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June 21, 2011 07:47 pm GMT
In my post about Groupon's potential for collapse, I talked about the possibility of merchant fraud. Because Groupon pays merchants everything within 60 days, they are exposed to the possibility of fraud or the merchant going out of business. Other deal providers pay even faster. LivingSocial pays out everything in about 15 days. Google Offers pays out 80% in about four days.Nobody knows how much fraud occurs, or what steps are taken to prevent it. The structure of the daily deals business makes it ripe for fraud and other abuse: upfront payouts, no recourse if something goes wrong, no collateral and minimal risk assessment. You can take the money and run.Fair warning: the rest of this post may make your head spin.
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/6lGGpPqFRsU/
Daily Deals And The Potential For Fraud
In my post about Groupon's potential for collapse, I talked about the possibility of merchant fraud. Because Groupon pays merchants everything within 60 days, they are exposed to the possibility of fraud or the merchant going out of business. Other deal providers pay even faster. LivingSocial pays out everything in about 15 days. Google Offers pays out 80% in about four days.Nobody knows how much fraud occurs, or what steps are taken to prevent it. The structure of the daily deals business makes it ripe for fraud and other abuse: upfront payouts, no recourse if something goes wrong, no collateral and minimal risk assessment. You can take the money and run.Fair warning: the rest of this post may make your head spin.Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/6lGGpPqFRsU/
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