Sometimes a Killer Deal really is too good to be true. (Triangulation Fraud Explained)

Killer Deal? Maybe not.

We all like a great deal, myself included. And when I’m looking to make a purchase, it’s sometimes hard to resist “Googling” for the best possible price. But sometimes, a deal does really turn out to be too good to be true. We’ve seen an uptick in attempts to “take us for a ride” lately, so I thought it would be good to make you – our customer – aware of one of the most common schemes, so you can avoid problems.

You're probably familiar with simple credit card fraud, where the person with bad intent (we’re going to call him/her “Dirtbag” from here on out) simply makes a purchase of something at an online store using stolen credentials. They are basically using someone else’s money to obtain products, which they then “fence” (sell) to make a quick buck. But to be successful, they must have the retailer ship it to a location where they can easily retrieve the package and subsequently re-sell it. That can be tricky and dangerous, particularly if the cops catch on and stake out their delivery point.

With Triangulation Fraud (what we're discussing today) "Dirtbag" gets pre-paid for the stolen item, by a willing purchaser using a legitimate credit card, and never needs to collect the goods. He even harvests a new stolen credit card in the process for future use!

How? So, let’s say that you’re shopping for a piece of equipment online, and one particular retailer has a markedly lower price on that item than every other retailer. This should set your Spidey-sense vibrating, especially if the retailer has a generic name or feels a little unprofessional.

The economics of retail are pretty simple: every legitimate vendor, whether on the internet or at your local strip mall, gets their gear pretty much from the same places, and pays reasonably similar wholesale prices for those products. If everyone else is selling something for $300, and one online shop has a raging bargain on that item for $200? You might be looking at a textbook case of “Triangulation Fraud,” where Dirtbag steals YOUR money to steal from ME.

So, here’s how it works:

1. The Dirtbag obtains a recent list of stolen credit cards.
2. They search legitimate e-commerce stores (like mine) for a product they can easily sell – something not too expensive as to arouse suspicion, but expensive enough to make this effort worthwhile. Usually, between $300-800 is the “sweet spot” for this scam.
3. They create a new online store, eBay auction, or listing on another 3^rd-party site, where they “sell” that product at a really tempting discount. The trap is set!
4. When you (the legitimate customer) find that listing, you jump on the “deal” – ordering the product with your legitimate credit card.
5. Dirtbag then scans their list for a stolen credit card owned by someone who lives (sort of) near you, and places an order on my store for that item – using the stolen billing information and card, but shipping the item to you. They’ll usually select expedited shipping, too.

And here’s how it all pans out in the end:

• If the store (me) falls for the fake order, I pack and ship the item, and ship your “bargain” to you; and for now, you’re none the wiser. However, shortly thereafter, the stolen credit card cardholder sees the unauthorized charge, calls their bank, and the charge gets reversed, which means the money is taken back from me. I’m now out the cash AND the product, so I take the loss (and the dinged reputation.)
• If I don’t fall for it, I reverse the charge and don’t ship anything. Dirtbag collects the money from your legit sale and bails, not really caring that you never receive your product. Dirtbag’s fly-by-night store or listing (and your money) is long gone by the time you’re ready to complain.
• Oh, by the way – in either scenario, now Dirtbag also has your legit credit card number, so it’s added to the list for next time and probably re-sold for an additional profit.

As you can see, it’s a pretty nefarious little scheme. And it’s a lot more prevalent than you might believe.

At Gollihur Music, we’re serious about preventing fraudulent purchases. It affects our reputation, our customers’ trust, and our bottom line. We’ve got a seriously secure website, and multiple safeguards in place to prevent the improper use of your data, and we use extensive measures – and a hands-on approach to order processing – to put a stop to purchases made on our site with other people’s stolen data (as described above). Your information is safe with us.

So why did I write this? I just want you to make yourself aware of the reputation of a store where you do your online business. It’s very tempting to “take a chance” on a really sweet deal – but it’s also really easy to be taken advantage of, and it has far-reaching consequences. Be vigilant!

I hope that this information is useful to you.