Food Delivery Fraud: Common Scams & How to Protect

Food delivery services have become a popular and convenient way for people to enjoy their favorite meals without leaving the comfort of their homes. With just a few taps on their smartphone, they can have hot, delicious food from any restaurant delivered to their doorstep. This convenience has also attracted fraudsters who are constantly looking for ways to scam unsuspecting customers. In fact, a recent study found that 20% of customers have fallen victim to food delivery phishing scams.

Food delivery fraud is a type of cybercrime involving tricking customers into paying for orders that either never get delivered or are tampered with. The rise in popularity and use of food delivery services has made it an easy target for scammers, as they can exploit vulnerabilities in the system to carry out fraudulent activities. This affects the customers and damages the reputation of genuine food delivery service providers.

Common Types of Food Delivery Frauds

The process of delivering food is more popular than ever due to the convenience it provides. Getting our favorite food is only a few clicks away on our smartphones and can now be fetched right from our doorstep. At the same time, there has also been an increase in food fraud. Scammers attempt to take control of innocent customer orders by devising new ways to commit fraud and scams. One must understand the basic forms of food delivery scams to form a strategy that helps fortify the safety of their orders and identity.

Account Takeover

Account takeover (ATO) is a form of fraud where a scammer gains unauthorized access to a user’s account on a food delivery platform. This can happen through various means, including phishing attacks, data breaches, or stolen credentials. To safeguard against account takeovers, it’s essential to utilize effective prevention tools. For a comprehensive guide on the top solutions, check out our blog on The Best Account Takeover Prevention Tools.

Once the fraudster has access, they can place unauthorized orders, change account settings, and steal personal information. Account takeover fraud surged by 85% in the food and beverage sector in 2023.

• Phishing Emails and Messages: Scammers often send fake emails or messages that appear to be from legitimate food delivery services, prompting users to enter their login credentials on a fraudulent website.
• Data Breaches: If a food delivery service experiences a data breach, hackers can obtain user credentials and sell them on the dark web.
• Weak Passwords: Many users still rely on easily guessable passwords or reuse passwords across multiple accounts, making it easier for scammers to gain access.

Prevention Tips (e.g., Strong Passwords, Multi-factor Authentication)

Protecting yourself from account takeover requires vigilance and the implementation of security best practices:

Strong Passwords

• Create Complex Passwords: Use uppercase and lowercase letters, numbers, and special characters to create a strong password. Aim for at least 12 characters in length.
• Avoid Common Words: Steer clear of easily guessable words or phrases related to your personal information (e.g., birthdays or names).

Enable Multi-Factor Authentication (MFA)

• Add an Extra Layer of Security: MFA requires users to provide two or more verification factors before accessing their accounts. These could include something they know (password), something they have (mobile device), or something they are (fingerprint).
• Choose Reliable Verification Methods: Instead of relying solely on email for verification, opt for authentication apps or SMS codes.

Friendly Fraud

Friendly or chargeback fraud has increasingly been problematic for food delivery companies. It occurs when a consumer contests a valid transaction with their bank for a refund while goods and services are provided. Though some cases of friendly fraud may arise from honest mistakes, willful instances can inflict considerable damage on businesses and derail operations. In the food delivery sector, refund abuse accounts for approximately 48% of consumer fraud, costing businesses an estimated $103 billion in 2024.

Steps to Avoid Being a Victim

Preventing friendly fraud requires proactive measures from both consumers and businesses. Below are key strategies to mitigate the risk of falling victim:

• Ensure you carefully check your credit card statements for unfamiliar charges before initiating disputes. Misunderstandings often arise from unrecognized transactions.
• Save receipts, confirmation emails, and delivery notifications as proof of purchase and receipt of goods.
• If you have an issue with your order, contact the restaurant or delivery platform directly instead of filing a chargeback through your bank.

3. Card-Not-Present (CNP) Fraud

Fraudsters are turning towards card-not-present (CNP) deception as a new trend in fraud. CNP fraud accounted for 73% of total card fraud in eCommerce in 2022, highlighting its prominence in digital food ordering environments. This fraud occurs when someone purchases online using someone else’s credit card without having the actual card. 

