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The rapid rise of online secondary markets provides businesses and consumers new choices. But as these grow, so do the risks.

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Growth of Secondary Markets

The emergence of the Internet and other technologies spurred the creation of alternative and secondary markets where businesses and consumers buy and sell products or services or gain access to a person’s time, talents, and property. Whether it reshaped an industry such as lodging or shifted a secondary market from a street corner to an online platform such as with sports and show tickets, secondary markets are growing both in size and significance:

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In 2023, the U.S. secondhand apparel market grew seven times faster than the overall retail clothing market and is projected to reach $73 billion by 2028. Globally, the secondhand apparel market is expected to reach $350 billion by 2028, with a compound annual growth rate of 12%.

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Founded in 2008, Airbnb accounts for roughly 26 percent of the global lodging market.

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Ticket resales in the U.S. are expected to double from $1.6 billion in 2023 to nearly $3.2 billion in 2032.

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A $2 billion secondary market exists to buy and sell domain names, with valuable online real estate selling for tens of millions of dollars.

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Consumers seeking to rent a car can bypass rental car companies and use companies like Turo to go directly to an individual willing to share their car for a fee.

This does not mean that online scams are unavoidable, however. By following some basic best practices, consumers can avoid common pitfalls and protect themselves against various scams on the secondary market.

Bad Actors, Bad Practices

Bad actors are savvy internet users. They know how to direct consumers to secondary websites where fraudulent or other nefarious practices occur. Because most consumers live by the philosophy “once bitten, twice shy,” negative experiences undermine trust.

Consumers believe primary markets are more trustworthy than secondary markets – and it’s not even close. Consumers see primary markets as more trustworthy by a 72 percent to 4 percent margin.

Event Tickets

Event Tickets

Online sellers such as StubHub, which boasts that it has sold tickets to over 10 million events worldwide, play an increasingly vital role in ticket distribution. Fifty percent of Americans say that after purchasing tickets on the secondary market, either the seats were of lower quality than advertised, the price was not fair, or they had trouble entering the venue.

Travel Accommodation

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Online marketplaces such as Airbnb and VRBO have booked billions of stays worldwide. However, guests have long raised concerns about their safety, and a recent CNN investigation found that Airbnb is failing to protect its guests from hidden cameras.

Goods and Services

RETAIL GOODS

Online markets have been especially risky for consumers, whether for counterfeit luxury goods, pharmaceuticals or other drugs, or toys made of dangerous materials. The online sale of counterfeit products has exploded, and many Americans don’t realize that many products sold on platforms such as Amazon are actually being peddled by third parties.

Domain Names

domain names

The secondary market for domains poses an issue for consumers and businesses alike. Consumers may often be tricked into purchasing event tickets at a premium because an online site appears to be the venue box office when it’s actually a reseller. The emergence of domain secondary markets has led to a spike in domain name prices, making it difficult for small business owners to establish an online presence.

Tips for Navigating The Secondary Markets

Malicious websites are, unfortunately, widespread. Bad actors are skilled at profiting from unsuspecting consumers visiting secondary sites. Polling by the Responsible Markets Initiative showed that:

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More than half of U.S. consumers think the emergence of secondary markets has led to a rise in online scams, credit card fraud, identity theft, or copycat website schemes.

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35 percent of U.S. consumers had difficulty telling the difference between the original seller of goods or services and a secondary market.

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One in five Americans said the secondary-market travel purchase was lower quality than advertised.

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35 percent of U.S. consumers had difficulty telling the difference between the original seller of goods or services and a secondary market.

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61% of Americans are concerned when buying event tickets from secondary markets.

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73% of U.S. consumers are concerned when buying retail goods from secondary markets.

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Nearly two in three Americans are concerned about buying pharmaceutical drugs online.

Best Practices

Protect yourself with these best practice tips.

Direct Purchase

DIRECT PURCHASES

Where possible and feasible, the safest bet is almost always to purchase goods or services directly from the company selling them. This severely reduces the risk of fraud or counterfeiting.

Check URLS

Check URLS

Bad actors often attempt to deceive consumers by using URLs similar in look and name to more popular, legitimate services. Before making a purchase or even visiting a website, consumers should diligently check the URL to ensure it is officially associated with a known and trusted brand.

Carefully Inspect the Website

Inspect the Website

When interacting with the website, do your best to inspect its quality for signals of legitimacy. Frequent mistakes in grammar and punctuation, outdated visuals, and clunky user interfaces should be seen as significant red flags.

Research the Website’s History

Research the Website’s History

Looking into a website’s online history can effectively filter out bad ones. Online tools can give insights into how long a domain has been active. Consumers should be more cautious of newer sites, especially those that appear brand new. Consumers can also search a website or company name on the Better Business Bureau’s Scam Tracker to see if others have reported harmful interactions in the past.

Use protected payment methods

Use protected payment methods

Credit cards and established services like PayPal usually offer built-in fraud protection, enabling customers to cancel fraudulent transactions once a scam is recognized or be reimbursed for their losses. Other, more cash-based payment methods, such as Venmo or CashApp, are much riskier and, as such, are commonly requested by scammers.

Be Careful of Reviews

Be Careful of Reviews

Product reviews can be a valuable tool in determining the quality and legitimacy of a product, but they should only be trusted with verification. Malicious actors regularly post fake positive reviews of their scam websites and products designed to mislead consumers into believing that others have been satisfied with a service. Any reviews should be examined for signs of illegitimacy, such as poor grammar or lack of depth.

Use Good Judgement

Use Good Judgement

In all cases, the best advice we can give consumers to avoid scams is to take time to think carefully and use their best judgment when interacting with a vendor online. The most successful scams are not always the most complex or sophisticated; rather, they are successful because consumers lack the basic knowledge and/or vigilance required to avoid them.