December 2015: The holidays aren’t just about buying. They’re about selling, too. So buyer beware is also seller beware.
If you’re offering an item for sale or auction on eBay (or another online platform) where others sell the same item, there’s a scheme you need to know about. It’s called triangulation fraud and it leaves both sellers and buyers holding the bag — an empty bag! Here’s how it works and what you can do about it:
Triangulation fraud isn’t new but it’s getting automated, which means the culprits can target a lot more retailers and buyers and do it faster. It’s based on using stolen credit cards and someone else’s shipping address to make the theft harder to track. It can take weeks for the victims to figure out what’s going on and smaller sellers are especially vulnerable because they don’t have the resources to devote to thwarting and discovering fraud.
The strategy reads like a movie plot, with a villain, several victims and a chase at the end.
- The Fraudster
- The Shopper
- The Legitimate Seller
- The Stolen Credit Card Owner
- The Fraudster acquires some stolen credit card information, probably from the Dark Web.
- The Fraudster offers an item on eBay (or another platform) that he or she doesn’t really own. It’s just a picture.
- The Shopper buys the item or wins the auction and sends payment to the Fraudster.
- The Fraudster then buys the exact same item from the Legitimate Seller using stolen credit card information. The Fraudster gives the Shopper’s address as the ship-to address so that’s where the Legitimate Seller sends it.
Both the Shopper and the Legitimate Seller are temporarily happy — the Legitimate Seller has made a sale and the Shopper has received the item. The Fraudster is also happy. He or she has pocketed the Shopper’s money.
- The Stolen Credit Card Owner gets his or her monthly statement — yikes, a fraudulent charge! He or she notifies the credit card company so the charge can be removed and a new card can be issued.
- The credit card company sends the Legitimate Seller a chargeback for the Fraudster’s purchase — yikes, a fraudulent payment! The Legitimate Seller has to return the credit card company’s payment for the item because it’s the Legitimate Seller’s responsibility not to accept stolen credit cards.
- The Legitimate Seller contacts the Shopper to return the item — yikes, the Shopper learns he or she has received stolen goods! The Shopper has to return it even though he or she has paid for it.
However, sometimes the item has already been used … or used up. Pet supplies and supplements are commonly scammed items, as are baby products, tools, electronics, small appliances and Legos. And other times the value of the item isn’t worth the hassle to try to get it back, so the Legitimate Seller just takes the loss.
- The Shopper can file a dispute with his credit card company against the Fraudster but chances are the Fraudster has closed those PayPal and eBay accounts.
- The Legitimate Seller can post pictures of the stolen item and team up with other sellers to try to figure out which eBay sites are currently participating in the fraud.
It can all get very complex. And frustrating. So it’s best not to have it happen in the first place!
- Fully understand how triangulation fraud works on eBay and in general.
- Understand what PayPal covers.
- If you’re a seller, use checkout technology to help assure the order-placer is human and not a computer. Also, check the Bill To and Ship To addresses to see if anything raises suspicions (like addresses in different countries), or use a service like midFraud from MaxMind that flags orders that might be fraudulent.
- If you’re a buyer, only buy from established, highly rated sellers, especially when buying something that a lot of sellers offer. (Although some well-established sellers have been tricked into participating in triangulation fraud without their knowledge.)
- If you’re a buyer or a seller, find out about other eBay scams and check the scams page in the eBay community regularly. If you get scammed, make sure to tell your story to the eBay community.
And advice for everyone, whether or not you use eBay or similar platforms — keep an eye on your recent credit card transactions! Get online, don’t just wait for your statement each month. Every day our frogs work hard to protect data like credit card information. When fraud schemes like this become automated, they can do a whole lot of damage in a short amount of time. So stay alert in the cyber-pond! It pays off.
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