Buyer’s deception is rarely examined, though this is true for most remote and phone calls and repeated automated billing for goods and services payments. Businesses and cardholders face many adverse consequences, including money losses, suffering reputational damages, inconveniences, chargebacks, or worse still for the holders.

Best Practices for Securing Payment Methods

As the popularity of food delivery services continues to rise, so does the threat of fraud. With financial information being shared for every transaction, consumers must know best practices for securing payment methods when using these services.

• Use a reputable and trusted platform: The first step in securing your payment methods is to ensure you use a well-known and reliable food delivery service. These platforms adhere to strict security measures and have protocols to protect customer data.
• Keep your devices updated: Ensure that all your devices, including phones, tablets, and computers, are regularly updated with the latest software and security patches. This will help prevent vulnerabilities that hackers can exploit.

Additional Emerging Scams in the Food Delivery Industry

Fraud-as-a-Service (FaaS)

FaaS refers to an underground service where cybercriminals sell or lease out fraud tools, software, or services specifically designed to exploit vulnerabilities in food delivery platforms. These services include stolen account credentials, fake ID generators, spoofing tools, and bots for placing mass fake orders. FaaS enables even non-technical scammers to commit food delivery fraud at scale.

Example: A scammer may purchase a toolkit from a FaaS provider to automate account takeovers or mass coupon abuse across several food delivery platforms.

Prevention Tip: Platforms must invest in AI-powered anomaly detection and regularly update their security protocols to stay ahead of such scalable threats.

Promo Abuse

Promo abuse involves users exploiting promotional offers such as referral bonuses, discount codes, or first-time user deals multiple times by creating fake accounts or using spoofed data. Learn more about Bonus Abuse: Definition, Prevention and More trends and how platforms are tackling them.

Example: A single user could create dozens of fake accounts to repeatedly claim “first order free” promotions or use referral bonuses to get credits unfairly.

Prevention Tip: Food delivery platforms should implement robust identity verification and limit the number of redemptions tied to specific payment methods or devices.

First-Party Fraud

First-party fraud occurs when a legitimate customer intentionally exploits the system by falsely claiming that an order was incorrect, not delivered, or unsatisfactory in order to secure a refund or free meal.

Example: A customer might falsely report a delivered meal as missing or spoiled, prompting the delivery service to issue a refund or resend the order.

Prevention Tip: Platforms should leverage order tracking, delivery photo confirmation, and past user behavior analysis to flag potential abuse and reduce unnecessary reimbursements.

Emerging Scams in the Food Delivery Industry

The food delivery industry has experienced tremendous growth in recent years, fueled by consumer demand for convenience and the proliferation of user-friendly mobile apps. This rapid expansion has also attracted fraudsters, leading to scams threatening businesses and consumers. The most concerning scams is location spoofing, which has significant implications for merchants and customers.

Location Spoofing

Location spoofing involves manipulating GPS data to deceive food delivery platforms. Fraudsters, often delivery drivers, use software to fake their location, enabling them to:

• Claim payment for deliveries they never completed.
• Access high-paying orders from busy areas, even if they are physically far away.
• Qualify for premier driver statuses by falsifying delivery metrics.

Impact on Both Consumers and Merchants

Consumers:

• Delayed or Missing Orders: Customers may never receive their food due to false delivery claims, leading to frustration and loss of trust in the platform.
• Financial Loss: Consumers may be charged for orders they did not receive, especially if disputes are not resolved promptly.
• Reduced Service Quality: Drivers exploiting location spoofing may prioritize fraudulent activities over legitimate deliveries, affecting overall service reliability.

Merchants:

• Revenue Loss: Merchants bear the cost of undelivered orders and chargeback fees when customers dispute payments.
• Reputation Damage: Negative reviews from affected customers can harm a restaurant’s reputation and deter future business.

