Fraud in food delivery platforms is a growing threat, draining restaurant revenue and eroding customer trust. From account takeovers to sophisticated GPS spoofing and device manipulation, fraudsters continuously exploit the vulnerabilities of these platforms. While traditional fraud detection methods like device fingerprinting provide some protection, they are no match for advanced fraudsters who bypass these systems with ease.
Recognizing the critical need for more comprehensive fraud detection, food delivery services must understand the methods fraudsters use—from creating fraudulent accounts to payment scams—and adopt stronger anti-fraud and security protocols like multi-factor authentication, real-time transaction monitoring and advanced identity verification to protect both merchants and customers.
The Fraudster’s Journey: Tactics and Exploits
Fraudsters use a range of techniques to compromise platform security, and, in turn, negatively impact both delivery services and the restaurants that rely on them. By examining these tactics, businesses can better identify potential risks and layer defense systems to afford better protection. Below, we break down the primary steps fraudsters take and how advanced technology can mitigate these threats.
- Step 1: Creating New Accounts
Fraudsters often circumvent platform security by using previously banned or tampered devices, masking themselves as new yesterday and bypassing basic detection systems. Bad actors employ strategies like device resets and modified applications to disguise their true identity and bypass platform safeguards.
Basic device fingerprinting might catch some anomalies but can be easily defeated by fraudsters with tampering expertise or anonymized setups. Advanced onboarding monitoring is needed to flag tampered devices or suspicious activities before fraudsters gain access to a platform. - Step 2: Account Takeovers (ATO)
In ATOs, fraudsters use stolen credentials to gain unauthorized access, bypassing common security protocols like two-factor authentication (2FA). Once inside, they can conduct fraudulent activities under legitimate user profiles, damaging user trust and platform security.
Basic fraud detection tools often struggle to distinguish between genuine users and attackers, particularly when logins appear typical. The ability to identify suspicious login behaviors or mismatched location data becomes crucial to prevent these ATO incidents from occurring undetected. More advanced anti-fraud measures include location intelligence to identify logins from suspicious or mismatched locations that can raise flags to stop unauthorized access before damage occurs. - Step 3: GPS Spoofing and Route Manipulation
Fraudsters use GPS spoofing and route manipulation to create false delivery routes, inflating fees and undermining the reliability of the service. This technique allows them to collect unearned fees or alter delivery metrics, which can damage a platform’s efficiency and profitability while increasing customer dissatisfaction.
To counter, accurate tracking and geolocation technology that cross-references courier behavior is essential to detect these anomalies and mitigate the financial and operational impact of route manipulation. - Step 4: Payment Fraud
Manipulating GPS data is another common method fraudsters use to inflate fees or create false delivery routes. This practice disrupts the efficiency of delivery services and imposes extra costs, ultimately harming restaurants through delayed service and dissatisfied customers.One of the more intricate schemes involves creating linked accounts that act as both customer and courier. This setup allows fraudsters to commit payment fraud using stolen credit card information, completing transactions that result in financial losses for the platform and the associated restaurants. By coordinating fraudulent activities across multiple accounts, scammers can bypass standard checks and maintain their operations without raising immediate suspicion.
Certain basic security measures may fail to connect fraudulent customer and courier accounts, allowing these schemes to continue unchecked. Comprehensive behavior analysis that tracks suspicious activity across related accounts is key to exposing and stopping fraudsters before their actions escalate into greater financial damage. Additionally, location behavior tracking plays a vital role in connecting activities across these accounts, exposing fraudsters who attempt to disguise themselves under multiple identities.
The Impact on Restaurants
Fraud can have a multifaceted impact on restaurants, affecting financial stability, operations and reputation. Financially, fraudulent activities can lead to chargebacks, refunds—and even legal disputes, all of which deplete profit margins.
Operationally, combating fraud demands extensive resources. Staff training, managing customer service issues and conducting investigations all contribute to inefficiencies. This diversion impacts overall service quality and can diminish customer experiences. Repeated fraud incidents can also harm a restaurant’s reputation, leading to negative reviews and decreased loyalty, with lasting repercussions for brand image.
How Technology Stops Fraudsters
Traditional fraud prevention measures like device fingerprinting may help to identify suspicious devices, but they often fall short against more advanced fraud tactics. Advanced technology can provide a more robust defense by integrating location intelligence that identifies suspicious behavior at multiple points of interaction. This includes detecting tampered devices, monitoring for unauthorized account access and linking related accounts to reveal coordinated fraud attempts.
Real-time fraud detection using geolocation and tamper detection allows restaurants to assess risk as transactions occur, preventing fraudulent activities before they escalate. Persistent identity binding goes a step further by recognizing returning fraudsters, even if they reset their devices or use multiple devices to disguise their identity. This comprehensive approach to fraud prevention not only blocks bad actors more effectively but also ensures that legitimate customers continue to have a seamless experience. By adopting such technology, restaurants can reduce financial losses, safeguard their reputation and alleviate the operational burdens associated with fraud management
Securing the Future
The battle against fraud in food delivery platforms requires a multi-layered approach that goes beyond traditional security measures. As fraudsters continue to evolve their tactics, from complex account linkages to GPS manipulation, platforms must invest in advanced fraud detection systems that can analyze behavior patterns, track location data and identify connected fraudulent accounts.
By implementing comprehensive security protocols, platforms can better protect their merchants, maintain customer trust and ensure the sustainable growth of the food delivery ecosystem.
André Ferraz is the Co-founder and CEO at Incognia, the innovator of next-generation identity solutions that enable secure and seamless digital experiences.