Fraud Prevention

Deep Dive: How Reshipping Scams Deliver For Fraudsters

The Better Business Bureau (BBB) has a warning for the public: When an offer appears too good to be true, that is probably the case. One scheme that fits this description is reshipping fraud, a type of scam that often lures in unsuspecting participants by offering them money to work from home and ship products overseas. The Digital Fraud Tracker’s Deep Dive explores how fraudsters are able to lure participants into their scams, and how consumers can stay vigilant against this type of activity.

The ongoing trade war between China and the U.S. appears to be doing little to dampen consumers’ holiday spirits. Recent data has projected that global eCommerce spending will rise by 15 percent this year, and total worldwide sales will reach $768 billion.

Major consumer shopping events like Black Friday and Cyber Monday attract deal-hungry customers, but such shopping holidays have the unintended effect of attracting fraudsters as well. These bad actors often take advantage of the chaos to steal credit cards, scam merchants and wreak other types of retail havoc.

Reshipping scams are one such nefarious activity that consumers must be wary of during the season. This type of fraud covers for cybercriminals by tricking unsuspecting consumers into believing that they have landed lucrative work opportunities when they are actually participating in criminal enterprises. The following Deep Dive unpacks how reshipping fraud works, and how both merchants and consumers can stay vigilant against it.

How Shipping Fraud Works

Shipping fraud is relatively straightforward: Criminals have purchased items redirected to their own addresses rather than to the customers who supplied their payment information. These consumers may have intentionally made their purchases, or simply had their data stolen.

Reshipping fraud is slightly more complicated, however. The criminal first steals payment data from a legitimate consumer, and uses that information to purchase an expensive product. These bad actors then rope in unsuspecting assistants through job advertisements, promising work flexibility. These victims are told to accept shipments at their private addresses, repackage them then reship them to fraudsters at different addresses that are often overseas.

The unsuspecting intermediaries make this fraud type hard to detect, and goods are difficult to recover once shipped abroad. Accomplices could face criminal charges for mail fraud and other crimes, and they are unlikely to receive the paychecks their fake employers promised.

Helping Consumers, Merchants Avoid Reshipping Scams

The United States Postal Service (USPS) has warned the public to stay vigilant against enticing types of fraud. These schemes often originate in chat rooms, as well as on dating and job sites, by scammers posing as representatives for fake charities, potential romantic partners or employers offering work-from-home deals.

The Better Business Bureau (BBB) shared one cautionary tale of an individual who learned about reshipping scams the hard way. A Mississippian applied for the position of “buyer” that promised him a salary of $98,400 plus commission to buy cell phones and ship them to an address in New York City. The man was told he could access a bank account to pay off his credit cards for the phones and himself, and he shipped the phones to a company that specialized in sending packages to Uzbekistan.

The man’s bank informed him a few days later that he lacked the authorization to transfer funds from the account, and reinstated the charges on his credit card. The “employer” did not respond to his emails. This experience cost the victim $6,500 in money paid for the phones, and resulted in his personal information being shared with the fake employer. The BBB urged the public to be wary of pursuing remote work opportunities that promise big payments, as they are unlikely to be legitimate.

Even Fortune 100 companies can be damaged by fraudsters' reshipping efforts. One such case involved a customer's credentials being stolen from a company, and used to register large volumes of fake online accounts. The bad actors then reshipped packages or delayed deliveries, and spammed legitimate users. These activities harmed the company's reputation, and caused friction with legitimate users.

The USPS has an even more urgent warning for consumers about reshipping scams: Participants in these types of schemes are at risk of committing several felonies, and are likely to lose money to fraudsters in the process. Unwitting participants who are mailed checks or money orders are often told to deposit them, keep portions for themselves and wire the rest elsewhere. The USPS urges consumers to check whether those checks or money orders are legitimate before depositing them, or else they could be liable for the full amounts, and to research with the BBB, Federal Trade Commission and state attorneys general any company making an unusual job offer without an interview process.

Merchants can guard against this activity by comparing available data from Facebook, LinkedIn, Twitter and other social media networks to detect if there is a legitimate connection between online buyers and intended delivery addresses. Connections that cannot be verified should lead sellers to consider using anti-fraud solutions. Merchants should also consider implementing AI technology, as well as unsupervised machine learning solutions, that can proactively guard businesses against fraudulent activity, even before patterns become clear.

A busy holiday season will generate plenty of opportunities for fraudsters to end up on law enforcement’s naughty list. Vigilance is imperative if consumers and merchants wish to ensure that they are not pulled along on a cybercriminal’s reshipping ride.



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.