The ability to book rides instantly via mobile apps, coupled with features like cashless payments and real-time tracking, has made ride-hailing services a preferred choice over traditional transportation methods.
The global ride-hailing market is at an all-time high and is projected to grow to $200 billion by 2028, twice its size in 2023 ($100 billion).
A growth rate that’s set to double in the next five years is massive!!
And it naturally attracts a lot of attention.
Attention from whom?
Especially from those looking to take advantage of a booming platform by hook or by crook.
Yes, I’m talking about the rising threat of fraudsters in the ride-hailing industry.
The convenience of ride-hailing apps also brings the possibility of fraud. This affects users, riders, and, most importantly, app owners or businesses.
This article explores how effective fraud detection in ride-hailing platforms is critical to preventing modern threats — and shares best practices to stay ahead of evolving fraud tactics.
The first step in preventing fraud on digital platforms is knowing which types of fraud are most prevalent in the industry. Here’s a list of the five major fraud types in the industry.
Common fraud types in ride-hailing platforms
Referral & Promo Abuse:
Fraudsters take advantage of seasonal discounts and referral programs by referring themselves and reusing promo codes multiple times, often using bots and emulators to abuse these offerings on a mass scale.
Incentive Abuse:
Fraudulent drivers create fake passenger accounts to claim the incentives and rewards for completing a certain number of rides within a time slot. They use these fake passenger accounts to book real trips and then accept their own rides with their regular driver account.
GPS Spoofing
Drivers use GPS spoofers to cheat an app's virtual queueing system to jump the virtual queue and get a passenger without having to wait. This unethical practice is unfair to other drivers and also to the passengers who have to wait longer before the ride arrives.
Fake Apps
Fraudsters use reverse engineering and tampering to exploit specific functionalities of ride-hailing apps (such as unlimited ride cancellations), avoiding repercussions and leading to a poor passenger experience and brand image degradation.
Artificial Surge Pricing
Multiple drivers collude to artificially inflate ride prices in an area by using fake passenger accounts and GPS spoofers to make it appear as if many passengers are present, thereby causing a surge in ride prices.
Best practices for fraud detection in ride-hailing platforms
Here are a few effective strategies for fraud detection in ride-hailing platforms, helping businesses stay secure and one step ahead of fraud.
Secure 2-Step User Authentication:
One of the best practices to prevent fraud on ride hailing platforms is by stopping fraudsters at the first step by implementing strong multi-factor authentication (MFA). Implement strong password policies requiring users to create robust passwords as the first step, followed by biometric verification or an OTP sent to their device. This layered approach helps ensure that only genuine users gain access to the platform.
Ride Patterns and User Behavior Monitoring
Use machine learning algorithms to detect anomalies in ride patterns or user behavior—such as sudden location changes, multiple account logins from the same device, unusual ride timings, frequent ride cancellations, or an excessive number of short-distance rides—and flag those devices for further scrutiny.
Anti-GPS Spoofing Measures
Implement strong anti-GPS spoofing measures to identify devices using spoofed locations while accessing the app. This is important as GPS spoofing is one of the biggest threat indicators in the ride-hailing industry.
Real-Time Fraud Pattern Analytics
Utilize real-time fraud detection tools that can identify fraudulent patterns as they occur. This helps businesses catch fraudsters in action without disrupting financial operations or other critical processes.
Secure Payment Gateways
Implement encryption-based payment gateways, preferably those working on tokenization, to replace sensitive data with unique identifiers. This keeps user PII (Personally Identifiable Information) details safe and the transactions secure.
Regular Audits and Security Assessments
Perform regular audits and thorough security checks of the app’s functionalities. Further assessment involves keeping an eye on online forums as fraudsters love to brag about loopholes they’ve found and organizing hackathons to find loopholes before fraudsters do. Make this a consistent part of your security routine.
Regular release of Updates and Patches for the App
Based on the audit reports as mentioned in the above point and the current security trends, release updates and patches of the ride-hailing app (both for driver and rider) to prevent any fraud incidents.
SHIELD as a fraud detection solution for the ride-hailing industry
Considering SHIELD as a fraud detection solution provider for your ride-hailing app will help you stop fraud at the root with device identification & device intelligence. SHIELD is helping ride-hailing businesses worldwide to eliminate fake accounts and stop all fraudulent activity.
Here’s a case study - How Ride-Hailing Unicorn inDrive Leverages SHIELD’s Device Intelligence to Boost Trust and Fairness - link
Much like inDrive, you can proactively detect fraudulent activity with continuous session monitoring and identify red flags like GPS spoofing, emulators, app cloning, and more without friction. Leverage from this supercharged risk models with actionable device intelligence.