Food delivery fraud is a growing threat to the success of food delivery companies. From fake accounts and multi-accounting to promo abuse and policy violations, there are many ways that malicious actors can take advantage of these platforms for their own gain. In order to combat this problem, it's important for food delivery companies to have strong policies in place as well as effective fraud prevention measures.
In this post, we’ll provide an overview of the various types of food delivery fraud, how they occur, and what steps can be taken to prevent them.
Taking a bite out of profits: biggest food delivery fraud concerns today
In order to protect their profits and ensure customer safety, food delivery companies need to be aware of the various types of fraud-related activities that can occur on their platforms.
Policy abuse and policy violations
Policy abuse and policy violations are two of the most common forms of abuse on food delivery platforms. Policy abuse involves taking advantage of loopholes in a company's policies or exploiting them contrary to their intended use for personal gain, while policy violations involve breaking the terms and conditions set by the platform. Unlike traditional forms of fraud such as account takeover or credit card theft, policy abuse and policy violations don’t usually rise to the level of illegality. That said, their consequences can be just as severe.
Policy abuse and violations can be difficult to detect because they often involve the misuse of a legitimate existing policy, or they’re committed using multiple fake accounts to avoid accountability. Having a framework in place to monitor how policies are used and followed (or not) can help mitigate the effects of organized policy abuse.
Fake accounts and multi-accounting
Fake accounts and multi-accounting are a major fraud concern for food and grocery delivery apps. A fake account is any account made using falsified or manipulated information, like a phony name, while multi-accounting refers to the use of multiple accounts by one person to take advantage of the platform in various ways.
Both of these activities can be used by bad actors to take advantage of discounts and promotions offered by food delivery companies, resulting in lost business profits. Fake accounts can also be used to evade bans in the event that a fraudster is caught and barred from the platform. And multi-accounting is a gateway method that opens the door for many other types of fraud and abuse, like policy abuse and promo abuse.
The best way to reduce fake accounts and multi-accounting is to use a combination of identity verification and tamper-resistant user identification, like the verification made possible by device and location intelligence.
In courier scams, malicious actors exploit the trust that customers have in couriers and use it to steal their money or personal information. They may provide false payment information to customers or trick them into making additional payments before delivering their orders.
Employing robust identity verification methods at new courier onboarding is one way to weed out bad actors, as many wouldn’t want their real names and information associated with a job where they plan to commit crimes. Others will be hesitant to put in the effort required to fabricate a synthetic identity simply to commit courier scams.
This type of fraud involves customers sharing their account information with other unauthorized users in order to help the unauthorized user skirt around bans or security measures, such as background checks for contractors.
Account sharing can be done by creating false identities, using multiple accounts, or providing access to accounts through third-party sites. Account sharing poses a significant threat to trust and safety because of its potential to undermine the platform’s ability to have oversight over who is using the platform and how.
Strong, spoof-proof authentication methods can help prevent account sharing. Unlike a password or SMS code which can be shared, some authentication methods–like those that rely on behavioral biometrics–are very difficult for someone other than the account owner to complete.
Promo abuse involves taking advantage of promotions or discounts offered by food delivery companies counter to their intended use. For example, say that a food delivery app offers five dollars in app credit for each new signup. A promo abuser could create dozens or even hundreds of accounts to repeatedly take advantage of these credits. These abuses cost the business resources that won’t be returned in the form of new customers onboarding to spend money.
One of the best ways to prevent promotional abuse is to stop multi-accounting, as it’s the most common way that bad actors can take advantage of promotions and discounts. As mentioned above, stopping multi-accounting requires you to find a persistent, tamper-resistant solution for identifying individuals across accounts and devices.