Operational Challenges: Investigating fraudulent claims consumes time and resources, diverting attention from core business operations

Fake Food Delivery Drivers

Fake food delivery drivers are becoming a growing concern for both businesses and customers. These fraudulent individuals pose as legitimate food delivery drivers and use various tactics to scam unsuspecting victims.

Standard methods used by fake food delivery drivers are stealing personal information through phishing emails or creating phony websites that mimic legitimate food delivery services. Once you click on these links and enter your information, scammers will access your account and be able to place unauthorized orders using your identity.

How to Identify Fake Drivers

Spotting a fake food delivery driver can be challenging, but there are key signs to watch for:

• Lack of Proper Identification: Legitimate drivers typically carry official identification or wear branded uniforms. If a driver lacks these, it could be a red flag.
• Unregistered Vehicles: Most delivery apps require drivers to register their vehicles. If the car doesn’t match the description provided in the app, proceed with caution.

No Delivery App Verification: Delivery platforms often provide real-time tracking and driver details (name, photo, vehicle information). Cross-check these details before accepting your order.

How to Avoid Scam Deliveries

To protect yourself from falling victim to fake delivery scams, follow these practical tips:

• Verify Driver Details: Always check the driver’s name, photo, and vehicle information on the app before accepting your order.
• Avoid Cash Payments: Use in-app payment options to minimize risks associated with cash transactions.
• Do Not Share Personal Information: Never provide sensitive data like your phone number or address outside the app.
• Report Suspicious Activity: If something feels off, report the incident to the delivery platform immediately.

3. Phishing and Smishing Attacks

Phishing and smishing attacks, also known as social engineering scams, have become increasingly common in the food delivery industry. These attacks involve cybercriminals tricking unsuspecting victims into giving out their personal information or login credentials through fake emails or text messages.

The scammer will impersonate a legitimate food delivery company by sending out emails that appear to be from them. These emails usually contain urgent requests for recipients to update their account information or verify payment details.

Methods Used by Scammers to Steal Personal Information

Scammers are preying on the rise of food delivery services, allowing them to exploit customers and steal their identities. These techniques are becoming more advanced, so it is very important for people to know what is being done and how these scams work without taking precautionary steps.

Accessing sensitive data is made possible by impersonating a food delivery service, which is fraud. A text or call is made to notify about certain problems regarding an order or payment. After this, sensitive questions such as credit details or passwords are asked. Customers are advised to only share sensitive information when they make a call instead.

Examples of Phishing Scams in Food Delivery

Due to its widespread use and reliance on mobile apps, the food delivery industry has become a prime target for phishing and smishing attacks. Following are some common examples:

•  Fake Order Confirmation Emails: Scammers send emails resembling those from popular food delivery platforms. These emails claim an issue with a recent order and ask users to log in through a provided link.
• Account Verification Scams: Attackers pose as food delivery services, sending text messages asking users to verify their accounts due to “suspicious activity.” Victims who click the link are directed to phishing sites where sensitive data is collected.

Consequences of Food Delivery Scams

Food delivery has become an increasingly popular option for consumers, providing convenience and ease in accessing various food options without leaving their homes. With the rise in popularity of food delivery services, there has also been an increase in scams targeting unsuspecting customers. These scams can have serious consequences for both consumers and businesses alike.

The consequences of falling victim to a food delivery scam are financial loss. Scammers often use fake or fraudulent websites to trick customers into placing orders and paying for them, only to never receive their food or have their personal information stolen.

Financial Losses for Consumers and Businesses

Financial fraud in food delivery has become a common issue for consumers and businesses, resulting in significant economic losses. With the rise of online food ordering platforms, scammers have found new ways to trick unsuspecting victims into sharing their personal and financial information.

For Consumers

• Direct Financial Loss: Consumers may lose money through fraudulent transactions, paying for orders that are never delivered or significantly different from what was promised.
• Chargebacks and Fees: When consumers dispute unauthorized charges, they may face chargeback fees from their banks or credit card companies, further exacerbating their financial losses.

