#: Triangulation Fraud

Triangulation fraud is a growing form of online fraud that takes advantage of online marketplaces’ lack of merchant profile verification. Here is how it works:

1. A fraudster sets up a merchant profile on a marketplace and lists items at a discounted price.
2. A legitimate customer purchases one of those items.
3. The fraudster purchases the item from a legitimate shop using a stolen credit card and gives the legitimate customer’s shipping address to the legitimate shop.
4. The customer receives the item and gives the fraudster a high rating.
5. The legitimate cardholder, meanwhile, makes a chargeback request with the legitimate shop.
6. As a result, the legitimate shop has to pay for the chargeback.

What makes triangulation fraud particularly hard to detect is that neither the original customer nor the marketplace is informed of the chargeback request.

It’s only the person whose card was stolen and the shop where it was used that have to sort out the issues created by the fraudsters.  

‍