The e-commerce sector in the Philippines is booming. With online shopping becoming the preferred choice for many Filipino consumers, the market is expected to reach USD 17.65 billion in 2025 and grow at a CAGR of 13.78% to reach USD 33.65 billion by 2030. This growth is a great opportunity for businesses, but it also comes with new risks, one of the biggest being bogus buyers.
In 2024, the Philippines had a suspected digital fraud rate of 13.4%, more than double the global average of 5.4%. This figure includes various forms of online fraud, such as bogus buyers, fake sellers, and fraudulent transactions. Fake buyers drain your time, waste resources, and hit your bottom line hard—especially for e-commerce sellers running small to mid-sized businesses. These scams can quickly turn into costly setbacks you can’t afford. Knowing how to spot and block them is a must.
In this guide, we’ll explore practical ways to identify bogus buyers and provide you with strategies to minimize the risks they pose to your business. With the right knowledge and tools, you can keep your operations secure, allowing you to focus on growth without the fear of fraudulent transactions.
Understanding Bogus Buyers
A bogus buyer typically exhibits suspicious behavior that may seem harmless initially but can lead to significant consequences for your business. While it’s not always easy to spot them immediately, a bogus buyer’s primary goal is to exploit your business for personal gain or cause financial damage.
Bogus buyers usually follow specific patterns:
- False Payment Information: Bogus buyers may use stolen credit card information or provide invalid payment details.
- Fake Identity: They often create counterfeit accounts or provide inaccurate contact details that make it impossible to trace them.
- Excessive Returns or Refunds: A high volume of return requests after receiving goods can be a red flag.
- Unusual Order Sizes: Large, expensive orders with minimal communication are common traits of a bogus buyer.
Why Bogus Buyers Are a Threat to Your Business
Bogus buyers harm you financially and waste your time and resources. They tie up your inventory, create unnecessary shipping expenses, and may even result in chargebacks, impacting your payment gateway and overall business reputation.
Here’s why dealing with bogus buyers is so important:
1. Financial Losses
In the Philippines, the average loss per fraudulent digital transaction is approximately $768 (around ₱43,000), a significant amount considering the average monthly wage. Additionally, each fraudulent transaction costs sellers around $4, and these losses can account for about 5% of annual revenue for e-commerce businesses. Bogus transactions can lead to direct financial losses, especially when fraudulent payment methods are used, causing long-term damage to your business.
2. Inventory Management Issues
About 12.8% of e-commerce transactions in the Philippines during major shopping periods were flagged as potentially fraudulent, marking a 19% increase from the previous year. This high rate of suspicious orders leads to unnecessary stock movements and disrupts inventory management, as goods must be reserved or moved for orders that never materialize. Bogus buyers make it difficult to keep accurate track of stock, leading to inefficiencies and overstocking.
3. Wasted Time and Resources
A staggering 74% of Filipinos reported being targeted by fraudulent schemes in the last three months, which is far higher than the global average of 53%. This surge in fraudulent activities places a heavy burden on your resources as your team is forced to handle fake orders, process returns, and respond to chargebacks and customer service issues. Managing these false claims takes up valuable time that could otherwise be spent focusing on real customers and growing your business.
4. Reputation Damage
According to recent reports, 34% of Filipinos admitted to losing money to fraudulent transactions, which exceeds the global rate of 29%. The widespread concerns about fraud are eroding consumer trust in Philippine e-commerce. If customers start noticing fraudulent activities or unreliable service, your reputation as a trustworthy seller may be severely impacted, leading to a decline in trust, loss of customers, and fewer sales.
Understanding who bogus buyers are is just the first step; spotting their warning signs early can protect your business from costly scams.
