Increasingly, more retailers are trying the marketplace business model to profit from commissions, subscriptions, listing fees, or a hybrid revenue model.
The number of B2B marketplaces alone will reach 750 by 2025, compared to 75 in 2018, according to Digital Commerce 360.
However, maintaining security and keeping customer and corporate data safe is one of the most challenging aspects of the marketplace business model. The number of security threats is growing daily, and a successful data breach can cost a company hundreds of thousands of dollars and its business reputation.
This article highlights the greatest marketplace security threats to date and provides the best security practices developers at Itransition adhere to when creating custom marketplaces.
Table of Contents
What are the most significant marketplace security threats?
Malware and ransomware
Malware is a program (a virus, Trojan horse, or spyware) that penetrates a marketplace to leak business data or disrupt computer systems. Although malware is probably the most well-known cyber threat, it’s still hazardous as new and previously unknown malicious software emerges daily. AV-TEST, an independent research organization, claims to register more than 450,000 new pieces of malware daily.
Ransomware is one of the most widespread malware types that infiltrates a marketplace (for instance, by using an XSS vulnerability) and disrupts its normal functioning until the owner pays a ransom. According to the 2023 report from Zscaler, ransomware attacks increased by more than 37% in 2023, with businesses paying an average ransom of more than $100,000.
Ransomware is highly dangerous because it can encrypt website data and block websites, paralyzing business operations. For example, EV ransomware, a program that targets WordPress-based websites, which marketplaces commonly are, can encrypt site data and block administrator access, thus fully seizing control over the website.
DoS and DDoS
DoS is another joint attack that causes marketplace downtime by sending large TCP and UDP packets simultaneously. DDoS is its more advanced version, involving an attack from multiple distributed IP addresses. When hackers aim to cause maximum damage to a business, they can simultaneously attack several layers of its IT infrastructure and network, called a multi-vector DDoS attack.
One of the main risks of a multi-vector DDoS attack for marketplaces is its complexity. Even throughout a single attack, hackers can combine different DDoS techniques, such as DNS query attacks, LDAP reflection, or UDP fragmentation, which forces corporate security teams to spread their efforts across multiple counterlines and makes remediation much more challenging.
In its 2023 DDoS Attacks Report, StormWall states that the number of multi-vector attacks increased by 136% in the second quarter of 2023 compared to the second quarter of 2022. So, given the risks of multi-vector attacks, marketplaces should consider this negative trend when planning their digital security strategies for the years ahead.
In terms of consequences, financial fraud can be the most sensitive attack for marketplace owners since it targets companies’ finances. In a simple scenario, an attacker can use stolen debit card data to make an unauthorized purchase on a marketplace. Later, an actual card owner requests a refund for this purchase, creating a marketplace that faces unnecessary loss.
In a more sophisticated scenario, criminals can use collusion fraud to launder illegally earned money (for example, received from drug trafficking) through the marketplace. For example, a fraudster can create a fake advertisement about a service that will be purchased by a second plotter with “unclean” funds. Once the trade and transaction are processed, the fake service provider can cash out its “cleaned” money.
If a marketplace cannot identify and block such transactions timely, its business reputation and customer loyalty can be undermined, negatively affecting a company’s revenue. After all, customers prefer not to deal with a marketplace associated with cybercrime and fraudulent activity so that they can switch to its competitors.
Within a social engineering attack, criminals can use a marketplace’s employees as an entry point to access customer, financial, and other business data. Pretexting is one of the most widespread social engineering attack types – it implies using a false pretext and pretending to be an authorized person to lure confidential data from an employee.
For example, employees might receive an email from a technical support team asking them to verify corporate account information by sharing their system logins and passwords. Suppose a letter recipient trusts this “colleague” and shares information. In that case, an attacker can gain access to internal marketplace systems, which can cause a variety of adverse business outcomes, from stolen data to deleted website content.
Research data shows a growing number of pretexting, phishing, baiting, and other types of social engineering among all industries, and marketplace businesses are no exception. According to Statista, in 2022, almost the third (30%) of all cyber-attacks in the US involved social engineering and phishing.
How could we ensure marketplace cyber security?
Switch to the zero-trust security model.
The zero trust model implies that all users, devices, and software systems (both inside and outside a company) can be compromised, so they should not be trusted by default and be authorized. Marketplaces should consider implementing zero-trust security as this model prevents potential attackers from gaining unauthorized access while allowing legitimate customers and sellers to conduct business as usual. Additionally, since zero-trust implies tracking user and device activity, it helps marketplace businesses increase the transparency of their networks and improve their security.
Here are some steps to help a company switch to the zero-trust approach.
- Assess and minimize the attack surface
To begin, a marketplace owner and his cybersecurity team should take an inventory of corporate IT assets, including devices, databases, ports, servers, and websites. The key goal is to identify the attack surface, namely collecting all potential points of vulnerability that an attacker can exploit.
Depending on the inventory results, companies can take different measures to reduce their attack surfaces. For example, IT teams can reduce the number of entry points by retiring legacy software components or blocking unused network ports if these assets are not required for marketplace operation. Additionally, IT teams must ensure proper configuration of web servers, as misconfigurations are among the most common entry points for hackers.
