Why Marketplaces Need In-House Fraud Prevention to Compete and Grow

Marketplaces face two to three times the fraud rates suffered by e-commerce sites. The dual nature of marketplaces increments the risk of fraudulent transactions and makes it more difficult to manage and contain with traditional e-commerce fraud management tools.

“To succeed, marketplaces must assume their responsibility towards both sellers and buyers”

To avoid financial risk liability, some marketplaces utilize third party merchant accounts for sellers, but it does not prevent the reputational damage and loss of trust resulting from unsatisfied sellers and buyers that suffered from fraud and the decrease in income due to false positives. A marketplace is not just a matching system, both sides expect it to be the trust system taking responsibility of the transaction between the parties.

“Standard fraud screening services oversee the nature of dual side businesses”

In an attempt to lower risk, marketplaces managing their own seller accounts may send all transactions to screening by a third party. These screening services are not designed for marketplaces; they were designed for the one to many model of e-commerce, lack expertise in seller/buyer pairing scoring and the unique information about the sellers accumulated by the marketplace over time. Standard e-commerce fraud screening services increase the rate of false positives and negatives, eroding revenues and increasing fraud related charges.

“Developing an in-house expertise directly impacts the bottom line”

Each marketplace has unique information about its sellers and buyers pairing, that standard external fraud prevention services were not designed to consider when scoring a transaction. This knowledge, once translated to rules, allows the marketplace to apply educated decision making processes to each transaction and buyer/seller pairing in real time and accordingly to send transactions for third party screening only when necessary, increasing conversion rates, lowering false results and improving sellers and buyers satisfaction.

The Amaryllis Fraud Scoring Advantage:

Scoring System

Unlimited weighted combination of rules

Scoring-based events

During any transaction stage

Seller/Buyer Pairing Scoring


White/Black Listing


Integration to third party screening services


In-house fraud prevention not only lowers the costs of fraud screening, it also increases the number of transactions processed and prevents false negatives, presenting a true competitive advantage for marketplaces.

To explore how Amaryllis can help you implement your own in-house fraud prevention engine click here.