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E-Commerce Fraud in Indonesia

In today’s e-commerce landscape, trust is the cornerstone of success. With the exponential growth of online shopping, prioritizing customer security is paramount. ASLI RI is your trusted partner in safeguarding customer safety through our cutting-edge digital solution. Read on to discover how our digital solution can aid your business.

In the world after the pandemic, many of us have changed how we shop. We are now using online stores more than ever. It is not just about avoiding touching things; it is about having an easy and quick way to get what we want. Imagine having a virtual mall in your pocket, with thousands of stores at your fingertips. You can pay without cash and get your stuff fast. This way of shopping has become a big deal in Southeast Asia, especially in Indonesia.

But here’s the catch: while online shopping is great, there’s a sneaky problem called e-commerce fraud. It’s like a hidden danger that can ruin your shopping experience. This article is here to help. We’ll show you what’s happening with fraud in Indonesia and give you tips on how to keep your online shopping safe. 

So, let’s explore the world of e-commerce fraud and make sure you can shop online without worries.

The Boom of E-commerce in Indonesia

Before we dive into the topic of e-commerce fraud, it is vital to know how and why e-commerce in Indonesia is popular in the first place.

E-commerce is a profitable industry in Indonesia. The above graph from Statista shows e-commerce revenue (in USD) in Indonesia from 2017 to 2022 and the forecast from 2023 to 2027. The massive nationwide lockdown due to the COVID-19 pandemic from 2020 to 2021 caused a jump in revenue as more shoppers turned to shopping online. This data predicts that e-commerce revenue could grow exponentially from 2023 to 2027. The constant growth in revenue shows how popular online shopping is and its ever-continuing popularity.

E-commerce brings convenience and boosts economic growth in various sectors, from small home-grown businesses (locally known as Usaha Mikro, Kecil, dan Menengah, or UMKM) to large-scale companies. Therefore, e-commerce enables both shoppers and businesses to help build economic growth. The anticipated growth of e-commerce in the coming years is undeniable.

The threat of fraud is inevitable with the massive popularity of e-commerce. As more and more people shop online, fraudsters will continue to find new ways to exploit them. It is critical to be aware of the risks and to take steps to protect you and your business from fraud.

According to data from cekrekening.id, about 115.756 cases of e-commerce fraud reported in 2021. Although this number is lower than the previous year, it is still alarmingly high.

In Indonesia, e-commerce fraud is commonly found in transactions on social media such as Facebook, Instagram, and WhatsApp. Fraudsters can easily create convincing profiles to lure unsuspecting customers with cheap prices. It is also easier to fake or steal testimonies and use them to convince the customers that the business is legitimate. Although using platforms exclusively for e-commerce might seem safer, there are still cases of fraud occurring in these e-commerce platforms.

Identifying and being familiar with common types of e-commerce fraud can help you become more prepared if you become a target/victim. There are several commonly found e-commerce frauds in Indonesia, such as:

  • Phishing: fraudsters create a legitimate-looking website or profile that can be used to steal the victims’ personal information, like their username, password, address, and credit card data. The stolen data is then used to commit frauds such as account takeovers (ATO), identity fraud, or even credit card fraud.
  • Parcel stuffing. It happens when the seller sends the legitimate product as ordered. Once it reaches the fraudster, the fraudster will stuff/swap the contents of the package with packing materials or a lower-quality product, making it look like the seller sent the fraudster a fraudulent package. The fraudster then can attempt to ask for a refund.
  • Fake purchases, locally referred to as ‘order fiktif,’ represent a prevalent fraud tactic on online food and shopping platforms. Fraudsters employ a deceptive address and identity to place orders for products. Typically, this tactic utilizes the cash-on-delivery (COD) feature, placing the financial responsibility for the fictitious purchase on the courier or driver upon the delivery to the fraudulent address.
  • Fraudulent deliveries. In this type of fraud, the seller will send an empty package to their victims. Once the victim receives the package, and goes on to report the seller, the seller changes their username or deletes their account.
  • Fraudulent transfers. A fraudulent transfer happens when the buyer fabricates a fake money transfer receipt to trick the victim into believing they have received the money in their bank account.

So, how can we prevent e-commerce fraud?

Aside from being aware of the recent fraud tactics, there are several more ways to ensure a safer and more secure e-commerce experience. These are:

  • Carefully examine the seller’s profile. Make sure that the seller’s profile has genuine testimonies from customers. Do not be fooled by promos and prices that seem too good to be true.
  • Be wary of suspicious sites or messages. Do not click links on suspicious sites or messages, as this might be a phishing tactic. Do not give out your personal information as well.

As a seller or business, it is also vital to take steps to protect your customers from e-commerce fraud. Here are some steps you can take:

  • Implement multi-factor authentication (MFA). Two-factor authentication is no longer enough to thwart fraudsters, multi-factor authentication uses identification verification technology like Authentication Solution and E-KYC to prevent fraudsters from accessing existing online accounts or creating fake accounts.
  • Educate employees on fraud tactics. This can help increase awareness and patch holes within your business that fraudsters can take advantage of.

Report instances of fraud to authorities. Fortunately, you can report fraud to Badan Regulasi Telekomunikasi Indonesia (BRTI). This agency operates under the Indonesian Ministry of Communications and Information (Kominfo).

A secure e-commerce experience brings wonders for the local economy

The e-commerce experience heavily relies on trust. As more and more people shop online, businesses must see the importance of customer security. ASLI RI can help your business ensure customer’s safety through our E-KYC with Biometric Verification, Authentication Solution, and Digital Onboarding systems. Visit www.asliri.id to learn more about our products.

Last modified: November 3, 2023