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While online shopping has taken a lot of the stress and hassle out of buying things, the convenience of it has also created openings for new kinds of online scams. Sometimes, as in the case of triangulation fraud, customers and merchants can even become unwitting participants.
Triangulation fraud occurs when a scammer acts as a secret middleman in online purchases. In essence, it works like this: Scammers set up a fake storefront and accept orders they then use stolen credit card information to fulfill, pocketing the money provided by the person who placed the order. Since the buyer receives their order as expected, it may never occur to them that they were involved in a scam.
Here's how to protect your credit card information from scams like these.
How Does Triangulation Fraud Work?
The typical triangulation fraud scheme has three stages and involves four parties: an innocent buyer, a victim of credit card theft, a merchant and the scammer.
- A scammer posts a sales listing for a desirable item, such as a pair of headphones, often for an unusually low price. A buyer comes along and enters their credit card information to purchase the headphones.
- The scammer receives the payment, and now has access to the buyer's account information. They then buy headphones from a legitimate retailer using a separate stolen credit card and have them shipped to the buyer.
- The buyer receives the headphones and may have no reason to question the purchase, so they don't raise an alarm. Meanwhile, the owner of the stolen credit card is out the cost of the headphones. They may reach out to the legitimate merchant for a refund, but the fraudster will still have the money from the original buyer.
If you've been alerted to a charge on your credit card for an order you didn't make, your credit card may have been used in stage two in this scheme. And if you receive an order that was suspiciously shipped from a merchant other than the one you used to order it, you may have been the buyer whose credit card information is now in the hands of a scammer.
Here's what cardholders can do to protect their card and identity.
Fraud Protection for Credit Cards
If you notice any charges you don't recognize, let your credit card company know as soon as possible. Credit cards also come with a variety of fraud protections, which may help you regain money if your card is used by a fraudster.
Some of these protections include:
- Limited liability: The Fair Credit Billing Act (FCBA) stops credit card companies from holding you responsible for fraudulent purchases if you report that your card was stolen before the fraudster uses your card. If you report your card as stolen after the fraud has occured, the FCBA says you can only be held responsible for up to $50 of fraudulent credit card activity. Many credit card issuers also offer zero-liability protection so that you're not responsible for any unauthorized charges.
- Chargeback options: You can request a chargeback. A chargeback is when the credit card company returns charges back to you if there is a mistaken or fraudulent charge.
- Card lock: Many credit card companies allow you to lock your card yourself through an online account or mobile app as soon as you realize it's been stolen.
- Virtual card numbers: Several card issuers also offer virtual card or account numbers, which allow you to create separate card numbers for each different site you use to shop online. Each of these is tied to your account, but they keep your main account number private. If someone gets their hands on a virtual card number, you can simply delete it and create a new one instead of having to request a new card.
Take Steps to Prevent Your Account From Being Compromised
There are steps you can take to protect your credit card accounts from being compromised. Some common security moves include:
- Using secure, unique passwords: The risk of using the same password repeatedly is that if a scammer gets hold of it, this single password will give them the opportunity to log in to multiple accounts of yours.
- Learning to recognize fake businesses: When shopping online, make sure the company is who they say they are. Check for spelling errors, make sure the website address starts with https:// and check for a "not secure" notification at the top of your browser. Many online shopping marketplaces also let you leave reviews for third-party merchants, so it's wise to check them before making a purchase.
- Watching for card skimmers: Card skimmers are small devices that thieves often place on easily accessed card readers, such as a gas pump or an ATM. These devices let you insert your card into the machine, but steal the card information as you insert it. To spot card skimmers, check for loose or protruding card readers.
- Avoiding shoulder surfers: Scammers take advantage of any opportunity. A scammer might happen to be standing behind you on the bus while you log in to your bank account on your phone. Shoulder surfers have long been notorious at ATMs, but now that everyone can access their financial accounts on their devices from anywhere, it's more important than ever to be aware.
- Shopping on secure internet networks: Before entering your credit card on an e-commerce site, make sure it's secure by checking for a lock icon in the URL bar. While this is not a surefire way to avoid a scammer, it makes it safer to enter your credit card details.
Enroll in Protective Monitoring
If you suspect your credit card has been used in triangulation fraud, there is a good chance you may be a victim of wider identity theft. An Experian Premium membership, which includes alerts and dark web surveillance, can help spot any other fraudulent use of your personal information or tell you where it may be hosted online.