How to fight Online Fraud?
Your company may already have a program to fight fraud, such as counterfeits, in the brick and mortar world.
The online and traditional markets are interconnected; you cannot separate the two.
However, in the online world, to be efficient, you must use different tactics. Online, fraud is more widespread because it is easier to cheat, and it is more difficult for brands and sellers to identify and crack down on it. Furthermore, it is easier for fraudsters to disappear and quickly relist themselves under another identity.
More than likely, online fraud is a bigger issue for your business than you realize, and it is growing over time too!
In this article, I will just focus on the following fraud causes: Counterfeit, VAT Fraud, Grey Marketing & misleading marketing.
The following topics will be covered:
- How bad is the problem? Why does it need to be tackled effectively?
2. What can be done about it?
How bad is the problem? Why does it need to be tackled effectively?
Online fraud is a huge issue from a branding perspective (misleading customers hurts your brand), but also from a business point of view (it creates unfair competition for honest players in the online channel and can be responsible for negative online pricing spirals for brands).
Online fraud is more widespread than people realize because most of it goes undetected.
Consumers spend an estimated half a trillion dollars annually on counterfeit products in the world. 70% of counterfeit products are purchased from online marketplaces (Alibaba, Amazon, E-Bay, Google shopping, Allegro….) (1).
In the UK alone, HMRC estimates Online VAT Fraud at £1.5bn a year. The EU estimates €5 billion of VAT is lost each year within its borders due to non-compliance on cross-border online sales (2). It is now a top priority for governments in western Europe to tackle this issue.
It can be due to online sellers failing to declare or only partially declaring VAT or VAT fraud Carousel schemes.
The issue is made more difficult to track and enforce due to the large volume of cross-boarder e-commerce customers looking for better deals abroad.
This growing cross-border e-commerce also creates a fertile ground for a serious online grey marketing issue.
This is a serious business issue because it pulls down prices in some countries in the online marketplace.
It can also create customer satisfaction issues, if the imported product cannot technically be used in the recipient’s country.
As we will see later, enforcement can only be carried out on products being bought from outside of the EU (esp. from China or the USA) to be sold in the EU.
Misleading Marketing is also an issue, even if it cannot be strictly classified as fraud.
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Delphine is an experienced marketing and eCommerce manager, with 16 years experience in large corporations (HP and Epson), in international roles.
In the past 5 years she led the HP EMEA printing supplies team through digital transformation, building the team, data infrastructure and needed programs to gain share in the online space ( i.e. online brand protection program).
She is passionate about supporting companies through the change management needed to be successful in this digital transformation.
She holds an MBA from Cambridge university and a professional coaching certification.
Originally published at https://tietalent.com.
