In a poll of 1,300 purchasers conducted earlier this month, reputable consumer group Which? discovered that 32% of participants had experienced scams on used markets over a two-year period, spanning from January 2022 to January 2023.

Fraud was reportedly common on Depop, Shpock, and Preloved, among other sites; issues were also found at Amazon and eBay, two of the biggest companies in the sector.

77,000 fraud cases—or 66% of all recorded cases—were reported in the first half of 2023 alone.

Customers receiving inaccurate or nothing at all was the most frequent fraud; reports of empty parcels and counterfeit items were also made.

The poll emphasizes the necessity for e-commerce platforms to increase their anti-fraud efforts and draws attention to the expanding scope of authorized push payment (APP) fraud.

Can secondhand stores stop the APP trend?

It's undeniable that APP fraud is on the rise. However, what impact may secondhand marketplaces have on the situation?

According to Maciej Pitucha, vice president of data intelligence at Mangopay, the Which? results serve as a clear warning to customers to be on the lookout for rising fraud.

"Marketplace operators must work together to stay ahead of the ever-evolving tactics used by fraudsters," he says.

since of their two-sided ecosystems, which raise the fraud surface area, platforms need stronger fraud protection than traditional e-commerce since they act as third-party intermediates.

Both the vendor, who sells phony goods, and the customer, who could use false information to make purchases, are capable of fraud.

"Now, fraudsters are also using AI technology to automate their operations and create counterfeit documents, checkout pages, and identities, among other things, more quickly and covertly than ever before."

The fight against fraud is being led by fintech developments.
Businesses need to combat tech with tech if they want to reverse the trend, since AI is becoming a more effective tool for fraudsters to carry out their harmful actions in a more smooth and efficient manner.

In this context, generative AI may be quite helpful, says Maciej, since it can facilitate the creation of sophisticated biometric identification methods like deep learning-powered speech and face recognition systems.

Through the integration of advanced authentication techniques, enterprises may avert unauthorized entry and safeguard their clientele.

In fact, for secondhand marketplaces trying to ensure consumer security and preserve brand integrity, forming fintech alliances in the fraud and ID verification arena might be crucial.

We discussed the benefits of using anti-fraud solutions through third parties with Inna Lyubashevskaya, Chief Customer Officer of ID verification provider Sumsub, earlier this year.

She informed us that each business case is different and needed careful analysis when deciding whether to conduct identity verification internally or by outsourcing.

"While internal solutions have their advantages, an in-house approach is often outweighed by the compelling advantages of outsourcing, such as significant cost reductions and customizable options."

Other fintech companies are spearheading the battle against fraud by launching AI-based solutions; Revolut is one of the most recent to do so, having introduced its AI scam detection function in February of this year.

Maciej asserts that in order to secure their platforms, it is "critical they are collaborating with marketplace-specific fraud detection and prevention providers" in relation to used markets.

According to Maciej, safe secondary markets are essential for more than just protecting consumers; they are also "crucial to powering a circular economy for a greener future."

The success of secondhand markets in providing a high-quality consumer experience and payment convenience has been fueled by finance technology. These platforms now need to step up their anti-fraud measures to protect users and preserve their good names.