When people think about trust in traditional online marketplaces, their concerns almost always turn to the seller—the possibility of falsely advertised products, unreliable services, hidden fees, scams, and even having their information stolen or misused.
But the reality is that trust must exist at all ends of the marketplace.
Whether it’s the buyer, seller, or supplier, bad actors are always looking to exploit any points of weakness in online marketplaces.
The service or “gig” marketplace, in particular, has seen significant developments in recent times. Unfortunately, fraud in this space has adapted to question the integrity of not only those who provide the service but also those who buy the service. Imagine a digital ecosystem in which neither party can be trusted in a transaction. Such a scenario would not only deter buyers from purchasing online services but also discourage vendors from providing their services, hindering innovation and growth in online marketplaces.
At the end of the day, trust is the foundation that holds marketplaces together.
As online marketplaces continue to evolve, so does the need to ensure their integrity. Digital platforms must explore modern strategies for fraud prevention that can be implemented while simultaneously enhancing the user experience. By doing so, they can uphold trust in online marketplaces while adapting to the changing needs of their end users.
The service marketplace: a growing problem
The rapid expansion of the service marketplace has brought a significant surge in fraud. In fact, over a third of American consumers have been victims of fraud on gig economy platforms. Digital environments designed to connect individuals for services are increasingly targeted by bad actors who exploit the open nature of these ecosystems. Even organized crime rings are targeting these digital marketplaces, drawn to the ease of exploiting existing systems and the potential for considerable financial gains.
The flexible, decentralized nature of service marketplaces, combined with a lack of user protection, makes them attractive targets for digital fraud rings.
Using fake or synthetic identities, fraudsters can create fake accounts and pose as legitimate users to execute a variety of scams, ranging from the fraudulent exchange of goods to elaborate schemes involving fake payments, requests for upfront funds and financial harm done outside the platform. The damage is often swift and substantial, leaving victims with significant losses and eroding the overall trust in marketplaces. By the time platforms detect and try to mitigate these fraudulent activities, the victims have already suffered immense emotional and financial damage, compromising the integrity of online marketplaces.
The sophistication of these fraud tactics further exacerbates the problem. Bad actors deploy a range of techniques, including multiple account creation with stolen identities, device and location data manipulation through VPNs and proxies, bot attacks, and the meticulous clearing of cookies and device data to evade detection. This constant evolution of fraud tactics, especially in light of the rapidly changing 2025 fraud landscape, requires a proactive approach to risk management. The consequences of inaction are severe, including a damaged reputation, loss of user trust, and decline in user base. In a marketplace where trust is fundamental, the inability to effectively combat fraud can lead to its decline.
75% of consumers would switch services in the event of fraud.
The issue extends beyond simple financial losses. Even seemingly vulnerable individuals can become perpetrators, using the platform to deceive others. For instance, in gig marketplaces that offer services to vulnerable populations like the elderly, bad actors can pose as elderly individuals needing care and orchestrate complex payment scams. First, fraudsters, under the guise of someone needing care, will send their caregiver a fake cheque to buy supplies. The fraudster will then claim that they sent too much and request that their caregivers return the difference in legitimate funds. By the time their caregivers realize their loss, the money is long gone.
The ease with which bad actors can create seemingly legitimate profiles and operate outside the platform’s direct control leads to the erosion of trust. When users feel they cannot rely on the platform’s integrity, they will inevitably seek alternatives, causing marketplaces to suffer. This underscores the critical need for robust fraud prevention measures that can detect and block threats before they inflict any damage.
Tackling the core of the problem
Tackling the core of the problem requires a shift from reactive to proactive risk management solutions. Solutions that incorporate advanced geolocation intelligence, device fingerprinting, machine learning and behavioural insights have the ability to verify a user’s true intent and anticipate suspicious user patterns early on before actual harm can be done. For instance, if a user claims to be an elderly buyer based in a U.S. senior care home, but is actually logging in and sending text messages from outside of their given location, online marketplaces can immediately intervene to ensure no harm is done to the caregiver.
Similarly, detecting the presence of location spoofing tools like VPNs or proxies, as well as a history of device tampering, is a telltale sign of fraud that can signal a user’s integrity level early on. For instance, if they have a short device lifespan, a history of device resets, applications that alter location and device information or are based in a location known for fraudulent activity, risk teams can block these users or even entire areas to safeguard their platform. Solutions that leverage multiple geolocation sources, like GPS, Wi-Fi, GSM (Cell Tower) and IP, can pinpoint, identify and block individual users or areas with an accuracy down to a few feet, making it an effective risk management solution. Furthermore, multi-source geolocation is robust, making it difficult to spoof, even with the most sophisticated location spoofing tools.
As online marketplaces and fraud continue to evolve, having solutions that can adapt to emerging trends is essential. In addition to having robust technologies like advanced geolocation and device fingerprinting in place, incorporating machine learning and behavioural insights is key to adapting risk management models to future threats. This dynamic approach allows for the continuous refinement of detection algorithms, enabling platforms to identify and respond to new risks in real time. By analyzing user behaviour and anomalies, marketplaces can move beyond static rules to embrace an agile and adaptable approach to security. This not only strengthens defences against known threats but also anticipates and mitigates emerging risks, ensuring the long-term integrity and sustainability of the online marketplace ecosystem.
Looking forward: the future of online marketplaces
The future of online marketplaces will be defined by their ability to build and maintain trust with both their buyers and sellers. As these platforms continue to grow, fraud will continue to evolve in sophistication and scale. This calls for a proactive and adaptable risk management strategy that leverages cutting-edge technologies like advanced geolocation intelligence, machine learning and device fingerprinting to identify and neutralize threats in real-time. The marketplaces that will thrive are those that prioritize nurturing robust and secure environments, fostering confidence among users and instilling confidence in every online interaction.
Ultimately, the potential of online marketplaces lies in a collective commitment to security and user trust. By embracing innovative risk management tools and prioritizing the protection of online communities, these platforms can unlock new levels of growth and innovation. Guaranteeing a secure and reliable experience will not only drive user loyalty but also serve as the cornerstone of a thriving and sustainable marketplace ecosystem.
Want to learn how GeoComply is keeping marketplaces secure? Meet with one of our experts today!
