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With B2C fraud grabbing headlines, it’s easy to overlook the tremendous and growing impact of B2B account fraud today. But make no mistake: B2B fraud is a big deal—with bigger transactions, larger payoffs for fraudsters, and greater consequences for B2B marketplaces and those who do business in them. Not to mention the INFORM Consumers Act, the new legislation that places stringent new requirements on online marketplace that can lead to hefty fines for non-compliance. Increased B2B fraud today is having a negative impact not just on the financial health of companies but also on the trust that is essential to building and sustaining robust B2B markets.
Eroding trust in B2B markets creates a downward spiral of lost revenue to compensate for fraud losses and lost subscription revenue. Users abandon the platform, causing eventual collapse as they flee to avoid fraud. Once fraud has metastasized on a platform, rebuilding trust may become impossible. And that’s where things can get tricky. As fraudsters get more adept at bypassing traditional security measures designed to stop them, B2B marketplaces must modernize and adopt a different approach. Fighting fraud means making it harder for fraudsters to fake out legitimate buyers and sellers in B2B marketplaces—but doing so without making it harder for those legitimate players to go about their business.
The good news is that it is possible to strike that balance between stopping bad actors in their tracks and clearing the way for legitimate businesses to move forward successfully. It’s also possible to screen your platform for existing fraudulent users by conducting an essential account health check using Verosint to determine how exposed you may already be. (Request one today!)
In this post, we’ll take a look at a modern example of B2B marketplace account fraud today, from the shipping and logistics industry, explore the long-term, large-scale consequences of fraud in that and other B2B marketplaces, and, finally, show how Verosint technology enables a solid strategy for fighting back.
Online freight brokerages, which bring together shippers who have goods to transport with carriers who can provide transportation services, are among the B2B marketplaces being targeted for account fraud today. In this marketplace, a scam known as double brokering is often used to commit a type of fraud that exacts a costly toll on freight carriers and the shippers who do business with them.
In a double brokering scenario, an illegitimate carrier agrees to ship a freight load for a set fee and then, instead of hauling the load, pays another carrier to do it at a lower rate and pockets the difference. That’s bad enough, but it can be even worse! Sometimes, the illegitimate carrier doesn’t pay the second carrier at all, leaving the shipper to pay twice. This practice is costing the freight brokerage business hundreds of millions of dollars.
It’s not hard to see that trust is a central weak point in this scam—especially in the version where nobody but the bad guy wins. Shippers trust carriers to do what they’re paid to; legit carriers trust they’ll be paid. But in both cases, the trust is broken. It’s a short trip from there to a marketplace where it’s hard for anyone to really know who can be trusted. And so, the cost of fraud becomes more significant than just losing money; it turns into losing the very trust on which successful business relationships rest.
Not surprisingly, victims and potential victims of fraud in B2B marketplaces, whether in shipping or other industries, are fighting back against fraud across all areas. They’re implementing measures and taking steps to vet the carriers they’re working with to be sure they are trustworthy. But those efforts and actions can be time-consuming and inefficient—not to mention so heavy-handed as to impose an undue burden on legitimate carriers who want to keep the freight moving.
The result: Trust may be restored—but at what cost? Is the frustration worth it? Is the inefficiency sustainable? Probably not. But fortunately, there’s a better way.
Verosint provides a next-generation platform for detecting fraudulent registrations and logins. It works by detecting subtle signs of risk that suggest a user is a bad actor rather than a legitimate user. In a world where many B2B marketplaces are stuck relying on manual processes to ferret out fraudsters, the Verosint platform offers a way to move to an automated solution. The Verosint platform has been shown to reduce fraudulent registrations and logins by 96% by analyzing login and registration events in real time without the user even being aware of it.
With Verosint, B2B marketplaces can more easily detect account takeovers (ATOs), ban evasions, fake accounts, multi-accounting, and other types of account fraud, and challenge or block unknown or high-risk users. Even better, Verosint does this while providing easy access to low-risk users. It’s all done through integration between Verosint and identity and access management (IAM) or identity-proofing partners.
Want a detailed look at how it works? See how Verosint’s straightforward process for stopping fraud in shipping and logistics works without stopping the flow of progress in this and other B2B marketplaces. Or, if you want to try it yourself, start a free trial today.
