How Online Marketplaces Face Escalating Fraud Threats

The rapid expansion of the digital marketplace has created a fertile ground for increasingly sophisticated financial crime.

Organisations are no longer just fighting transactional fraud but a complex web of threats designed to exploit every vulnerability in the digital ecosystem.

Cybercriminals are leveraging advanced technologies including AI to perpetrate these schemes creating significant financial and reputational damage.

This evolving landscape requires a deeper understanding of the primary threats from fraudulent account applications to the abuse of internal policies.

Companies such as CSI are utilising a multi-layered approach in the journey to driving innovation in cybersecurity. 

In an interview with FinTech Magazine during Money 20/20, CEO David Culbertson noted that the company use "real-time ongoing scanning” 

“It's not just a matter of us doing a penetration test once a quarter. Our tests are ongoing all the time.” 

The rise of sophisticated impersonation

One of the most significant emerging threats is application fraud where criminals use stolen or synthetic identities to open accounts.

Financial institutions expanding their digital lending operations are particularly at risk from this type of activity.

Organised crime syndicates are using data from external breaches to submit fraudulent applications at a scale never seen before.

The problem is compounded by the use of deepfakes and advanced digital forgeries which can bypass traditional identity verification methods.

Partnerships such as one recently announced between Nasdaq Verafin and Biocatch are dedicated to fighting payment fraud. At the time, Stephanie Champion, Nasdaq Executive Vice President and Head of Nasdaq Verafin commented: “As criminal threats grow in scale and sophistication each day, the need for greater industry collaboration has never been more urgent.” 

The partnership aims to pre-emptively halt fraudulent transactions, preventing payment from leaving a bank account in the first place. 

Internal systems under siege

Beyond external attacks fraudsters are becoming adept at manipulating internal marketplace systems for their own gain.

Chargeback fraud also known as friendly fraud is a prime example where a legitimate customer makes a purchase and then falsely disputes the charge to obtain a refund.

Data from Chargeflow predicts that the volume of global chargebacks could rise to 324 million transactions in 2028, with 2025 currently forecast to have 261 million global chargebacks. 

In the US, businesses typically incur between US$3.75 – US$4.61 for every US$1 lost to chargebacks.

Similarly, promotion and policy abuse sees bad actors exploiting loopholes in discount codes or return policies often creating multiple accounts to do so.

This not only causes direct financial loss but also undermines the integrity of marketing campaigns and customer loyalty programmes.

The persistent danger of account takeover

Account takeover remains a prevalent and damaging form of fraud.

Criminals use techniques like phishing and credential stuffing to gain unauthorised access to legitimate user accounts.

Once inside they can steal personal information and make fraudulent purchases, or use the compromised account to defraud other users.

The consequences for the marketplace include direct financial loss and a significant erosion of customer trust which can be difficult to rebuild.

Building a collaborative defence

Combating these diverse threats requires a multi-layered and collaborative strategy.

Financial institutions and marketplaces are moving towards more robust client onboarding protocols including advanced identity verification using biometrics.

AI-powered fraud detection systems are critical offering the ability to recognise hidden patterns and adapt to new criminal tactics in real time.

However, technology alone is not enough.

Effective fraud prevention requires operational excellence and collaboration across different departments within an organisation from IT to fraud prevention teams.

In a recent interview with FinTech Magazine, Nick Rugg, Head of Fintech and Investment Management Insurance at Markel International highlights the increasing focus on responsibility.

"Under the amended regulations payment service providers are now more accountable for ensuring that customers have verified the payment request and that the account to which the funds are being sent is legitimate" Nick explained.

Combining advanced technology with human expertise and regulatory accountability is essential to stay ahead of the constantly evolving threat landscape.

Further collaboration as the key to prevention 

Chris Hubbard, Global Fraud Director at food delivery giant Just Eat Takeaway, will be giving a fireside talk on strategy around global marketplace fraud at FinTech LIVE London 2025. 

Leading marketplaces suffering from fraud need to know how to stay ahead without compromising values such as trust and efficiency. 

Chris’ talk will centre on important topics such as the use of AI and analytics in the fight against fraud, in addition to sharing insights about best practices to balance security with customer experience. 

Tickets are available here.