potential customers that bogus buyers will be posted and exposed on their respective online store pages. However, this doesn’t always work out, especially when bogus buyers use fake accounts to buy online.
Moreover, public shaming and exposing the private information of an individual can lead to a case of libel or defamation against the business owner, especially if evidence was not properly documented or in the case of misunderstanding.
So how do you properly protect your online business from bogus buyers?
Avoiding bogus buyers and protecting your online business
On the internet, online businesses are able to reach wider audiences across the globe. But with the benefit of more potential customers, there is also the increased risk of encountering customers that do not mean well.
Here are ways your online business can avoid becoming the next victim of bogus buyers.
Learn the seller-protection laws of the country, state, and locality you operate in
The first defense you have against bogus buyers is the laws that protect online businesses in the country, state, or locality in which your business operates. These laws inform you of the specific actions you can take in retaliation to an attempted fraud without endangering your online business in the process.
In the Philippines, the Department of Trade and Industry tells online sellers to document interactions with bogus buyers. These can serve as evidence if online sellers would want to sue bogus buyers whose actions can be considered estafa (i.e., swindling), which is punishable by law.
Moreover, for bogus buyers, laws can feel like a threat. When an online business shares the possible legal repercussions of a bogus buyer’s actions and its willingness to pursue legal action, bogus buyers are less likely to pursue a fraudulent action or scam.
I mean, who wants to appear in court just to get some $10 freebie?
So yes, knowledge is power.
Foolproof your terms and conditions
Your store’s terms and conditions, when done well, can protect your business from bogus buyers. Terms and conditions share the requirements needed for a successful transaction and availing of your business’s products and services. It also identifies limitations when it comes to the offered customer aftercare.
It is perfectly normal for a business to expect some sort of responsibility from customers in the same way that customers expect great products and services from a business. And since a customer has to agree to the terms and conditions before a transaction, they are easily held liable for the content of the document.
For this particular case, it is especially important to…
- Ask for relevant buyer information. Ask for official proof of identity as part of your purchase process, especially when selling expensive merchandise. Ask for a means of communication, may it be a phone number or an email address, in case a concern pops up. For online store owners, you can make this information a prerequisite in making an online store account. Note that you must handle this personal information with the utmost responsibility by making your online store and records secure.
- Only accept secure payment methods from trusted payment solutions providers. Depending on your market, you can skip offering COD and opt for pre-payment using trusted payment solutions providers. Doing so gives you more control during return/refund situations.
- Set a time limit for reservations. Doing so will force buyers to pay within your set time frame or lose the product or service they’re eyeing. It will also protect your business from long product reservations that eventually lead to cancellations, allowing you to offer your merchandise to better customers.
- Set specific limits on returns and refunds. For products that are meant to be used long-term, you can offer a 7-day refund. For venue and services bookings, you can specify up to when customers can cancel, and state that cancellations near the booking date can only lead to a partial refund if any. For short-use items as well as food items, you can be more stringent and offer no refund at all.
- Set strict conditions for accepting return/refund requests. This could mean only accepting a return/refund request if the store is responsible for the mistake, not the customers. Online stores can also opt to only honor return/refund requests if the customer provides video proof of the unboxing/opening of the product in question. Doing such measures lessens the chances of false accusations against the product and the business.
Have a secure order management system
What is an order management system (OMS)? It is a system that ensures the smooth operation of the order management process which begins the moment an order is placed and continues until the customer receives the product or service.
Having a messy, outdated management system is a weakness that can be exploited by bogus buyers. Without a reliable way to do inventory management, process orders, track order status, and keep up with your supply chain, it will be that much harder to prove that your business is not at fault when bogus buyers make false claims against you.
SMEs with relatively smaller operations budgets are more vulnerable since many do their order management process manually. However, as technology becomes more and more accessible, finding an advanced, automated inventory and order management software for a small price is possible.
The best order management software can offer data recording automation, real-time updates, and easy tracking of multiple channels for sales. Every action will have a receipt, and proof of store responsibility can be accessed in a snap. And on an ecommerce platform like Cafe24, ecommerce order management is made even easier as an OMS is integrated within its user dashboard. It even comes for free!
With great order management systems, ecommerce is made more secure.
Use a great online business platform against bogus buyers
Bogus buyers can be the cause of quite a headache, especially for businesses that are just starting out. But given their limited budget, many just accept these scammers as a fact of life.
But it doesn’t have to be so.
Cafe24 offers a free ecommerce platform that will gear you with ecommerce solutions that will protect your online business from fraud and ill-intentioned buyers.
Cafe24 online stores are SSL-encrypted and come with an order management system that lets you oversee your inventory, orders, order status, shipping status, and overall supply chain data on a single dashboard. Relevant information necessary for flawless management is literally a few clicks away every time. Our order management tools save time, improve customer experience, and boost customer satisfaction, especially when dealing with incidents and complaints.
We also offer templates for your terms and conditions to guide and help you avoid weak policies that bogus buyers can exploit.
Our payment solutions providers like Paypal, PayMaya, and PayTM are also world-renowned and trusted by thousands, even millions, of users to provide reliable service and ensure secure transactions.
So if you ask us what’s the best way to avoid bogus buyers to protect your online business, it would be for you to sign up and join us at Cafe24.
