The FBIs Internet task force is warning businesses to beware of a new scam targeting consumers and businesses.
Known as Triangle Credit Card Fraud, its a bit hard to follow so bear with me on this one.
The first party is the fraudster, who acts as a seller on a popular auction or marketplace site. The fraudster sells a product to the second party, the buyer who knows nothing about the scam.
The buyer pays the seller for the product or service, never realizing that anything is amiss. The seller then delivers the product or service to the buyer by placing an order with the third member of the triangle, a manufacturer or another retailer of the product or service.
The order placed with the victim merchant will contain the buyers information for shipping but someone elses stolen credit card information for billing. When the legitimate merchant receives the order, it looks like it is being ordered as a gift. The billing and shipping information is valid, so the merchant delivers the product or service.
When the cardholder for the stolen credit card finds a fraudulent charge on the card, he or she may file a dispute with the credit card company, resulting in a chargeback for the merchant, who already shipped the merchandise to the buyer. That buyer never realized that he was receiving goods that hadnt actually been paid for.
Meanwhile, the fraudster was able to transfer the stolen credit card into cash quickly by obtaining the money up front from the buyer.
NLP Secure President Dan Harrington suggests two control methods if a business owner is suspicious: Code 10 and Verify by Visa.
These methods expose the buyer, stolen cards holder, bank and scammer to the transaction, and can raise any red flags.
While its labor intensive, it works well because all those involved in the transaction come into the loop, Harrington says.
Verify by Visa is more of a purchase protection. The merchant is responsible to collect all information before passing it through a merchant services provider.
In a Code 10, the business owner requires a call to the card-issuing bank, which then contacts the cardholder.
Key is, do not ship products to a different address than what is on file with the bank, Harrington says. If the customer is requesting you to ship to a different address than their billing address, have them call their bank and put the shipping address officially on file with the bank first.
This scheme is often much more complex as it is often led by overseas criminals who recruit established sellers (often referred to as mules) on auction or marketplace sites to sell the products. Once a sale is completed, the mule will forward the buyer information and the bulk of the money to the fraudster to place the fraudulent order. Once mules become trusted, they are often allowed to recruit other mules, leading to a complex pyramid of fraudsters and mules.
ROBB HICKEN: Better Business Bureaus chief storyteller serving the Snake River Region. firstname.lastname@example.org, 947-2115.