Why Quick-Commerce Apps Are Easy Prey for Fraudsters (and How to Protect Against it)

Quick-commerce (Q-commerce) isn't new, but it's gaining traction fast. Consumers want speed, efficiency and convenience, and Q-commerce promises all this with the delivery of goods within hours or even minutes. Q-commerce has exploded in Asia, and its popularity is spreading to the U.S. as well, with many grocery stores jumping on board. In fact, Q-commerce revenue is anticipated to reach $26.47 billion in 2023.

When a market gets hot, fraudsters get hungry. The rising popularity of Q-commerce apps presents fraudsters with a myriad of opportunities to exploit. And when they succeed, it results in lost revenue, broken trust from customers, and a poor reputation that may be hard to fix. So, what do companies need to be on the lookout for, and how can they prevent it?

Here are three of the tricks that fraudsters use today:

1. Promotion Abuse: Businesses incentivize users to make repeat purchases by offering promotions. The problem is that fraudsters abuse this by creating fake accounts to use the same promo code over and over again, wasting the business’s resources. Promo abuse also puts genuine users at a disadvantage because fraudsters are able to use fake accounts to buy up all the available promotional-priced items. Fraudsters may supercharge this by using bots and emulators to create fake accounts at scale and exploit promotions.
2. GPS Spoofing: Fraudsters use GPS spoofers to make it seem as though they're in one place when they're really in another. This is so they can make it seem as though a delivery was made on time, which many Q-commerce platforms reward drivers for. If this happens repeatedly, it can leave a customer frustrated with late deliveries and break their trust.
3. Referral Abuse: Offering referral incentives is a familiar program for many companies — but also one that's frequently abused. By using fake accounts, fraudsters refer themselves over and over again to reap the benefits. It makes businesses think they're more successful than they are which can result in problems in the future when presenting misleading numbers to investors.

Often, once you notice there’s a problem, it's too late. What can companies do to protect against app fraud?

First, choose a fraud prevention solution that focuses on device identification. By finding and shutting down multiple accounts linked to the same device, you can eradicate fake accounts quickly and ensure only genuine users are part of your ecosystem. Any tool you use should offer a persistent device ID; this way, it remains unique no matter how fraudsters try and spoof a device. A good solution will also offer real-time monitoring of devices and accounts throughout the session, allowing the business to take instant action if risky behavior is detected.

Secondly, know your risk indicators. Identify when and what malicious tools are being used — e.g., device spoofing. For example, Q-commerce platforms frequently offer incentives to drivers who make deliveries on time. By pinpointing fraudulent drivers using GPS spoofers to get bonuses, you can ensure that rewards only go to drivers who actually make deliveries on time.

Finally, prioritize digital trust but be judicious in the fraud prevention measures that you adopt. Trust is vital if you want to retain customers. If customers find jacked-up prices or log in to find their account has been compromised, trust is broken and your customer might head straight to a competitor. Fraud destroys trust and prevents growth.

Conversely, overly aggressive fraud prevention measures can create friction in the user experience. For example, a user might get frustrated and bail after facing too many verification checks. It's a delicate balance that many Q-commerce apps have yet to attain. You should also look for technology that minimizes the need for personally identifiable information to be able to provide comprehensive fraud detection. This will ensure seamless and frictionless checkout experiences for genuine customers, while still ensuring fraud is stopped and your customers’ privacy is maintained.

As your Q-commerce company grows, your business becomes more susceptible to fraud. At the same time, you need to ensure positive customer experiences. If your business is compromised, trust is lost. And it's tough to regain it once it's broken. Put solutions in place that protect the brand and your customer base, and you're bound to reap the benefits as this fast-growing industry thrives.

Jake Ooi is the head of product at SHIELD, a global risk intelligence company.