• Latest
What is Triangulation Fraud

What is Triangulation Fraud

November 16, 2022
Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud (Pt. 2)

February 22, 2023
Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

February 15, 2023
Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

February 7, 2023
Curbing emerging fraud types with network intelligence and data enrichment

Curbing emerging fraud types with network intelligence and data enrichment

January 31, 2023
Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud

January 10, 2023
How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

January 6, 2023
  • Contribute
  • Contact Us
  • About
  • Join Us
  • Advertise
Tuesday, March 28, 2023
Merchant Fraud Journal
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
Merchant Fraud Journal
No Result
View All Result

What is Triangulation Fraud

This article was contributed by Shawn Colpitts, Senior Fraud Investigator at Just Eat Takeaway.com

by Bradley
November 16, 2022
in Articles, Fraud Prevention
What is Triangulation Fraud

Triangulation fraud continues to be a prominent emerging fraud trend. The onset of the pandemic led to a visible increase in first-party misuse and refund/retunr fraud. The rollout of PSD2 led to more credential breaches and account-takeovers. Now, with the hard economic times hitting much of the population, we see the bitter rise of triangulation fraud.

Why is it Called Triangulation Fraud?

As it’s name suggests, triangulation fraud requires three parties to be involved with the order.

  1. The Customer who places an order for a product or service from a marketplace or auction with their own credentials.
  2. The Fraudster who has offered the deal through some form of marketplace, auction site or social media post, group or discussion and places the order to the actual merchant for the customer but uses someone else’s stolen payment credentials to do so.
  3. The Merchant who unknowingly fulfills the fraudulent order and sends it to the customer.

How Does Triangulation Fraud Work?

There are several variations, but the general method is this…

The fraudster sets up a fake marketplace online and offers items at discounted prices.

The customer, looking for a deal as customers tend to do, finds the fake listing and places an order through them. They believe they are making a genuine purchase and enter all of the required payment information for their transaction to go through.

The fraudster collects all of the customer’s personal information and payment details.

From there, the bad actor charges the customer’s card and uses a previously compromised set of payment credentials to order the items from a real marketplace that offers the customer’s desired product.

The genuine marketplace processes the fraudulently paid order and sends the item to the customer.

The customer receives the discounted item and is happy with the price they paid and the service they received from the fraudster.

The cardholder who actually paid for the order, however, eventually sees the charge on their statement for an order that they did not place. So, they file a dispute with their bank which reverses the charges and hits the genuine merchant with a chargeback.

What Happens Next?

At the end of everything, the fraudster walks away with the customer’s payment and all of their supplied PII and payment details. Along with the agreed upon funds for the purchase, the bad actor can now add the customer’s details to a list of credentials to use for a later customer or sell them elsewhere for a different scammer to use.

Since the customer is happy and has no idea, there is no report to anyone with regard to any sort of fraudulent activity from the marketplace. There is just the word of mouth praise to others for the great service and price they had received.

Even later, when the customer’s card details are eventually used, they will have no way to connect the activity back to the shady purchase they had made from the murky marketplace. They will simply file a dispute with their bank for whatever unrelated purchase was placed using them. By that time, the fraudster has already made more money from their details and has new credentials from that customer to continue funding their scheme.

When the genuine seller receives the chargeback, they are out the original purchase price paid for the order, any shipping/packing costs, the physical product and issuer chargeback fees. On top of the monetary costs, the supplying marketplace also faces potential reputational damage and negative effect on their score upon the issuer’s fraud monitoring program.

Of course, this is when the true trader takes action against the fraudster’s account that was used to place the order, which is typically prevention from placing additional orders. Unfortunately, the account is unique to their platform, contains replaceable fake PII, the details of the customer’s delivery address and the genuine cardholder’s payment information. There is really nothing to connect the activity back to the actual fraudster and the shop that had listed the discounted offer without a lot of off-platform digging or luck.

If the activity somehow comes to light and the fraudulent marketplace gets shut down, the fraudster simply moves on to create another and continue doing the same thing.

Why is There More Triangulation Fraud Happening Now?

The present economic state in many areas of the world has drastically increased the cost of living within those effected areas and their salaries have not risen to keep up with it. People are feeling the pinch but still need to purchase things. To do so, they are searching for deals and discounts to stretch their paycheques as far as possible without losing out on any previous quality of life. These baddies are taking advantage of this increased pool of potential victims and opportunity by setting up a variety of these schemes.

On top of being opportunistic based on the state of the world, fraudsters also work schemes that are easy to setup, keep running and make them the most money. As things are right now, all three of those boxes are being checked by this method.

What Are Some of the Triangulation Fraud Variations

As touched on at the very beginning of this article, this method can be used through marketplaces, auction sites and through social media-type groups, posts and discussions.

When listing using a professional service, such as reputable eCommerce marketplaces and auction sites that process the payments through their own processes, this is simply a means to make money by being a “middleman” of sorts and evade detection. They almost literally make money from nothing. They have no product to offer. They just sell someone else’s merchandise by buying it with stolen credentials and take the funds given to them by the customer for doing so. It basically costs them time.

