Reshipping Fraud

The last thing the world needs is more varieties of fraud to keep track of, but as fraud keeps evolving, it becomes important to describe and classify the different schemes one might encounter. A particularly nasty one is reshipping fraud, a conceptually straightforward scam that can be quite complex in its execution.

Reshipping fraud can victimize multiple consumers and merchants, spawn unwinnable true fraud chargebacks, and cause lasting reputational harm to every organization unfortunate enough to be afflicted by it. What goes on in reshipping fraud, and how can merchants protect themselves and their customers from these multifaceted scams?

There's a domino effect to fraud. Ill-gotten goods almost always have to be laundered or fenced before the fraudster can cash in on them, which means that turning a profit on a big scam may subsequently require various ancillary acts of fraud.

Opportunity is also a factor: once a fraudster has obtained a victim’s personal data or won their trust, it’s easy for them to justify re-victimizing the same target out of convenience. Either way, a single fraud event can soon turn into a cluster of fraudulent acts.

Both these factors can come into play in reshipping fraud, which can involve job fraud, credit card fraud, merchant fraud, and identity theft. Reshipping fraud can be especially harmful to merchants not just because of the risk of incurring chargebacks from fraudulent purchases, but because these scams can be extremely corrosive to consumer trust and can leave victims with strong negative feelings toward all parties involved—even the merchants who may be innocent victims as well.

Reshipping fraud is a scam with lots of moving parts, and merchants may not realize they’ve been dragged into it until after the fact—even if you catch the fraudulent credit card transactions that are part of these scams, it won’t necessarily be apparent that they’re associated with reshipping fraud. The first step toward stopping these scams is understanding exactly how they work.

What Is Reshipping Fraud?

There are plenty of legitimate reshipping services out there. Say you want to order something from a small independent shop in another country, but they don’t ship internationally. A reshipper can serve as the middleman that makes the purchase possible.

It’s easy to understand and easy to do, and it just requires you to be in the right location—and that’s why job scams frequently offer fake work-from-home “reshipping” jobs.

Any fake job offer can be used to steal sensitive data and personal information from a victim. The advantage of reshipping job scams is that fraudsters can actually put their victims to work fencing stolen goods.

Here’s how it works: the fraudster obtains stolen credit card numbers (usually purchased in bulk on the dark web) and sets up a fake merchant site. This may be a standalone website designed to imitate a well-known brand, or it might be an Amazon or eBay shop. Either way, the fraudster will list high-value items for sale and wait for orders to come in.

Once they get an order, they pocket the money and “fulfill” the order by purchasing the item from a legitimate merchant using one of the stolen credit card numbers.

The order is delivered to the reshipper, who repackages the item (thereby concealing its original shipper) and sends it along to the buyer.

With the scam completed, the fraudster walks away with the purchase price of the item they “resold” and the buyer gets the item they purchased, but the credit card holder gets hit with a fraudulent charge that they will certainly dispute.

The reshipper might get paid for their work, but now they’ve participated in a criminal act, and the fraudster is free to use their name, address, social security number, and banking information—all things they would have had to provide to get “hired” in the first place—to steal their identity and engage in new account fraud.

How Does Reshipping Fraud Impact Merchants?

There are usually two merchants who feel the impact of any given act of reshipping fraud. First, the merchant whose website is being imitated by the fraudster, or the marketplace platform that hosts them. Second, the merchant who unwittingly provides the actual merchandise.

Sometimes, these merchants will be one and the same; this is more common when a fraudster is mimicking an exclusive or high-end store brand and wants their victims to believe they are buying directly from the source.

The first merchant can suffer real damage to their reputation and customer relationships when they become implicated in fraud schemes, however inadvertently.

For sites like Amazon or eBay that provide hosting for sellers, this kind of fraud can hurt their integrity and invite disputes from misled customers. However, it is the merchants in the second category who must deal with inevitable and costly chargebacks as a result of this scam.

How Can Reshipping Fraud Be Prevented?

The U.S. Postal Service offers some general advice for avoiding reshipping fraud and similar scams: don’t give out personal information to an unknown company, be wary of job offers that come from overseas or don’t pay a regular salary, and always vet a potential new employer with the FTC, Better Business Bureau, or your state’s attorney general.

There’s no specific advice for merchants, but the first step should be fairly obvious: protect yourself from credit card fraud by devising and following a fraud prevention strategy that relies on best practices and carefully-chosen anti-fraud software.

It’s also a good idea to search your brand name and products regularly to see if any copycat sites pop up. If you can’t get them shut down right away, you can at least try to inform and educate your customers about it.

Conclusion

Reshipping fraud serves as an excellent example of all the ways in which the many varieties of e-commerce fraud are interdependent on each other and work together to undermine the payments ecosystem.

A good preventive strategy requires a big picture perspective that takes all forms of fraudulent activity into account, but also a detailed knowledge of the specific types of fraud that are most likely to target you. This allows you to allocate your resources where they will be most effective while keeping you well-positioned to adapt and pivot to face new threats as they emerge from the ever-evolving payments landscape.

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