Food delivery marketplace: industry pulse, challenges & fraud risks

The food delivery marketplace industry was already on a rapid upward trajectory pre-Covid. But stay-at-home mandates massively sped up growth. By 2025, the global food delivery market is set to be valued at over $190 billion dollars.

Even as restaurants reopen for dine-in service, this trend is predicted to continue. And we are seeing the rise of a new phenomenon – ghost kitchens. These are commercial kitchens that serve food to customers exclusively via delivery. Reports suggest that ghost kitchens could create a $1 trillion global opportunity by 2030.

This is a really exciting time for the industry! But how has this increase in activity impacted fraud?

Is supplier fraud eating away at your reputation?

Online food delivery marketplaces connect customers with suppliers. Unfortunately, this unique model can open your business up to a whole new fraud risk that you should be aware of – supplier fraud.

Supplier fraud isn’t new but it is a growing problem. However, only 34% of food delivery merchants consider it to be a top three fraud risk. The reality is that it could be happening to your business, but you haven’t uncovered it yet.

According to one study, almost a third of delivery drivers admit they've previously stolen food on a delivery job. And one in five customers that took part in the survey said that they suspected their food had been pinched.

Supplier fraud can be costly, and it can seriously damage your reputation. Hungry disgruntled customers are bad for business, so it’s vital that you identify and tackle the problem. For more information on how to detect and stop it, read this blog.

Is friendly fraud the new dine and dash?

The meteoric rise of the food delivery industry has brought with it a surge in fraud. But not just your usual suspects. More and more legitimate customers are falsely filing chargebacks to get a free meal.

The food delivery industry is particularly vulnerable to friendly fraud. Around 50% of food delivery merchants say that friendly fraud has increased over the past year. It can take a while to spot because the chargeback amount for a food order is typically low. So the issue could be even worse than it seems at first glance. And as food is a perishable item, any fraud massively impacts your bottom line.

Fraud as a service is on the rise

Food delivery accounts can be surprisingly lucrative for professional fraudsters. Unfortunately, legitimate customers are also looking to get in on the action.

Fraud as a service is when an opportunist customer enlists the help of a professional to commit fraud. In the case of food delivery, we’ve seen the rise of the “pizza plug”. This is where fraudsters use stolen credit cards to place orders and advertise them at a deep discount online.

So, the professional fraudster walks away with free cash, the discount diner gets a cheap dinner, and the business is hit with the loss. Fraud as a service doesn’t always have the typical signs of fraud, so intelligence gathering is important.

Read on for more statistics and details on how to stay ahead of fraud in 2022…

Source list

• Industry value by 2025
• App users by 2023
• Supplier (courier) fraud
• Fraud as a service - Pizza plug
• Increasing chargeback rates
• Industry chargeback rate
• Cost of user accounts and password on the dark web