Using their own storefronts, their schemes can get rather elaborate. The sites can look extremely professional and even have partnering services, offering marketing advantages that will increase revenue. Those partnerships pay a fee for their services and do see an increase in sales, but they come from this sort of process. To go even further, the same scheme, their partnerships and efforts can be used to perpetrate transaction laundering on some platforms.

How Can We Detect and Prevent Triangulation Fraud?

There is not a lot that one can do for the activities that are not upon our own platforms. As much as we could take the time to scour the internet for these offerings, even if they get reported and taken down, another just pops up again in their place. Off platform, it is really up to those offering the services for these shops to be setup in the first place to stop them. Since that is the case, you need to fight the fraud that you experience within your own domain.

If you are an independent marketplace, with no partnerships, a lot of this follows what you will see with classic credit card fraud schemes…

  • New accounts placing orders to various addresses using multiple payment methods seeing failures, chargebacks and/or amassing large values of debiting across multiple accounts
  • Mismatched billing and shipping addresses with no other location generating detail matching either one
  • These accounts typically fall into some form of pattern with their manually entered PII
  • You can also see repetition of other behind-the-scenes details like device ID, user-agent, IP address, language and more…
  • Geolocation methods can often narrow or even pinpoint these activities to one small area of source
  • Ordering patterns where the same items are ordered by accounts these accounts

These are all things that many of us are used to using and it is a little difficult to determine that what you are seeing is triangulation fraud without being able to see what is happening throughout a connected network of varying details. To be perfectly candid, this is best achieved through graph link analysis, where you can visually see the connections and their paths, so you know where you should look deeper.

Doing a Triangulation Fraud Analysis

If you have partners upon your platform, where they are merchants themselves or you are handling the payment and logistics of their storefront, there are some additional things you could do to help detect and deter these baddies.

Fraudsters are people, too, and fall into patterns and they wish to keep things as simple as they can. Above, I had mentioned ordering patterns. The same items ordered by these suspicious accounts. If you are putting forth partner offerings, you can also see a pattern of partners being targeted. In many instances, especially those where the fraudster has developed some from of agreement with a partnering merchant, they will receive more of these orders than others. You can use that to your advantage. You can look into different partner activity based velocities with relation to this targeted activity. Many of your transaction laundering indicators could end up flagging a lot of this activity to you. Open up your threshold to be a bit wider than your prevention flags and that may expose more of this kind of activity. Once exposed, you can then fight the customer aspect of the fraud based on the patterns observed.

Many who offer retailers and other merchants to use their platform to sell their own products see them as customers. They absolutely are. That leaves there a strong desire to keep the processes they need to follow to use your services as frictionless as possible. However, to protect everyone and every genuine customer (partner and purchaser), there have to be dilligent verification and validation processes in place.

You should both verify and validate manually entered PII where you can. Include authentication of contact details like phone number and email address. Use data enrichment to get further information surrounding these datapoints. Are they using a VOIP, online SMS service or a temporary email provider? If you cannot enrich the data coming into your platform, after verification, wait and verify again. Given a little time, a lot of falsely verified information will no longer capable of access or simply not used by the fraudster any longer.

Research for a genuine presence where and when you are able. If your process allows for a little time before approval, go through the web and look for them. Most people and businesses have a visible digital footprint because they want to be found… even some who don’t want to be. If someone is selling something, they have more than likely said so and advertised it somewhere. If it is a physical location, pull up streetview or satellite view and look. Look at government business registrations at the address or under the account holder details. There are a lot of free resources out there to help you look, and there are also some paid services that are created to do this for you and give you a result in seconds.

If you need any form of official government identification to legally allow use or to cover your assets, I would recommend subscribing to a service that can check the submission for accuracy and validate its authenticity. Although these are also not 100% accurate nor available for every global entity, they cover a good amount of the planet and are faster than a human, offering more insights than just manual scrutiny for doctoring.

Just like linking customers, linking partners should also be a part of your defense. If someone who was running one business that was doing this then tries to establish a new one upon your platform, you should either prevent that from happening or flag it for monitoring.

Don’t limit to just conencting on the typical phone, email, name… Remember the physical address, as well. New sources with the same motive can crop up from the same location. In some of these instances, they will try to turn things around quickly using the same address. For this, many time, the online presence and registrations would not be updated anywhere.

If you have deeper tech or payment/subscription details, look to keep those from your network, as well, where necessary.

If they do successfully gain use to your platform, monitor earnings for sharp increases. These can come and go in waves to attempt to deter detection and confirmation of the activity. Look for nothing but good reviews or nothing but bad, depending on if they are actually buying products for the customer correctly and supplying them or not. Watch for those ordering patterns. Scrutinize offers based on alerts based on common sales category prices and if a merchant offers sales on everything all of the time.

We have to do our part as best we can to defend against triangulation fraud, especially with it being on the rise. The holidays during these hard times are going to open a very large cargo door of opportunity for this fraud to grow. Be aware and be ready.


