Ecommerce players toughen up to remove frauds, fakes

Almost every success in the real world scenario has a flip side to it. Looks like ecommerce is no exception to this. Along with the here-to-stay impact online shopping had on consumers, we also saw the rise of counterfeits and fakes being sold on the platform.

While this raised questions of who is responsible for keeping these in check and to what extent marketplaces could intervene in such instances, the need of the hour was to find a solution irrespective of who is responsible for it.

Marketplaces tighten their grip

Last week we read how even a global ecommerce giant like Alibaba has to spend millions to counter fakes on its platform. Now our Indian players are also stepping up to ensure sellers are kept in check from following unethical practices, thus maintain quality of products being sold on their platforms.

Also, stringent measures are being adopted to check on the credibility of sellers before admitting them to sell on the online portals. Right from physical checks to constant monitoring through analytics is being followed. Anyone found a threat in tarnishing the brand image is immediately banned from starting or continuing operations.

Although there is no hard and fast rule to weed out the wrongdoers, in general marketplaces are required to conduct background checks on sellers before signing them up. Once fraud is detected, sellers may not be formally informed being blacklisted and their product listings removed.

“Legal aspects like entity structure, background checks of the entity or persons in charge of the business and commercial aspects like its key customers, etc have to be considered. This would go a long way in helping e-commerce companies manage their reputation risk as they cannot afford to completely wash their hands of the products sold on their platform,” said Sharanya Ranga, partner at law firm Advaya Legal.

Examples of marketplace checks

Amazon India

By making employees pose as shoppers, Amazon India conducts regular internal audits to keep track of seller activities and products on the platform. They buy from sellers who directly pack and ship their products to test quality and adherence to regulations.

And from sellers who use Amazon’s warehouse facility, mandatory checks are done before the items are shipped to ensure fakes are not being sold.


Mystery shoppers and on-ground teams keep track of Flipkart‘s seller activities. “We have a three-tier rating/review system for our sellers. Customer rating, returns and seller cancellations are the key factors which determine a seller’s rating,” said Ankit Nagori, senior vice-president at Flipkart Marketplace.

New sellers are evaluated based on verification of their business registration, documents of PAN, VAT, TIN and TAN numbers, and also their track record on other online platforms.


eBay introduced the Verified Rights Owner Program to counter fakes being sold on its platform. “VeRO Program participants have the ability to identify and request removal of allegedly infringing items. Sellers are evaluated using a parameter called as Defect Rate. Sellers having a Defect Rate of more than 5% have certain restrictions. Each merchant can see their defect rates on their individual dashboards,” said Girish Huria, official spokesperson at eBay India.

What about the legal aspect?

A few months, we heard news about the Consumer Protection Act being extended to cover ecommerce as well. “When it comes to consumer disputes on defective product or deficient service, most companies limit the jurisdiction to a specific city where most of their operations are based or where their registered office is situated. Also, they build in a limitation of liability in their terms and conditions wherein liability is limited to a specific amount or the value of the purchase effected by the consumer on the website. All indirect or consequential damages are expressly excluded,” said Ranga of law firm Advaya Legal.

The success and growth of online retail is undoubtedly dependent on consumer acceptance of the platforms. At this point when online marketplaces are riding the wave of success, we feel they would not want to compromise or risk losing out on consumers’ trust. If it means nipping a few fraud sellers off the bud, so be it.

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