6 Ways to Prevent Triangulation Fraud

Customer fraud losses and remediation are often integrated as an inevitable cost of doing business Fraud's impact on the bottom line is often considered when pricing products and services. This has happened since the first thief swiped a product from a marketplace stand.

Today, scams responsible for severe business impact have become increasingly sophisticated, and the creeping costs are increasingly hard to budget for. Merchant losses attributed to 

What is Triangulation Fraud?

Triangulation fraud is a sophisticated card-not-present (CNP) fraud in which the fraudster inserts themselves between a genuine buyer and a retailer. It then manipulates the legitimate purchasing process to defraud the seller.

As the name suggests, triangulation fraud typically involves at least three actors: the genuine shopper, the legitimate supplier, and the fraudster impersonating the legitimate supplier. Like other types of CNP fraud, triangulation fraud schemes employ stolen credit card details, often 

, they can purchase from the fake shop---all without realizing that they're being used as virtual money mules or, even worse, are handing their credit cards and PIIs over to criminals.

3. The 'ol Switcheroo

When unsuspecting customers place their orders on the fake website, the fraudster uses stolen credit cards to order the products from the legitimate merchant, setting the shipping address to that of the legitimate buyer. Unaware of the fraudulent nature of the purchase, the merchant fulfills the order (often automatically) and ships the product to the address entered initially during the ordering process on the fake website.

4. The Chargeback

Upon discovering the fraudulent transaction, the compromised cardholder will contact their card issuer and demand a chargeback. The merchant will be forced to refund the money and potentially incur penalties and fines due to high chargeback rates.

The result of the scheme is:

• The fraudster pockets the customer's money for the product they purchased and potentially their credit card number to be used in future scams.


• The cardholder whose stolen information was used in the fraud must file a chargeback for a purchase they never intended to make and never received.


• The merchant victimized in the scheme loses the cost of the item shipped and is forced to refund the cardholder whose card was used in the scheme.

6 Ways to Prevent Triangulation Fraud

Triangulation fraud hurts the bottom line and tarnishes the hard-earned reputation of brands and merchants whose products are resold by scammers. So, what can eCommerce website administrators and merchants do to avoid triangulation fraud?

1. Employ Robust Real-Time Fraud Detection and Monitoring Tools

Fraud prevention tools and services can help automatically score each order for potential fraud risk and 

 for user accounts and strict password policies. Importantly, publish a comprehensive return and refund processing policy.

While it may add some steps to the purchasing journey of legitimate clients, more robust security policies and purchase verification services can deter fraudsters from choosing your shop to target.

3. Use Threat Intelligence

As fraudster strategies and triangulation fraud trends change, you must stay up-to-date and apply steps to mitigate specific threats. Among the techniques you can adopt are automatic updates to your application deny lists to ban known fraudsters. You can also implement additional protections to product categories trending among fraudsters (think coffee capsules or consumer electronics).

In addition, you can employ 

 like mismatched personal details, helping you detect and block fraudulent transactions as timely as possible. 

INVESTIGATE

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Protecting your Web Shop and Reputation with Memcyco

Triangulation fraud is a particularly nasty form of CNP fraud plaguing online businesses worldwide. Some fraud campaigns abuse marketplaces like Amazon and eBay to impersonate genuine merchants. In contrast, others replicate full e-commerce websites to harvest credit card numbers while using genuine shoppers as money mules.

The last thing businesses want is for their customers to fall victim to fraud. Unfortunately, with fake websites becoming increasingly indistinguishable from legitimate ones, it's easier than ever for unsuspecting users to be duped. 

Memcyco's nano-defenders, embedded into your site, can detect cloned websites in real-time and provide advanced insights into attackers, their locations, and details of affected victims. These capabilities allow you to quickly alert your customers, work to take down malicious sites used in triangulation fraud and minimize damage.

Additionally, Memcyco's red alert system warns users if they visit a fake site mimicking yours, preventing them from unknowingly sharing their payment details when making purchases. Contact us to learn how Memcyco can safeguard your eCommerce shop and bottom line from triangulation fraud.