This article was contributed by Shawn Colpitts, Senior Fraud Investigator at Just Eat Takeaway.com

Tags: Triangulation Fraud
ShareTweetShareSend
Previous Post

Fraud Prevention Industry Sees Continued Investment Amidst a Global Slowdown in Venture Capital and Acquisitions

Next Post

GDPR Data Breach: What You Need To Know

Next Post
GDPR and European Union flag

GDPR Data Breach: What You Need To Know

Our Latest Reports

2022 Chargeback Consumer Survey Report

Fraud Prevention Tactics that Enable Exceptional Customer Experience

Addressing Payment Fraud and The Customer Experience in 2022

2022 Fraud Trends Report

ATO Fraud In Retail Report

2022 Customer Experience Report

3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue

Digital Trust And Safety Report: Combating the Evolving Complexities of Payment Fraud

On-Demand Webinars

Balancing Customer Experience and Fraud Prevention: What’s the Secret?

Stopping Fraud Across the Customer Lifecycle

Addressing Payment Fraud and the Customer Experience in 2022

 

Get the 2023 Fraud Trends Report

Search Our Site

No Result
View All Result

Our Sponsors

Featured Directory Listings

  • logo
    NoFraud
  • SEON. Fraud Fighters
  • sift logo
    Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Our Sponsors

Fraud Industry News

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023

Connect With Us

Quick Navigation

  • Home
  • News
  • Join Us
  • About Us
  • Contact Us
  • Advertise
  • Contribute
  • Privacy Policy

The Payments Media Network

Merchant Fraud Journal
Payments Review

Privacy Policy

Our Privacy Policy
Our Terms of Use

Resources

  • Articles
  • eCommerce Fraud Reports
  • eCommerce Fraud Webinars
  • Training and Certifications
  • Jobs Board
  • Associations and Non-Profits
  • Podcasts
  • Vendor Directory

Popular Posts

  • How to File a Claim With FedEx + What To Do If Claim is Denied

    How to File a Claim With FedEx + What To Do If Claim is Denied

    0 shares
    Share 0 Tweet 0
  • How Does Two-Factor Authentication (2FA) Work?

    0 shares
    Share 0 Tweet 0
  • Top eCommerce Fraud Prevention Companies

    0 shares
    Share 0 Tweet 0
  • The Best Reverse Email Lookup Tools in 2022 (with pricing)

    0 shares
    Share 0 Tweet 0

Featured Vendors

  • NoFraud
  • SEON. Fraud Fighters
  • Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Download the 2023 Fraud Trends Report

No Result
View All Result
  • About Merchant Fraud Journal
    • Interested in Contributing or Guest Posting to Merchant Fraud Journal?
  • Advertise on Merchant Fraud Journal
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Contact Us
  • Download Addressing Payment Fraud and Customer Experience Report
  • Download Chargebacks Consumer Survey Report 2022
  • Download Evolving Complexities of Payment Fraud Report
  • Download Fraud Prevention Tactics that Enable Exceptional Customer Experiences Report
  • Download Merchant Fraud Journal 2023 Fraud Trends Report
  • Download the 2020 Chargeback and Representment Report
  • Download the 2020 Merchant Fraud Journal Vendor Guide
  • Download the 2021 Fraud Trends Report
  • Download the 2022 Fraud Trends Report
  • Download the 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue Report
  • Download the MFJ 2022 Customer Experience Report
  • Download the MFJ ATO in Retail Report
  • Home
  • Job Dashboard
  • Join The Merchant Fraud Journal Community
  • Merchant Fraud Journal Advertising Agreement
  • MFJ Fraud Trends Report Giveaway
  • News
  • Post a Job
  • Privacy Policy
  • Resources
    • 2020 Chargeback Representment Guide for Merchants
    • 2020 Vendor Guide
    • 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue
    • Addressing Payment Fraud and the Customer Experience in 2022
    • Associations and Non-Profits
    • ATO Fraud In Retail Report
    • Balancing Customer Experience and Fraud Prevention: What’s the Secret?
    • Chargebacks Consumer Survey Report 2022
    • Digital Trust & Safety: Combating the Evolving Complexities of Payment Fraud
    • eCommerce Fraud Reports
    • eCommerce Fraud Webinars
    • Fraud Prevention Tactics that Enable Exceptional Customer Experiences
    • Fraud Prevention Training and Certifications
    • How to Build a Recession Proof Chargeback Prevention Strategy
    • How to Stop Fraud During the 2022 Holiday Season
    • Jobs Board
    • Merchant Fraud Journal 2023 Fraud Trends Report
    • Merchant Fraud Journal’s Fraud Trends 2020 Report
    • Merchant Fraud Journal’s Fraud Trends 2021 Report
    • Merchant Fraud Journal’s Fraud Trends 2022 Report
    • MFJ’s 2022 Customer Experience Report
    • Podcasts
    • Prevent High-Velocity Fraud Attacks During the 2021 Holiday Season
    • Stopping Fraud Across the Customer Lifecycle
    • Vendor Directory
    • Webinar – Addressing Payment Fraud and the Customer Experience in 2022
    • Webinar – Mitigating Fraud and Risk on the ACH Network
    • Win January Chargeback Disputes
  • Subscribed
  • Terms and Conditions

© 2021 Payments Media Solutions Canada Inc.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?