There’s a popular scheme that targets online shoppers. But are you savvy enough to spot this scam? Everything you need to know about triangulation fraud.

Do you crave the hunt for an online deal? When you decide that you want to buy a thing, is part of the satisfaction of acquiring it how good of a deal you can find?   

Perhaps you look at popular auction websites, marketplaces, lists, and even some off-the-beaten-path community boards. If you’ve gone through that process more than a few times, you’ve very likely seen an instance of triangulation fraud. It’s a crime that every sharp online shopper should know about. 

Get to know the mechanics of triangulation fraud 

The scheme takes its name from the three parties involved: the online shopper, the scammer running the scheme, and an unsuspecting victim whose credit card has been stolen.   

Start with the online shopper. Imagine you’ve been scouring the internet for that deluxe cordless vacuum, a new monitor for your home office, or a trending toy for the kids. Then, you find the deal you’ve been looking for! 

You discover the item for sale on an online marketplace, and the sale price is hundreds of dollars below what others are asking. It’s new-in-box, they accept payment systems with buyer protection, and all the details look right. It’s not a deal you want to miss out on, so you make the purchase. What’s happened at this point is that you’ve paid a scammer for the item, and this is where their deception begins to unfold. 

In a few days, you receive the item you ordered, and it is exactly what you ordered. But, it’s not from the person you bought it from. Instead, the item was shipped directly to you from the manufacturer or a legitimate online store.  
 
What’s wrong with that? Well, remember the third party—the person whose credit card was stolen? 

When you paid the scammer on the auction site, the scammer in turn ordered the item directly from the manufacturer or legitimate store. At checkout, they used a stolen credit card to pay for the item and had it shipped directly to you. The money you paid through the online auction site or marketplace went straight to the fraudster’s pocket. The item you received was paid for by a yet unsuspecting victim of credit card theft.  

If you paid $300 at a great deal to a scammer, they took 100% of that money, and passed on the headache of the theft and reporting the credit fraud to an innocent person you’ve never heard of. 

Triangulation fraud costs everyone 

Who foots the bill? At a glance, it seems like a victimless incident since the shopper receives the product, and surely the person who had their credit card stolen can report the theft and get reimbursed. However, it should never be considered harmless.  

The primary victim is the credit card company or the bank. However you might feel about that prospect, it’s a fact that banks and credit institutions often have to bear the cost of a fraud once it's reported. In turn, these financial institutions have to recoup their losses by raising fees or interest rates for all of their customers. 

The legitimate online retailer who shipped the product can also lose out if the sale is reversed by the bank. And lastly, while the direct shopper might receive their product, they could be victim of a breach of their personal and payment data if they paid via direct transfer or exposed their banking information along the way. It leads to a cycle of identity theft and fraud, as the scammer starts seeking out their next victim. 

 How to spot triangulation fraud 

Given the intricacy of triangulation fraud, how can you tell the difference between a genuine offer and a scam? The age-old rule applies: if a deal seems too good to be true, it probably is. Approach big discounts with caution. Prices offered that are far below market, especially from relatively unknown online stores or sellers, should always be a red flag. 

It’s never a bad idea to research the legitimacy of unfamiliar online merchants. Look at their reviews and seller history. Have they ever sold anything like your item before, or have they sold anything within the last few years? Do they have a pattern of positive reviews that seem generic and bland? Any of the above could be a sign of a scam account that will be closed as soon as you pay them. 

Lastly, in the case of your information being stolen, keep an eye on your bank and credit card statements. Regularly checking your financial statements can help in quickly identifying any unauthorized transactions. The sooner you detect and report them, the better.  

In the world of online shopping, it's essential to stay informed about the potential pitfalls. Understanding the mechanisms of scams like triangulation fraud arms consumers with the knowledge to shop wisely and protect everyone’s financial well-being.