- Adopt authentication and authorization
The zero trust model requires that every device, service, or user interacting with a marketplace is identified and verified to help mitigate the risk of fraud. To establish zero-trust security, companies can adopt various IAM technologies, including multi-factor authentication (MFA) and single sign-on (SSO), into their marketplace software.
- Implementing RBAC
Adopting role-based access control (RBAC) is another mechanism that helps create the zero trust model. RBAC implies assigning roles to all marketplace users, including customers, sellers, and employees, to limit their access to certain functionalities and data. For example, a user-defined as “the owner” can have complete website access, while “a marketing manager” only has access to marketing-related features and analytics.
The primary purpose of RBAC is to grant users only the minimum access level they need. This helps prevent attackers from moving across a network horizontally, even if they can hack and compromise some user accounts.
Establish real-time monitoring
Marketplace businesses should monitor their networks, security systems, and hardware to detect and counter cyber threats before they cause damage. For example, IT teams can analyze event logs and monitor a marketplace for malicious code infections to identify and prevent DDoS attacks and SQL injections, respectively.
However, if monitoring tasks are time- and labor-intensive, business owners should consider adopting automated tools. We recommend choosing those equipped with machine learning capabilities, as they can analyze large amounts of data in real time and learn continuously to identify threats even more efficiently in the future.
Could you conduct security training with employees?
Even proven security practices won’t ensure the marketplace’s safety if a company’s employees aren’t familiar with the critical social engineering threats. Comprehensive security training for newcomers and existing employees can help marketplace owners improve security awareness among the workforce. Additionally, businesses can implement corporate LMS to deliver training more systematically and thus improve its efficiency.
Security threats are growing daily, making marketplace cybersecurity more challenging than ever. Marketplace owners can mitigate common security risks by implementing MFA, RBAC, and real-time monitoring.
To ensure maximum security by design, companies can turn to experienced marketplace engineers when initiating marketplace development, as experts can conceptualize and build a more reliable marketplace architecture. In addition, they can run a security audit after a marketplace is built to guarantee it is protected against recent cyber threats.
Frequently Asked Questions
What is the zero trust model in marketplace security?
The zero trust model is a security concept where no user or device is trusted by default, requiring verification for every access attempt within the marketplace.
How does multi-factor authentication enhance marketplace security?
Multi-factor authentication adds multiple layers of security, requiring users to provide two or more verification factors, significantly reducing the risk of unauthorized access.
Why is real-time monitoring crucial in marketplace cybersecurity?
Real-time monitoring allows for the immediate detection and response to potential security threats, helping to prevent breaches before they can cause significant damage.
How can employee training improve marketplace security?
Regular cybersecurity training equips employees with the knowledge to identify and prevent security threats, making them a proactive part of the marketplace's defense strategy.
What are the main challenges in marketplace cybersecurity?
The main challenges include staying ahead of evolving cyber threats, ensuring data privacy, and balancing security and user experience.
What is the impact of a data breach on a marketplace?
A data breach can lead to significant financial losses, damage to reputation, loss of customer trust, and potential legal consequences.
How does ransomware affect marketplaces?
Ransomware can encrypt marketplace data, block website access, and disrupt business operations, demanding a ransom to restore functionality.
What are DoS and DDoS attacks, and how do they impact marketplaces?
DoS (Denial of Service) and DDoS (Distributed Denial of Service) attacks flood a marketplace's network, causing downtime and disrupting business activities.
How can marketplaces protect against financial fraud?
Implementing robust authentication, monitoring transactions, and anti-fraud technologies can help marketplaces detect and prevent financial fraud.
What role does social engineering play in marketplace security?
Social engineering exploits human psychology to access sensitive information, making employee awareness and training crucial in defense strategies.
Why is it essential for marketplaces to minimize their attack surface?
Minimizing the attack surface reduces the number of potential vulnerabilities that attackers can exploit, enhancing overall security.
How does role-based access control (RBAC) contribute to marketplace security?
RBAC restricts access to sensitive data and functions based on user roles, limiting potential damage in case of a security breach.
What are the benefits of conducting a security audit for a marketplace?
A security audit identifies vulnerabilities, assesses compliance with security standards, and provides recommendations for enhancing security measures.
How can marketplaces stay updated on the latest cyber threats?
Regularly monitoring cybersecurity news, attending industry conferences, and collaborating with security experts can help you stay informed about emerging threats.
What is the average cost of a data breach for a marketplace?
The cost varies but can include direct financial losses, regulatory fines, legal fees, and reputation and trust repair costs.
How does encryption help in securing marketplace data?
Encryption transforms data into a secure format, making it unreadable to unauthorized users and protecting it from breaches and theft.
What is the significance of having a cybersecurity response plan?
A response plan ensures a coordinated, efficient approach to managing and mitigating the impact of a cyber incident, reducing potential damage.
How can marketplaces ensure customer data privacy?
Implementing robust data protection policies, using encryption, and complying with privacy regulations help safeguard customer data.
What are the common signs of a compromised marketplace system?
Unusual account activity, unexpected data access patterns, and system performance issues can indicate a security breach.
How often should marketplaces update their security measures?
In response to new threats and technological advancements, regular updates are essential to maintain robust security in a dynamic digital landscape.