Blockchain to help remedy e-commerce fraud

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 11 Apr 2023

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

At its recent annual general meeting (AGM), the EFSA outlined the plans and programmes it aims to introduce this year, as it looks to increase awareness, confidence and capability in SA’s e-commerce industry. Chief among its long-term goals is combating the increasing spate of fraud in the sector, it says.

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

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

Some of these were due to failures in understanding of how e-commerce should work, while others reflected an increasing spate of fraudulent activity in the sector.

“The CGSO has identified a steady increase in fraud, mainly fly-by-night operators who run e-shops with attractive offers. The EFSA has therefore decided on two actions to help mitigate these risks for our members.

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

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

Karen Nadasen, CEO of PayU Africa.
Karen Nadasen, CEO of PayU Africa.

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

“If a website does not comply with 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, the EFSA plans to develop two training modules for SA’s e-commerce industry, in partnership with the Services SETA, she continues.

The first module is basic training for new entrants at SETA level four. The second will be full training at level six. These training modules will be recognised under SETA rules and will integrate into existing SETA training on specific trades.

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

“The EFSA will collaborate with the Consumer Goods Council SA (CGCSA), which is producing training modules with the Wholesale and Retail SETA on retail issues. We will therefore avoid ‘reinventing the wheel’.

“A memorandum of understanding with the CGCSA is under preparation. EFSA will apply as a training body in order to provide the SETA training. The EFSA is also looking at the accreditation of the different e-commerce skills to provide lifelong learning for young people joining the sector,” states Nadasen.

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