Also Read: How to Track Inventory: Steps and Tips
Red Flags to Watch Out For
When running an online business, it’s essential to be vigilant and recognize the signs of a bogus buyer early. Fraudulent buyers often display certain behaviors or characteristics that can alert you to potential risks. Here are the key red flags to watch for:
1. Unusually Large Orders from New Accounts
A legitimate buyer is unlikely to make a big purchase on their first order, especially if they have no prior history with your business. Bogus buyers may attempt to place large orders as a way to take advantage of your goods without paying for them. Keep an eye on first-time accounts placing orders far outside the norm.
2. Multiple Orders with Different Billing and Shipping Addresses
When a customer provides different addresses for billing and shipping especially when these addresses are in different locations it could be a sign of fraudulent activity. Scammers commonly use this tactic to test stolen credit cards or avoid being traced back to the original fraud source.
3. Suspicious Payment Methods
Bogus buyers often prefer using non-standard or hard-to-trace payment methods like gift cards, money transfer services (e.g., Western Union), or credit cards with foreign billing addresses. Watch out for transactions that deviate from the typical payment methods your customers usually use.
4. Overuse of Discount Codes or Promotions
Fraudulent buyers might use multiple discount codes or promotions in a way that seems suspicious. For example, they could attempt to combine codes or exploit expired offers. If you notice an unusually high volume of discount-related transactions from one account, it might warrant further investigation.
5. Pressure to Ship Quickly
Bogus buyers often create a sense of urgency by demanding that their orders be shipped immediately. They may give excuses like “I need it for a special event” or “I’m in a rush” to rush you into shipping before you’ve had a chance to verify the payment or the buyer’s identity.
6. Fake Profiles
Many bogus buyers operate through fake or incomplete profiles, sometimes using suspicious usernames, missing key contact information, or inconsistent details across platforms. These fake profiles make it harder to verify the buyer’s identity and can be a strong indicator of fraudulent intent.
7. Only Accepting Cash on Delivery (COD)
While COD can be convenient, some fraudulent buyers prefer this method to avoid upfront payments, especially on high-value orders. This can lead to issues like refused deliveries or false claims of non-receipt, causing financial losses. Limiting or monitoring COD orders, particularly from new customers, can reduce risk.
8. Inconsistent or Suspicious Communication
Bogus buyers often avoid clear communication. They may frequently change their contact information, avoid direct phone calls, or respond inconsistently across different communication channels. Such behavior should raise red flags.
9. High Return Rates or Frequent Refund Requests
A pattern of excessive returns or refund claims from certain buyers may indicate fraudulent activity. Some bogus buyers purchase items with no intention of keeping them or claim damages falsely to get refunds while keeping the products.
10. Orders to High-Risk Locations or IP Addresses
Orders originating from high-risk regions, or where the IP address location doesn’t match the billing or shipping address, can signal fraud attempts. Monitoring geolocation data helps identify potential threats.
These are key red flags that can help you identify potential bogus buyers. In the next section, we’ll explore some proactive strategies to avoid these situations altogether and protect your business from fraud.
If any of these red flags resonate with your current processes, it’s time to assess your strategy. Consider exploring our customized solutions that safeguard your business.
Ways to Avoid Bogus Buyers
Here are some effective ways to minimize the risk:
1. Use Identity Verification
One of the most effective ways to avoid bogus buyers is through stronger buyer verification processes. This may include requesting government-issued IDs or verifying phone numbers. Additionally, cross-check buyer information through external tools like comparing billing and shipping addresses. This ensures that the person making the purchase is legitimate.
2. Offer Secure Payment Methods
Promote safer payment options like credit cards or bank transfers that provide built-in fraud protection. Credit cards, in particular, often have measures to prevent fraud, such as chargeback options for the buyer. Limit cash on delivery (COD), especially for high-value transactions, as it can be a potential risk for scammers.
3. Implement a Clear Return Policy
Ask customers to provide proof of purchase and submit return requests within a strict time frame (e.g., 7–14 days). Only accept returns for items in original, unopened condition, and inspect products before issuing refunds. Clearly communicate these rules on your website and in order confirmations to prevent misuse.