For Businesses

• Revenue Loss: Businesses suffer direct financial hits from fraudulent orders and chargebacks, reducing profit margins.
• Operational Costs: Investigating scams and implementing security measures requires resources that could otherwise be spent on growth and customer service.

Long-term Damage to Trust and Reputation

Food delivery fraud impacts individual consumers and has the potential to greatly damage the trust and reputation of businesses within the food delivery industry. When customers fall victim to fraudulent orders, their trust in the company is shattered, leading to long-lasting consequences for both the consumer and the business.

Customers who experience food delivery fraud may feel violated and angry that their personal information has been compromised. This can result in a loss of trust between the customer and the food delivery service and insecurity about ordering from that specific company again. Customers defrauded may share their negative experiences with friends and family through word of mouth or social media, further damaging the business’s reputation.

Legal and Liability Issues

When it comes to food delivery fraud, there are not only financial consequences for both parties involved but also potential legal ramifications. It is important for both customers and delivery services to understand their rights and responsibilities to protect themselves from potential liability issues.

The customer whose credit card was compromised may dispute the charges with their bank, leading to a chargeback for the delivery service. This results in a loss of revenue for the service, as well as possibly damaging their reputation with the payment processor and other merchants. If a fraudulent order is placed using a legitimate customer’s account without their knowledge or consent, it is up to the customer to report any unauthorized charges and take the necessary steps to secure their account.

How to Protect Yourself from Food Delivery Scams

These scams can range from fake restaurants on food delivery apps to phony delivery drivers stealing customers’ credit card information. The consequences of falling victim to these scams can be devastating, leading to financial loss and potentially compromised personal information.

Specific measures should be taken to protect yourself from falling prey to food delivery scams when ordering food online. Only trusted and reputable food delivery apps or websites are essential. Please research and ensure the platform has a good track record of providing security for its users. Doing background research on a restaurant before placing an order with them is always a good idea.

Implementing Strong Security Measures

As the popularity of food delivery services continues to rise, so does the risk of fraudulent activity. Food delivery fraud can take many forms, from stolen credit card information to fake orders placed by scammers. As a business owner or consumer, it is crucial to take proactive measures to protect yourself and your orders from falling victim to these scams.

• Use Secure Payment Methods: It is essential to use secure payment methods when placing online food delivery orders. This means avoiding using public Wi-Fi networks or unsecured websites when entering sensitive financial information.
•  Partner with Reputable Delivery Services: As a business owner, it is crucial to partner with reputable and established companies that have robust security measures in place when choosing a food delivery service.
• Train Employees on Fraud Awareness: For restaurants offering their own delivery services, training employees on identifying potential signs of fraud can go a long way in preventing it from happening or escalating further.

Utilize Multi-Factor Authentication, Trusted Apps, and Encryption

Several measures can be taken to ensure the highest level of security when it comes to protecting your orders and personal information while using food delivery services.

• Multi-factor Authentication: Multi-factor authentication involves using two or more identification methods before granting access to an account or service.
• Secure Apps: The first defence against food delivery fraud is ensuring that you only use legitimate and secure apps from trusted sources.
• Encryption: Encryption is critical to data protection when ordering food online. Essentially, encryption refers to converting plain text into code so that it cannot be read by anyone who isn’t authorized to do so.

Staying Vigilant and Informed

Staying vigilant and informed is essential in protecting yourself against food delivery fraud. With the rise of online ordering and door-to-door deliveries, scammers have found new ways to exploit unsuspecting customers. You must familiarize yourself with the different types of food delivery fraud and stay updated on the latest scam tactics.

Phishing is a type of food delivery fraud. It involves scammers posing as legitimate food delivery services through fake websites or emails. These fraudulent sites may look similar to the real ones, making it challenging to spot the difference.

Tips for Identifying Suspicious Activity in Food Delivery Services

Due to its convenience and speed, online food delivery has become increasingly popular. With the rise of this industry, there has also been an increase in food delivery fraud. Fraudulent activity not only affects customers by causing financial loss but can also damage the reputation of businesses involved. Both customers and companies must know how to identify suspicious activity in food delivery orders.

