A few years ago I wrote about my fraud prevention duties at Eagle Optics. While I provide technical support and advice for our customers on purchasing sport optics, a fair portion of my workday is spent battling credit card scammers. As predicted by industry experts, the arrival of EMV cards (smart payment or chip cards) would decrease Point-of-sale (POS) fraud, at the same time increasing Card-not-present (CNP) fraud. Online merchants were warned. The experts were correct. CNP fraud attempts are at our highest level since scammers first attacked us during the summer of 2007―over $80,000.00 so far this year. Naturally, the strategies and techniques these crooks employ continue to evolve. We’re seeing more of what I will simply call "social engineering" scams, some that don’t even involve credit cards.
Unfortunately, credit card scammers make a lot of money and are seldom ever brought to justice. Obviously, they want to maintain or exceed a certain level of annual income. If one avenue for stealing money is shut down or becomes too difficult (POS fraud), they either innovate or move onto something easier (CNP fraud). How lucrative is CNP credit card fraud for the average scammer? I recently interviewed a culprit from Montreal who tried (and failed) to steal from us. That’s right―I occasionally get the opportunity to talk to the crooks over the phone. Most just hang up on me when I confront them, but some can get pretty chatty and are rather proud of their thieving accomplishments.
Me: How long have you been involved with credit card scamming?It’s easy to see how this translates to billions of dollars lost by US merchants annually given that just this one scammer is stealing ~$300,000.00 each year. As I’ve written before, scammers don’t want the actual products they steal; they want the money they can get through selling. In most cases they already have a buyer even before they submit a fraudulent order over a merchant’s website. The scammer acts as a procurement agent using stolen credit cards. A high percentage of stolen merchandise is shipped to a work-at-home re-shipper―a person "hired" by the scammer as a "warehouse manager" via a job posting on Craigslist, CareerBuilder, or some other website.
Scammer: A little over 2 years.
Me: How much do you make a year?
Scammer: Around $300,000.00.
Me: Do you work alone or with a group?
Scammer: I have a group of friends – we all do this for a living.
Me: Do you realize that merchants are the ones you're hurting?
Scammer: That's not true. The banks pay for the losses.
Me: Actually, that isn't true. Merchants never win “card-not-present” chargebacks. All the legitimate cardholder has to do is say he/she did not authorize the purchase and the merchant loses the money. Always. Every time.
Scammer: I did not know that.
Me: What is your success rate?
Scammer: About 90% of the orders I place get shipped. Most merchants do not do their due diligence.
Me: Would you try to steal from us again?
Scammer: No. Because it is not worth my time. I could make thousands of dollars in the time you're taking away from me right now. I can tell from talking to you that you guys know what you're doing.
Me: Have you hit us before?
Scammer: No. This was my first time placing an order over your website.
Me: Why did you pick us?
Scammer: I entered the product name in Google and you were at the top of the list.
Me: Do you think you will ever get caught?
Scammer: No. Because each instance of a crime is too small for law enforcement to bother with. They do not care or have the manpower to investigate every case. It's not worth their time.
Actual scammer website
Actual work-at-home "job" (scam)
I’m continually amazed by how many people fall for these work-at-home re-shipping scams. While it’s true that the crooks behind these particular scams often have official looking websites (see above), if you do a WHOIS on the domain you’ll see they’re almost always created within the past month or so. When I suspect a work-at-home re-shipper is involved, I feel obliged to contact them (when possible) and let them know they’re shipping stolen merchandise. It can be a painful phone call and usually goes something like this:
John: Hello?And then I fill them in on the sad details of the scam. Reactions include disbelief, apologies, crying, etc. Technically, they are victims. As unwitting accomplices, they aren’t going to be charged with a crime so long as they cease the activity and return any merchandise they haven’t yet shipped. For thoroughness, I usually ask for websites and email addresses belonging to the scammers who recruited them so I can shut them down. To be sure, it’s a game of whack-a-mole, but I feel like it’s my civic duty to thwart the scammers wherever and whenever I can.
Me: Hi there. My name is Mike McDowell. I work for Eagle Optics in Middleton, Wisconsin. Is this John?
John: Yes?
Me: Did you recently apply online to re-ship packages from your home?
John: Uh, yeah. Why?
Me: I regret to inform you that all of the packages you’re receiving are being paid for with stolen credit cards.
John: You’re kidding me.
What can you to do to help? For your part, if you’re shopping on eBay or some other non-dealer website and see a new binocular or spotting scope priced well below MAP (minimum advertised price), then there’s a fair chance you’re dealing with a crook. Though there can be exceptions, all authorized sport optics dealers generally advertise prices at MAP. Also, if you’re seeking a little side income with a work-at-home job, avoid offers that have anything to do with re-shipping packages. As the adage goes, if it sounds too good to be true then it probably is. As you can see from the graph at the top of this post, CNP credit card fraud is expected to get far worse.
Our fraud losses this year: $0.00