4. Limit High-Value Purchases for New Accounts
It’s a good practice to introduce rules that restrict high-value purchases from first-time buyers unless they have verified payment information. If new customers place large orders within the first week of account creation, consider holding those orders for manual review. This extra layer of scrutiny helps protect your business from fraud.
5. Use Fraud Detection Tools
Integrate fraud detection software that automatically analyzes patterns and flags suspicious orders before they’re processed. Many tools can set thresholds for high-risk transactions, triggering a manual review of the order. These tools are crucial for businesses that want to minimize fraud without increasing the workload on your team.
6. Monitor and Track Orders
Regularly monitor orders for abnormal patterns or red flags, particularly for products with high demand or during seasonal surges. Fraudsters are often attracted to these periods as they know demand is high. Use tracking tools to monitor order status and identify potential fraudulent chargebacks or disputes before they escalate.
7. Regular Staff Training
Training your team to spot the signs of bogus buyers is essential. Make sure your staff understands the red flags to watch for, such as irregular payment methods or unusual shipping addresses. Establish an internal system for reporting suspected fraud, so the team can quickly take action when necessary.
8. Enable Email and Phone Confirmation
For high-value orders, it’s helpful to confirm the buyer’s intent to purchase through email or phone. This helps ensure that the order is valid before shipping out the product. Confirming orders directly with buyers also provides an additional layer of security and helps prevent fraudulent orders from slipping through the cracks.
While implementing these strategies is essential, knowing your legal rights is equally crucial to protect your business from bogus buyers and costly scams.
Legal Protections and Action Against Bogus Buyers
Bogus buyers can seriously impact your bottom line, but understanding your legal protections and following the right steps can help you manage fraud effectively. Here’s what you need to know and do:
Step 1: Understand the Legal Framework
Familiarize yourself with relevant laws protecting e-commerce businesses in the Philippines:
- Article 315 of the Revised Penal Code addresses fraud and false pretenses, with penalties including imprisonment for up to 20 years.
- Republic Act No. 11967 (Internet Transactions Act of 2023) strengthens online transaction protections and provides clear recourse for fraud victims.
Knowing these laws helps you recognize when legal action is justified.
Step 2: Report and Document Fraud Thoroughly
Documentation is your first line of defense:
- Keep detailed records of all communications, orders, payment attempts, and suspicious activity.
- Capture screenshots or email copies showing fraudulent intent.
- Report the buyer to your e-commerce platform’s fraud detection system (e.g., Shopee, Lazada, TikTok Shop) to help block fraudulent accounts.
Step 3: File Formal Complaints and Legal Actions When Necessary
For severe or repeated offenses:
- File complaints with local authorities such as the National Bureau of Investigation (NBI) or the Philippine National Police (PNP).
- Consider civil lawsuits to recover financial losses.
- Pursue criminal prosecution if the fraud qualifies under penal laws.
Step 4: Address International Fraud with Regional Laws in Mind
If the fraudulent buyer is overseas, know that several Southeast Asian countries have strict anti-fraud laws that may help:
- Singapore (Section 415 Penal Code)
- Malaysia (Penal Code Act 574)
- Thailand (Section 341 Criminal Code)
- Indonesia (Article 378 Criminal Code)
However, legal actions depend on jurisdiction and your ability to present evidence.
Step 5: Educate Your Team
Ensure your staff understands legal protections and knows how to spot potential fraud. A well-trained team can detect and report bogus buyers early, reducing risk and protecting your business.
As you address bogus buyers, it’s important to consider both legal and ethical implications to protect your business. Let’s explore how to handle these situations with care.
If you’re ready to optimize your business operations and protect against fraudulent buyers, don’t wait for the next issue to arise. Contact us now and explore how our customized solutions can help safeguard your e-commerce business.
