Blockchain to remedy e-commerce fraud

TThe Ecommerce Forum South Africa (EFSA) plans to develop a blockchain-based solution to combat fraud in the sector, amid a rise in fly-by-night operators posing as legitimate e-traders.

At its recent Annual General Meeting (AGM), EFSA outlined the plans and programs it aims to introduce this year as it looks to increase awareness, confidence and capacity in SA’s e-commerce industry. Chief among the long-term goals is to combat the rising tide of fraud in the sector, it said.

This, as the Consumer Goods and Services Ombudsman (CGSO) has recorded a sharp increase in complaints, including regarding delayed or “no-show” deliveries, according to EFSA.

In her General Assembly report shared with EFSA members, Karen Nadasen, Chair of EFSA and CEO of PayU Africa, notes that while SA’s business-to-consumer (B2C) e-commerce activity saw a 40% increase in 2022, the CGSO received many consumer complaints .

Some of these were due to a failure to understand how e-commerce should work, while others reflected a growing wave of fraud in the sector.

“CGSO has identified a steady increase in fraud, mainly fly-by-night operators running e-shops with attractive offers. EFSA has therefore adopted two measures to reduce these risks for our members.

“First, to create a blockchain-based certification service. This will certify e-shops based on their compliance with the law, and provide a ‘trust mark’. This trust mark will be renewed every year.”

– Over time, EFSA plans to add services, such as training, an online dispute resolution service, etc., says Nadasen.

The cost of signing up for the new service will be minimal and it will be available to both B2C and business-to-business (B2B) stores. Such trust marks are common in Europe and North America, and consumers are keen on them as a sign of trust, she adds.

“If a website does not meet the requirements of the certification (for example, receives many complaints) the trust mark will be removed. We plan to develop this trust mark with the SA Fraud Prevention Service.”

Secondly, EFSA plans to develop two training modules for SA’s e-commerce industry, in collaboration with Services SETA, she continues.

The first module is basic training for new participants at SETA level four. The second will be full level six training. These training modules will be recognized under the SETA rules and will be integrated into existing SETA training in specific subjects.

The EFSA team working with Services SETA consists of Professor Adheesh Budree at the University of Cape Town, Tinashe Guramatunhu from King Online, Wale Adejumo from Dropshop and EFSA chief Alastair Tempest.

“EFSA will work with the Consumer Goods Council SA (CGCSA), which produces training modules with the Wholesale and Retail SETA on retail issues. We therefore want to avoid ‘reinventing the wheel’.

“A memorandum of understanding with CGCSA is being drawn up. EFSA will apply as a training body to provide the SETA training. EFSA is also looking at the accreditation of the various e-commerce skills to provide lifelong learning for young people joining the sector,” says Nadasen.

The explosive growth of the e-commerce sector has led to an increased demand for e-commerce skills in SA, with critical occupations – such as digital commerce specialist, data analyst, web designer, online order clerks and stock brokers – among those in demand, according to industry insiders.