How to Identify Bogus Buyers: 6 Signs to Watch Out
The Philippine e-commerce sector continues to surge as Filipino consumers prefer buying products online. The sector’s market size is projected to balloon from USD 15.51 billion in 2024 to an impressive USD 29.57 billion by 2029. However, this surge in online shopping has also attracted unwelcome guests: the bogus buyers.
Bogus buyers in e-commerce are fraudsters who place orders without the intention of paying. Sometimes they use fake accounts and give the wrong address. To increase their chance of success, bogus buyers in the Philippines opt for cash-on-delivery (COD) as a payment method.
Many bogus buyers do the fraudulent act as a source of living, while others indulge in this behavior for mere amusement or to pass the time.
However, the consequences for merchants are anything but amusing. An insight from MasterCard revealed that every fraudulent transaction costs sellers an average of $4. Cumulatively, this accounts for about 5% of annual revenue losses.
The financial impact of e-commerce fraud extends beyond the immediate sale. Shipping costs, chargebacks, and processing fees are also added to the cost. What makes it worse is that small businesses are the common victims of this fraudulent act.
A report by TransUnion found that 12.8% of e-commerce transactions were flagged as potentially fraudulent, from Nov. 23 to Nov. 27 before Black Friday. This marked a significant 19.0% increase from the previous year.
So, as an e-commerce business owner, how can you fight bogus buyers and protect your online store?
Don’t worry, we’ve created this guide to help you identify and combat bogus buyers. We’ll discuss all the red flags to watch out for, effective bogus buyer prevention strategies, and the legal recourse available to you.
The first step to protecting your online business from bogus buyers is early detection. Every e-commerce business needs an effective fraudulent buyer detection measure. This will not only help you deal with fake buyers but also deal with other common types of e-commerce fraud in the Philippines.
We know this is not an easy task. So, we created a list of the red flags that scream “bogus”. Here are the signs that you’re dealing with a bogus buyer.
1. Fake Profiles
Check the buyers’ profiles if they are using fake profiles. A lack of information, suspicious, negative reviews from other sellers, or a brand-new account could all be signs that you’re dealing with a bogus buyer.
2. Communication Issue
A bogus buyer often avoids providing concrete details and may present a series of inconsistent stories and excuses. Additionally, they might insist on shifting communication off the secure platform, urging the use of personal text messages or emails instead.
Those tactics are a significant red flag, as these often indicate attempts to evade the security measures and oversight provided by the selling platform.
3. Suspicious Shipping address
A bogus buyer may request shipping to an address that seems suspicious or incomplete. Some fraudsters may also try to get you to use a non-standard shipping method.
4. Refusal to Meet in Person or Conduct Inspections
Giving a fake address is one thing, refusing to provide a meet-up location is a different matter. Both of these actions, however, raise a red flag. This reluctance to meet could mean that they are not interested in completing the transaction or possibly have other intentions.
5. Asking Unnecessary Questions
An overly friendly buyer can be a sign of fraudulent intentions. They may ask unnecessary and unreasonable questions to make it sound like they’re interested in your products. This is a tactic to gain your trust so that you’ll accept their terms, or distract you from their motives.
6. Only Accept COD as a Payment Method
Typical bogus buyers don’t accept pre-payment for their orders. They prefer and stick only to cash on delivery (COD). Some may also demand other payment methods not supported by your established terms. Be vigilant to these demands as these may expose you to some risk.
6 Ways to Avoid Bogus Buyers for Your Online Shop
E-commerce scammers and fraudsters have become increasingly sophisticated in their tactics. To protect your e-commerce business against these fraudulent activities, it is important to exercise extreme caution. Educating your team about the latest fraud tactics can improve your online business security.
Here are some steps that can help you shield your business from fraudulent entities:
1. Background Checking
To ensure the buyer’s identity is genuine, you need to carefully verify their buyer profile. Does the information listed seem complete and consistent? Is the profile picture’s resolution clear enough to discern details? Does it appear realistic? Finally, does the provided name sound like a real person’s name?
Additionally, you can check their social profiles. Consider the list of red flags mentioned above, and determine if they meet any of the criteria.
If you think they are suspicious then ask for more details such as contact numbers, billing addresses, and email addresses. By doing this, you can confirm the customer’s identity. We also suggest creating a record of these pieces of information for reference in your succeeding transactions.
