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SCARS Institute’s Encyclopedia of Scams™ Published Continuously for 25 Years

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Triangulation Fraud And We All Pay

Triangulation Fraud Is A Growing Menace For Online Retailers & Customers

How Scams Work – A SCARS Insight

Triangulation Fraud - image courtesy of featurespace.com

Triangulation Fraud – Also Known As Three-way Fraud Or Drop Shipping Fraud, Is A Type Of E-commerce Fraud That Involves Three Parties: A Real Merchant, A Fake Merchant, And A Customer

What is Triangulation Fraud and How does it Work?

The Triangulation fraudster, who is the fake merchant, creates a fake online store and advertises it to potential customers. The store may sell a variety of products, but it is often focused on high-priced items such as electronics, designer clothes, or luxury goods.

When a customer orders a product from the fake online store, the triangulation fraudster purchases the product from the real merchant using a stolen credit card or another fraudulent payment method. The fraudster then ships the product to the customer directly.

The customer receives the product and is satisfied with their purchase, unaware that they have been the victim of fraud. The real merchant ships the product to the customer, but they never receive payment from the fraudster.

The fraudster makes money by selling the product to the customer for more than they paid for it or even the same – since they didn’t really pay for it, what they make is 100% profit. The real merchant loses money because they ship the product but never receive payment. The customer is also at risk, as their personal information may have been stolen by the fraudster.

Triangulation fraud is a difficult type of fraud to detect because it involves three parties, two of whom are unaware of the fraud. However, there are a few things that consumers and merchants can do to protect themselves from triangulation fraud.

How to Identify that a Customer is Part of a Triangulation Fraud Scheme

There are a few things that merchants can look for to identify customers who may be part of a triangulation fraud scheme:

  • Customers who place large orders for high-priced items. Fraudsters often target high-priced items because they can make a larger profit on them. Also, since they are using stolen credit cards they may only be able to make one or two purchases before detection.
  • Customers who use a different shipping address than their billing address. Fraudsters often ship the products to a different address than the billing address because they are using stolen credit cards.
  • Customers who use multiple credit cards to make a purchase. Fraudsters may use multiple credit cards to avoid being flagged by fraud detection systems. Sometimes the triangulation fraudster will make multiple orders with different shipping addresses and different payment choices, to rush the merchant and get all the profit possible before detection.
  • Customers who are new to your store and have no purchase history. Fraudsters often create new accounts to avoid being flagged by fraud detection systems. Merchants should always beware of new customers who do anything unusual.
  • Customers who ask you to ship the product to a different address than the billing address, even if you have a policy against it. They may say that the purchase is a gift.
  • New merchants/online retailers need to be especially cautious. New merchants typically have far less experience in fraud detection and do not have the technology in place to detect this type of e-commerce fraud.

If you see any of these red flags, you should be suspicious of the customer and may want to cancel the order. Merchants should never be afraid of canceling orders, since reliance on their fraud prevention rules will make them more money anyway.

How Merchants can Identify that are being used by a Triangulation Fraud Scheme

Merchants can identify that they are being used by a triangulation fraudster by looking for the following:

  • A sudden increase in sales, especially for high-priced items.
  • A large number of orders from new customers with no purchase history.
  • A large number of orders with different shipping addresses than billing addresses.
  • A large number of orders are paid for with multiple credit cards.
  • A large number of orders are canceled or returned.

If you see any of these red flags, you should be suspicious that you may be the victim of triangulation fraud. You should contact the credit card companies involved in the disputed transactions and report the fraud to the authorities.

What Law Enforcement can do?

Law enforcement can help to combat triangulation fraud by investigating and prosecuting fraudsters, specifically the mule addresses and parcel mules. They can also work with merchants and consumers to educate them about triangulation fraud and how to protect themselves from it.

Law enforcement can also work with other countries to combat triangulation fraud, as it often involves international transactions.

How to Protect Yourself from Triangulation Fraud

Consumers and merchants can protect themselves from triangulation fraud by following these tips:

Consumers:

  • Be wary of online stores that are offering high-priced items for significantly less than the market price.
  • Do some research on the online store before making a purchase. Look for reviews from other customers and make sure that the store has a legitimate contact address and phone number.
  • Use a credit card when making online purchases. Credit cards offer more fraud protection than debit cards.
  • Be careful about what information you share with online stores. Only provide the information that is necessary to complete your purchase.
  • Always look at who sent any pages you receive. If it comes from a different company name than who you placed an order with then this is a major red flag.

