One Stop Europe
Ecommerce Fraud Prevention
Ecommerce Fraud Prevention
Combating the growth in illicit
trade and cybercriminality
At A Glance
Ecommerce is fast becoming the primary focus for
illicit products ,
illicit trade, and cybercrime.
Criminals are exploiting the opportunities
offered by a corona-led economic downturn and continued supply chains disruptions.
- Over the medium term, the volume of illicit trade and number of routes are
growing, potentially leading to the increased abuse of Free Trade Zones.
- Countermeasures have been initiated by the OECD,
UPU and EU to create more secure and compliant major trade lanes and trade
- This is an update to the article: Postal Identity Management
Ecommerce failing to
comply with customs & import VAT regulations
estimate that each year the EU loses well over EUR 7 billion in revenue as a
result of import VAT and customs fraud. They calculate that up to 7% of all
commercial items are either counterfeit 
or do not comply with basic European safety, health, or environmental
July 2021, the EU's ecommerce fraud prevention measures will stop the import of non-compliant commercial items
(commercial letter post, packets and parcels) by introducing mandatory
electronic advanced pre-declarations which must be lodged with the EU
authorities prior to the shipment of any item to the EU.
Growth in ecommerce fraud
in ecommerce goes hand in hand with increasing criminality. Buyers are drawn by
low prices and special products offered on fake websites, hand over their money,
but fail to receive their purchased items.
of complaints about fake delivery companies demanding additional payments to
deliver goods is also increasing – often a non-existent product is sold via a
fake website, with the fraudsters then posing as the delivery company and extorting
more money from their victims to ostensibly cover import duties, etc.
adults are increasingly the focus of such scams, usually via social media
Illicit trade in times of the
to the OECD Trade Task Force on Countering Illicit Trade ,
criminal networks have reacted quickly to the crisis, adapting their strategies
to take advantage of the shifting online delivery landscape.
following trends are being observed:
- The pharmaceutical
industry is particularly at risk for fraud and illicit activity. Law
enforcement agencies and the industry report a precipitous rise in flows of
fake and substandard medicines, test kits and personal protective equipment, as
well as other medical products.
- Due to the
lockdown, the online environment has become more intensely misused, and
cyber law enforcement has reported skyrocketing volumes of e-crime.
in customs control priorities (e.g. focus on COVID-19-related products) and labour shortages among
law enforcement officials are increasing the potential for illicit trade in
trade in counterfeits is becoming a growing threat for many industries that suffer
from broken supply chains and shortages of components, including the food,
automotive and chemical industries.
medium and longer term, the COVID-19 pandemic will have several other effects
on illicit trade and increase the need for active ecommerce fraud prevention.
The economic downturn and continued disruptions in supply
chains will undoubtedly create additional opportunities for criminals; over the
medium term this is forecast to result in substantial changes in illicit trade
volumes, routes and composition.
limits on air transport and enhanced compliance regulations that are expected
in global value chains will re-shape the trade routes and patterns for illicit
trade, which could also lead to increased abuse of Free Trade Zones.
to this could be the establishment of more secure and compliant trade lanes, or
even trade “super-highways”.
Digitalization depends on cybersecurity & preventing ecommerce fraud
Industry and political policymakers are examining the
need for comprehensive, structured co-ordination and ecommerce fraud prevention measures to counter illicit trade, the
impact of cybercrime on ecommerce, and related scams.
Several areas in which enforcement needs to be stepped
up have been identified:
- Strengthening of information sharing across
borders is crucial for a comprehensive understanding of the new threat.
- Digital vigilance and the
involvement of financial services and ecommerce platforms in informing the
public about scams and related cybercriminal activities.
- Measures to ensure that
highly secure networks and information systems in the EU also include
ecommerce and its supply chain
- Modern technological
solutions (e.g., block chain, artificial intelligence, etc.) to
counter illicit trade.
- Ongoing risk monitoring: the OECD Task
Force on Countering Illicit Trade (TF-CIT) is playing an essential role by
developing a global standard
for unbiased and robust evidence on illicit trade, and identifying the main
challenges, victims, covert actors, and key governance gaps.
- In-depth dialogue between all
service providers with respect to the misuse of low value consignments, the digital
retail business model, and the increasing digitalization of transport and
- In pharmaceuticals, a
sector particularly impacted by the coronavirus pandemic, proper rules must
be established for shutting down the online trade in illicit medicines, and
which in turn will serve as sufficient legal deterrence.
Stakeholders have presented a variety of ways in which to tackle
challenges enhanced by the COVID-19 crisis in the online environment and strengthen ecommerce fraud prevention.
the problem posed by GDPR that limits the transparency of the WHOIS
database, and the sharp increase in ecommerce and small parcel shipments
that make the international trade more difficult to identify.
Key recommendations by the OECD experts on Countering
- Focus on the domain name registration system
and facilitated access to the WHOIS database that has been drastically reduced
in recent years as a result of stakeholder interpretation of the EU’s GDPR data
privacy laws. Ensuring the accuracy and openness of information within the
WHOIS database is a critical component in identifying the sources of fraudulent
medical products or misinformation online.
- Control access to domain names by policy 
and make legislative changes to ensure registries and registrars are comprehensively
accountable. “Know Your Customer” policies can have a positive impact on
ensuring safety and legitimacy of information found on these sites.
- Immediately identify legitimate postal services and
avoid confusion for individuals, business and stakeholders. The
Universal Postal Union has developed the most secure sTLD available on the net to
date. The UPU's .POST TLD aims to integrate the physical, financial, and
electronic dimensions of postal services, enabling and facilitating e-post,
e-finance, ecommerce and e-government services. It is the first sTLD to be 100%
secured by Domain Name System Security Extensions (DNSSEC) . Anyone
can trust that a .POST domain will not direct you to a fake postal website.
Where sites are found to be peddling counterfeit drugs
or false information, domain name registrars should lock and suspend those
domain names immediately upon notice from law enforcement or trusted third
 Including fake and substandard
medicines, test kits and other COVID-19-related goods.  Studies by the OECD and the EU
Intellectual Property Office (EUIPO) show that trade in counterfeit and pirated
goods amounted to up to 2.5% of world trade in 2013 / up to 5% of imports into
the EU; Source: OECD/EUIPO (2018), Misuse of Small Parcels for Trade in
Counterfeit Goods: Facts and Trends, Illicit Trade, OECD Publishing Paris. https://doi.org/10.1787/9789264307858-en  The OECD published a Chairman's note on "Illicit
Trade in a time of crisis". The document presents the Chair's summary of
the Webinar "ILLICIT TRADE IN A TIME OF CRISIS” on 23 April 2020, organised
by the OECD task force on countering illicit trade  A “good practice” example of this
has been achieved by the top-level country domain registry in Denmark, resulting
in a significantly reduced number of suspicious and illicit websites in the
country.  A set of codes for securing the Domain Name
System (DNS), the global database system that translates a computer's fully
qualified domain name into an Internet Protocol (IP) address
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