2. Create a Clear Policy
Creating a clear and explicit policy can protect you, should a harmful scenario appear. This policy can also guide and streamline your e-commerce operations. When you have a policy guiding you, you can also have a quicker and more professional e-commerce transaction.
The policy you create is particularly important if you’re selling on independent websites beyond popular platforms like Shopee, Lazada, or TikTok.
Make sure to elaborate on your return and reservation policy. For instance, you could set a rule where if a customer fails to complete the payment within a certain timeframe, their order will be automatically canceled. You can also include a secure payment method that you can only accept during a transaction.
Now, once the rules are all set, be firm and stand your ground. Bogus buyers and other fraudsters may assertively demand or challenge your policies. Regardless of how attractive their offers are, don’t let them lead you astray.
Your policies are your business’s backbone, so adhere to them strictly. Otherwise, you’re putting your business at great risk.
3. Communicate With Your Potential Buyers
Effective communication is always important in any field. E-commerce is no exception. Engage with your potential buyers to understand if they are genuinely interested buyers or just potential scammers.
Pay close attention to their response patterns. Does the buyer reply promptly, or is there an unusual delay? Are their messages filled with excuses or do they fail to respond altogether?
As you engage, you can also inform your buyer about your policies. To enhance the interaction, consider inquiring about their specific preferences related to your product, suggest various options, and introduce promotions.
At this point, you should approach this not just as a buyer authentication measure but also as a marketing strategy.
4. Stay within the Platform
If you’re selling on well-known online marketplaces in the Philippines such as Shopee and Lazada, then you can enjoy a certain level of protection. So, make sure to maintain communication and transactions within the platform’s system.
As we previously mentioned, fraudsters may lure you by offering enticing offers. For instance, they may offer you bulk purchases but insist on finalizing the deal through external apps like Telegram.
When you encounter such cases, politely decline. Suggest using the platform’s seller support services for any special order requests. This not only ensures your safety but also upholds the marketplace’s integrity.
5. Payment First Policy
One of the effective ways to stop Bogus buyers and other forms of fraud is by having a payment-first policy. Here, buyers can reserve a product they wish to purchase, but orders are fulfilled only after payment is made.
Keep in mind, however, that not offering Cash on Delivery (COD) may discourage your customers from proceeding with their transactions. After all, the majority of Filipino consumers nowadays prefer to pay cash on delivery.
To accommodate them, consider implementing a maximum limit for COD transactions. This balances the convenience with security.
6. Consider Using Online Fraud Detection Tools
If your budget allows, you can use fraud detection tools to protect your e-commerce business against bogus buyers and other cyber criminals.
Nowadays, there are fraud detection tools intended to safeguard e-commerce businesses. These tools monitor various metrics, such as financial transactions, user devices, and behavior, to identify and flag high-risk activities.
What’s more, these tools operate in real time. So, instant analysis is always ready whenever you need it.
Legal Action Against Bogus Buyer in the Philippines
In the Philippines, online merchants often handle bogus buyers by publicly exposing their identities on social media. We understand the frustration.
While it’s tempting to take matters into one’s own hands, it’s important to know that there are laws in place to protect you from fraudulent buyers.
The first is Article 315 of the Revised Penal Code of the Philippines. The law covers fraud committed through deceitful means, such as abuse of confidence, false pretenses, or fraudulent acts, including imaginary transactions. Depending on the scale of the fraudulent transaction, violators could face up to 20 years of imprisonment.
Furthermore, Republic Act No. 11967, or the Internet Transactions Act of 2023 was recently signed into law to regulate e-commerce and provide protection to both merchants and buyers.
Online sellers need to understand these laws and use them to fight against e-commerce fraud and other cybercrimes.
The Department of Trade and Industry (DTI) also advises online sellers to meticulously document interactions with bogus buyers, including keeping records of phone numbers, calls, or messages. This diligent record-keeping is the first line of defense and can be invaluable when reporting fraudulent activities to the authorities.
Protect Your E-commerce Business Against Bogus Buyers
E-commerce frauds and scams are on the rise. You don’t have to face it alone. Be Global E-commerce Corporation will help secure your every online transaction.
With cutting-edge technology and reliable partners, we’ll help you shield your online business from the threats of cybercriminals such as bogus buyers.
Reach out to our experts and take a stand against e-commerce fraud!
