Triangulation Fraud and How You Can Be an Unwitting Participant
Most people who frequent online auction sites, like eBay, have probably seen some deals that simply seem too good to be true. While these big discounts can be legitimate, they are occasionally part of a growing trend known as triangulation fraud. Often called a victimless crime, the online buyer becomes a participant in the scam without even knowing it, taking on the role known as the "money mule" and a participant in a scam that could be taking place thousands of miles away.
From the unknowing participant's angle, triangulation fraud works like this: Bill Buyer sees a great deal on a laptop - it’s new and listed at 70% of the lowest price he has seen anywhere. Sara Seller is a relatively new vendor without many reviews, but nothing stands out as alarming on her seller's profile. Bill Buyer orders the laptop, and not only does it ship quickly, he also receives a free wireless mouse with his shipment. Bill Buyer, obviously thrilled, leaves a positive review for Sara Seller, and purchases a discounted new printer she has listed as well. Two weeks later, after Bill has received the printer along with some free ink cartridges, he refers his friend Danny Discount to Sara’s page for more deals - only to find that Sara Seller’s eBay account has been deleted. Danny Discount, now curious, uses the wording of the laptop description to search for the same laptop that his friend Bill Buyer ordered. As luck (or deliberate design) would have it, he finds the exact same discounted item listed under a different auction account, which is really Sarah Seller's alternate online seller identity, and the fraud cycle continues.
On the seller’s end, the fraud actually goes like this: Sara Seller has access to several stolen credit card numbers. She searches for trending electronics deals and finds the retail prices at the manufacturer’s website. Establishing a new online seller account and creating listings using stock images, she offers the electronics (not in her possession) at a great “Buy It Now” price. Bill Buyer, excited, orders a laptop, using a valid credit card. Sara Seller receives Bill’s money and uses a stolen credit card to order the laptop directly from the manufacturer, adding a wireless mouse to make a happier customer - it’s not her money, anyway. Sarah requests that the manufacturer ship the laptop and mouse to an "alternate address" which goes directly to Bill Buyer, now a very happy customer. The victim of this scam is, of course, the owner of the stolen credit card who is hopefully watching their card activity so they are alerted to these fraudulent transactions. As this crime is perpetrated using an existing credit card, there are no credit monitoring alerts. After a few similar transactions, each earning Sara Seller a few hundred dollars, she closes her eBay account and opens another one - to run the same scam again.
Sara has no shortage of stolen credit card numbers and nothing tracing her to the fraud, as her name and address are never involved. Bill Buyer is unknowingly used as a money mule, but he gets what he wants and more. We know that there is a loss to the person who owns the stolen credit card, and now he or she must go through the steps to dispute the fraudulent transaction with their bank, proving that it was not them that placed the order for the merchandise in question. If successful, this leads to a loss for the financial institution which must reimburse the stolen funds to the credit card. These fraud losses impact our economy to the tune of billions of dollars annually.
Another twist on this scam goes like this: After Bill Buyer makes his second purchase (the printer if you recall) from Sara Seller, Sara knows that she has Bill hooked. Sara contacts Bill to say that there was a processing glitch and there were actually three printers ordered under Bill's eBay account. Sara is very apologetic and asks Bill to provide his credit card information so she can process the refund directly to his card without having to wait for the order to process through eBay. As her story goes, she wants to repay the money before the transactions hit his credit card. She offers to ship a free pair of earbuds for his trouble. Bill, not wanting his account to get hit for several hundred dollars more than he expected, provides the credit card information to Sara. Now the criminal has a new credit card to use for further fraud.