Collaborating with Food Delivery Services

As more and more consumers turn to food delivery services for the convenience and variety they offer, fraudsters are also finding new ways to target unsuspecting customers. As a business owner, it’s crucial to stay vigilant against these fraudulent activities and protect your orders from being compromised. One way to do this is by collaborating with food delivery services.

Partnering with reputable and well-established food delivery companies can help prevent fraudulent orders from reaching your doorstep. These more prominent companies have sophisticated systems that can detect suspicious patterns or behaviors, making it easier for them to identify potential fraudsters. By working with them, you can rest assured that fraudulent transactions will be flagged before they reach you.

Reporting Scams and Suspicious Activities

Unfortunately, online scams have become increasingly common. With the rise of food delivery services, scammers are also taking advantage of unsuspecting customers. Knowing how scams operate and what steps to take if you encounter suspicious activities while ordering food online is essential.

Common tactics scammers use include sending fake emails or text messages claiming to be from popular food delivery platforms and requesting personal information or login credentials. They may also pose as customer service representatives asking for payment or gift card codes to resolve an issue with your order. If you come across such activities, do not panic. The best course of action is to report it immediately. Most food delivery companies have dedicated customer support teams that can assist you in identifying fraudulent activities and taking necessary actions.

Importance of Choosing Reputable Delivery Platforms

The food delivery industry has experienced exponential growth due to the convenience it provides for customers. With just a few clicks on the smartphones, people can have their favorite meals delivered to their doorstep within minutes.

• Secure Payment Options: Reputable delivery platforms use safe payment gateways that protect your sensitive information, such as credit card details. This minimizes the risk of your financial information falling into the wrong hands.
• Verified Restaurants: These platforms partner only with verified and registered restaurants, ensuring that you receive food from legitimate sources. This reduces the chances of receiving contaminated or unsafe food.
• Customer Reviews and Ratings: Most reputable platforms have a system where customers can leave reviews and ratings for restaurants and their services. This helps other potential customers make informed decisions based on others experiences, reducing the likelihood of encountering scams or subpar service.
• Protection Policies: If your order has issues or you suspect fraudulent activities, reputable platforms often have protection policies that allow you to report these incidents and receive help promptly.

How Sensfrx Protects You from the Top Food Delivery Frauds

Sensfrx’s AI-powered fraud detection platform is specifically designed to combat the most prevalent food delivery scams, including:

• Account Takeover Protection: Monitors login behaviors in real time, flags suspicious activity, and enforces MFA protocols to prevent unauthorized access.
• Chargeback & Friendly Fraud Detection: Analyzes customer dispute patterns to detect abuse and helps platforms differentiate between genuine and fraudulent refund requests.
• CNP Fraud Defense: Employs tokenization, behavioral analytics, and encrypted transactions to identify and block high-risk transactions instantly.
• Driver & Location Verification: Detects GPS spoofing and verifies driver authenticity using location intelligence and pattern recognition.
• Phishing & Smishing Threat Monitoring: Scans communication channels to identify and shut down phishing attempts before they reach your users.

Conclusion

From account takeovers and phishing scams to friendly fraud and fake delivery drivers, the threats are evolving. The global cost of food delivery fraud is expected to surpass $5 billion annually by 2026, according to Juniper Research.

Sensfrx offers a comprehensive fraud detection and prevention solution that safeguards both consumers and food delivery businesses from the most sophisticated scams. Our advanced AI-powered platform detects suspicious behavior in real time, blocks fraudulent transactions, and ensures secure, encrypted communication across platforms. Whether you are a consumer, restaurant owner, or delivery service provider, Sensfrx helps you build trust and keep fraudsters at bay.

Don’t let fraud take a bite out of your business. Contact Sensfrx today to learn how we can protect your food delivery platform, customers, and reputation with cutting-edge fraud prevention technology.

Frequently Asked Questions (FAQs)