Why Trust and Safety Is Essential for E-commerce Platforms
This article is published in collaboration with Lazada.
While already trending before the coronavirus disease (COVID-19) pandemic, online marketplaces have accelerated their growth as the digitalization of retail and related fields has become a necessity. The rapid development of this sector, however, has also unfortunately led to an increase in bad actors using fraud, impersonation, counterfeiting, and other abuses to damage the reputation of and user confidence in online platforms and the brands and sellers they work with.
In the current landscape of widespread digital transformation, we have seen the rise in importance of having a “trust and safety” mindset among online businesses. This under-emphasized term refers to the steps taken by platforms to create safe digital environments by reducing the risks of abuses and behaviors that violate community guidelines.
Differing from compliance, which is backed by legal and regulatory requirements, trust and safety programs are company initiatives aimed at enhancing experiences for users so they can transact with confidence in a secure environment.
But what do trust and safety programs entail?
One of the main pillars of such programs centers on the idea that user trust must be built through positive experiences. It only takes a small percentage of low-quality experiences to destroy trust, which can then lead people to abandon a platform or company entirely. The second pillar is, of course, safety. The importance of this is perhaps even greater, as online abuses can lead to real-life repercussions. As such, the reputation of a business depends on both assets.
To create an effective trust and safety program, an e-commerce platform must, first and foremost, define the rules by forming robust policies around risk entry points. Online marketplaces then need to have mechanisms to remove dangerous content and prevent bad actors from returning. It is no longer enough to just respond to reports of abuse in a passive manner—there is a growing expectation for platforms to use big data to effectively detect and target bad actors.
Another hallmark of an excellent trust and safety program is that it actively coordinates with brands, policymakers, law enforcement, industry stakeholders, and even other online platforms to address complex issues and set guiding directions. E-commerce platforms must also take an active approach when instructing merchants to follow their policies and informing buyers about safe shopping practices.
In particular, in a developing market like Southeast Asia, where many consumers are still unfamiliar with the online ecosystem, platforms must clearly communicate their expectations and standards so that users can detect and avoid risky situations.
Curbing bad behavior online
At an anti-scam webinar in August, Desmond Tan, Singapore’s State Minister for the Ministry of Home Affairs and the Ministry of Sustainability and the Environment, highlighted the important role e-commerce platforms play in curbing bad behavior online.
“Digitalization has changed the way we live, we work, and interact with one another and have given us a lot of conveniences online. However, we may not possess good cyber knowledge to adequately protect ourselves online,” Tan said. Pointing to Lazada as an example of successful user protection, he said: “Lazada introduced an early detection algorithm system that was developed using online behavior analytics to flag potential fraud and automatically remove suspected anomalies. This system has led to a significant reduction in scam reports by Lazada by over 80% in 2020.”
In addition to working with government ministries, Lazada has collaborated with various broadcast media in Singapore to provide tips on how to practice safe shopping online and respond to suspicious or otherwise risky activity. New sellers are also required to take an online course via Lazada University to familiarize themselves with the platform’s policies. A wider range of learning modules includes awareness of platform terms and conditions and the consequences of non-compliance, which include escalating penalties, account suspension, and subsequent account termination.
To enable trust and safety policy execution, businesses must also be committed to investing in the latest innovations. For example, at Lazada, anti-fraud mechanisms that leverage deep tech and data science have allowed us to effectively and efficiently detect and remove fraudulent sellers and buyers from our platform. Last financial year, we processed orders from some 110 million active consumers and every single order went through our anti-fraud engine. We also work with the wider cybersecurity community, such as with white hackers, to identify IT vulnerabilities so that we continue to strengthen our digital security.
Aside from stopping the bad, trust and safety programs also aim to enable the good by creating positive user experiences. Having a platform that allows for businesses and consumers to sell and buy with peace of mind should be a digital retail platform’s value proposition. After all, keeping the well-being of users top of mind is not only an effective strategy but also a responsibility e-commerce platforms must undertake if they want to grow a healthy consumer base.
Alan Chan is Lazada Group’s chief risk officer.
This article was first published by Lazada on 14 October 2021.