Merchants:

  • Implement fraud detection systems to identify and flag suspicious orders.
  • Be wary of orders for high-priced items, especially from new customers with no purchase history.
  • Be wary of orders with different shipping addresses than billing addresses.
  • Be wary of orders that are paid for with multiple credit cards.
  • Contact the credit card companies involved in disputed transactions to report the fraud.
  • Make it easy for apparently non-customers to contact you about orders they received. Most larger merchants make this very hard if not impossible.
  • Establish a fraud reporting hotline!

By following these tips, consumers and merchants can help to protect themselves from triangulation fraud.

How to Report Triangulation Fraud

Consumers should report their suspicions to the merchant that shipped the product first to see if anything is wrong. DO NOT REPORT it to the merchant they purchased from, this just alerts the criminals.

If you think the merchandise was part of a fraud scheme, contact your credit/payment card provider immediately. Ask them to cancel the card number and do a chargeback. Real merchants will fight a chargeback, but fraudsters typically will not.

Do not do anything with the merchandise. Do not use it, keep it in the original box. It might be stolen property.

Contact your local police and explain what you suspect. Ask for an incident or report number, this is your proof of reporting and declaring your innocence.

You should also report the triangulation fraud to the FTC – see reporting.AgainstScams.org for details.

Summary

Triangulation fraud is a serious and growing threat to us all. Even if we are not involved in one of these schemes we pay for in through increased prices. Only the scammers win!

It is vital that every crime be reported. Scams and fraud got to be as large as they have in part because so few people report them.

Make sure you talk to your family and friends about triangulation fraud, especially teens and young adults. They are most often the victims without even knowing it. They have much less awareness of deception and are more tolerant of unusual practices.

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SCARS is the most trusted support & education provider in the world. Our team is certified in trauma-informed care, grief counseling, and so much more!

To apply to join our groups visit support.AgainstScams.org

We also offer separate support groups for family & friends too.

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Important Information for New Scam Victims

If you are looking for local trauma counselors please visit counseling.AgainstScams.org or join SCARS for our counseling/therapy benefit: membership.AgainstScams.org

If you need to speak with someone now, you can dial 988 or find phone numbers for crisis hotlines all around the world here: www.opencounseling.com/suicide-hotlines

A Note About Labeling!

We often use the term ‘scam victim’ in our articles, but this is a convenience to help those searching for information in search engines like Google. It is just a convenience and has no deeper meaning. If you have come through such an experience, YOU are a Survivor! It was not your fault. You are not alone! Axios!

A Question of Trust

At the SCARS Institute, we invite you to do your own research on the topics we speak about and publish, Our team investigates the subject being discussed, especially when it comes to understanding the scam victims-survivors experience. You can do Google searches but in many cases, you will have to wade through scientific papers and studies. However, remember that biases and perspectives matter and influence the outcome. Regardless, we encourage you to explore these topics as thoroughly as you can for your own awareness.

Statement About Victim Blaming

Some of our articles discuss various aspects of victims. This is both about better understanding victims (the science of victimology) and their behaviors and psychology. This helps us to educate victims/survivors about why these crimes happened and to not blame themselves, better develop recovery programs, and to help victims avoid scams in the future. At times this may sound like blaming the victim, but it does not blame scam victims, we are simply explaining the hows and whys of the experience victims have.

These articles, about the Psychology of Scams or Victim Psychology – meaning that all humans have psychological or cognitive characteristics in common that can either be exploited or work against us – help us all to understand the unique challenges victims face before, during, and after scams, fraud, or cybercrimes. These sometimes talk about some of the vulnerabilities the scammers exploit. Victims rarely have control of them or are even aware of them, until something like a scam happens and then they can learn how their mind works and how to overcome these mechanisms.

Articles like these help victims and others understand these processes and how to help prevent them from being exploited again or to help them recover more easily by understanding their post-scam behaviors. Learn more about the Psychology of Scams at www.ScamPsychology.org

Psychology Disclaimer:

All articles about psychology and the human brain on this website are for information & education only

The information provided in this article is intended for educational and self-help purposes only and should not be construed as a substitute for professional therapy or counseling.

While any self-help techniques outlined herein may be beneficial for scam victims seeking to recover from their experience and move towards recovery, it is important to consult with a qualified mental health professional before initiating any course of action. Each individual’s experience and needs are unique, and what works for one person may not be suitable for another.

Additionally, any approach may not be appropriate for individuals with certain pre-existing mental health conditions or trauma histories. It is advisable to seek guidance from a licensed therapist or counselor who can provide personalized support, guidance, and treatment tailored to your specific needs.

If you are experiencing significant distress or emotional difficulties related to a scam or other traumatic event, please consult your doctor or mental health provider for appropriate care and support.

Also read our SCARS Institute Statement about Professional Care for Scam Victims – click here to go to our ScamsNOW.com website.

If you are in crisis, feeling desperate, or in despair please call 988 or your local crisis hotline.