What is Triangulation Fraud?

Triangulation fraud is when a customer makes a genuine purchase on a third-party marketplace (for example Amazon or Sears.com), but the product they receive was fraudulently purchased from a different retailer’s website. This practice harms businesses of all kinds.  Customers usually aren’t aware.

Triangulation fraud denotes that there are three individuals who play a role in the order.

  1. An unsuspecting customer who places an order on an auction or marketplace using some form of credit, debit, or PayPal tender.
  2. A fraudulent seller who receives that order and then places the order for the actual product with a legitimate eCommerce website using a stolen credit card.
  3. A legitimate eCommerce website that then processes the criminal’s order.

Triangulation Fraud Infographic

The illegitimate purchase is made using stolen card information from someone else, but the shipping information of the original customer. So the customer is shipped the product, and fraudster keeps his money. Meanwhile, the fraudster charges the legitimate retailer with other credit card information, further boosting net profit.

Often, the person with the stolen credit card details will dispute this charge, causing the original retailer to refund the purchase. The customer at the beginning of the transaction has no idea. Consequently, the fraudster in the middle wins big.

The Costs

These chargebacks indefinitely hurt the merchant most. Studies show that these fraudsters will cost merchants upwards of $30 billion a year by 2020. Even at the scale of medium to small size businesses, the losses can be detrimental. A brief look at any third party marketplace forum will show hundreds of disputed transactions and mystified sellers. These losses can add up to hundreds of thousands of dollars for even the smallest enterprises. The numbers will continue to grow with the rise of eCommerce.

Protect Your Business

However, triangulation Fraud can be stopped. Address and location verification that matches the customer are just some examples of how Fraud.net’s software combats fraud. With insights from user behavior, location, and fraud scoring, Fraud.net can stop transactions in place. Advanced AI technology keeps an eye on fraudsters, card information, and more. Dark web monitoring and continuous testing allow fraud prevention to develop with the fraudsters.

Above all, eCommerce will only expand. And so should your solution. With a powerful portfolio of solutions, Fraud.net can meet your unique needs to quickly and cost-effectively. Contact us for a free demo.