What Platforms Need to Know About Building Marketplace Policy

The internet has changed the way we shop forever. ​​In 2020, over two billion people purchased goods or services online, and in 2021, online retail market was worth a whopping $5.2 billion. Simultaneous with this drastic increase in online marketplaces is the growth of bad actors preying on online marketplaces and their users.

Fraudsters cost businesses billions of dollars yearly. A 2020 report from the Association of Certified Fraud Examiners revealed that companies lose roughly 5% of their revenue to fraud each year. When fraud takes place on platforms, companies suffer from financial loss, damaged relationships and poor brand reputation. 

To combat harmful and exploitative activities, online marketplaces have developed and implemented policies to keep their platforms fair and safe. ActiveFence has completed extensive research on the policies of four of the largest online marketplaces. Here, we review the main themes of marketplace policies countering intellectual property violations, harmful content policies, and policies that govern inauthentic behaviors and anti-competitive practices.

1. Intellectual Property & Counterfeit Goods

Intellectual property (IP) refers to “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.” Laws of patents, copyright, and trademarks allow individuals to protect their creations.

Billions of dollars are lost each year due to the theft of intellectual property and the selling of counterfeit goods. In the digital era, this threat continues to grow. Technology only advances these abuses, facilitating these illegal activities. To protect users, sellers, and themselves against legal action for infringement, online marketplaces and e-commerce platforms develop policy.

Here are main themes of online marketplace policy that ActiveFence has identified:

• The rights of sellers to their content
• Sellers compliance with the law
• Actions against the sellers of IP theft and counterfeit goods
• Platform compliance with specified copyright laws
• Restriction of the selling of counterfeit goods
• Use of brand, logo and trademark of different companies
• Illegal production of goods

2. Harmful Content

Extremist groups take advantage of e-commerce platforms, selling paraphernalia and goods inline with their beliefs. These purchases allow groups to not only enable their followers to showcase their beliefs, but also fundraise for their causes. Child predators have also abused platforms by selling and purchasing sexual materials. 

Online marketplaces and e-commerce platforms have created different content prohibitions to combat these offenses, with many prohibiting any sexually explicit content. Platforms create policy focusing on:

• Discriminatory activities
• Perpetuation of stereotypes
• Glorification of violence
• Political extremism
• Child abuse and exploitation

3. Inauthentic Behavior & Anti-Competitive Practices

Due to its size and vast scale,  e-commerce is a highly competitive ecosystem. The competitive market causes sellers to promote themselves and seek ways to be more successful than the competition. While some sellers compete in fair and legitimate ways, others participate in illegitimate and often illegal practices.  

Platforms looking to protect their buyers must ensure that sellers on their platforms are fair in their practices. In response to this danger, e-commerce platforms have enacted numerous policies to help combat deceptive practices and keep their marketplaces fairer. These themes include the prohibition of:

• Specified corruptive practices such as extortion, fraud, or bribery
• Harmful practices to buyers
• Practices aimed at harming competition such as manipulation of product reviews, clicks on ads, bidding on items, and search results
• Practices that promote their own businesses such as listing multiple items in one listing
• Tampering with member’s accounts or the creation of multiple accounts

As highlighted, online marketplaces and e-commerce platforms face many challenges keeping their platforms and users safe. However, policies can equip trust and safety teams with the tools to counter these fraudulent activities and protect themselves and their users.