Ethical Considerations when Handling Bogus Buyers
Protecting your business from bogus buyers is crucial, but it’s just as important to handle these situations carefully to avoid legal complications like defamation or privacy violations. Here’s a responsible approach to managing fraudulent buyers while keeping your business safe and professional:
- Respect Buyer Privacy: Avoid publicly naming or shaming suspected bogus buyers, as this can breach privacy laws and lead to defamation claims against your business. Always use official reporting channels provided by e-commerce platforms or legal authorities to address fraud discreetly and professionally.
- Follow Platform Guidelines: Platforms such as Shopee, Lazada, and TikTok Shop have established fraud reporting procedures. Make sure you comply with these rules to ensure your complaint is handled effectively without exposing your business to additional risks.
- Verify All Fraud Claims Carefully: Confirm that the buyer’s behavior is genuinely fraudulent. Gather all relevant evidence and verify the authenticity of the suspicious activity. False accusations can expose you to legal consequences, such as charges of online harassment or cyberbullying, which can damage your business reputation and incur penalties.
- Seek Legal Advice When Needed: Consult with a legal professional before pursuing formal complaints or court actions. Understanding your rights and obligations ensures you take the most appropriate and effective steps to protect your business.
- Handle Disputes with Discretion: Escalate cases to public or legal channels only when absolutely necessary and supported by strong evidence. This measured approach helps preserve your business’s reputation and prevents unnecessary conflict.
By following these guidelines, you can handle bogus buyers in an ethical and legally sound manner, ensuring that your business remains protected while maintaining professional integrity.
How Inspire Solutions Asia Can Help Protect Your Business from Bogus Buyers
Protecting your business from bogus buyers ensures smooth and secure operations. Inspire Solutions Asia offers a comprehensive suite of services to help businesses smooth their e-commerce operations, enhance transparency, and reduce the risk of fraudulent transactions. By combining physical infrastructure with the powerful Fusion SaaS Platform, businesses can improve their buyer verification processes and monitor transactions with greater ease.
- Fusion Platform for Better Order Tracking: Inspire’s Fusion Platform brings together all aspects of your e-commerce operations inventory, sales tracking, and customer management. With clear, real-time visibility, your team can easily spot discrepancies or unusual behavior associated with fraudulent buyers.
- Analytics for Identifying Suspicious Activity: The Fusion Platform also provides valuable insights through analytics, allowing businesses to keep an eye on key metrics like order patterns and customer behavior. When something unusual occurs, like a spike in orders from a new customer or inconsistent information, it’s easier to identify early signs of fraudulent activity, helping you take action quickly.
- Customer Relationship Management (CRM) for Clear Communication: With Fusion’s CRM and Helpdesk tools, communication with buyers becomes more organized, making it easier to verify buyer details and resolve any potential issues. Clear communication ensures that any suspicious transactions are flagged and dealt with quickly, reducing the risk of fraudulent purchases.
- Fraud Detection Tools Integration: Inspire’s open API and Webhooks allow your business to connect with third-party fraud detection software. This easy integration lets you check for fraudulent orders in real-time, ensuring that you don’t miss any red flags in your transactions.
Protect your business from bogus buyers today. With Inspire Solutions Asia’s comprehensive services, you can safeguard your e-commerce operations and maintain customer trust. Get a Quote to learn how we can help you manage your operations and prevent fraud.
Conclusion
Protecting your business from bogus buyers is crucial for maintaining a smooth and profitable operation. You can safeguard your business from the costly consequences of fraudulent transactions by implementing practical measures like secure payment methods, verifying buyer identities, and setting up clear return policies.
At Inspire Solutions Asia, we understand the complexities of running a successful business in the e-commerce world. We offer various solutions to enhance your operations, from advanced warehousing to secure last-mile delivery.
If you’re looking to take proactive steps in protecting your business, schedule a meeting with us today to discuss how we can help you safeguard your operations and focus on what matters most: growth and success.
