What Is the Triangulation Scam?

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What Is the Triangulation Scam?

By Elliot Nesbo

Published 9 hours ago

When shopping online, one scam you need to beware of is the triangulation scam. But what is it, and how can I spot the signs before it's too late?

If you buy products online, there's no shortage of ways that you can be ripped off.

Most of the time, it's obvious. For example, the product might not arrive—or you might receive something wildly different.

Unfortunately, though, not all online shopping scams are so obvious. In fact, many of the more sophisticated scams involve sending you exactly what you ordered.

A perfect example of this is the triangulation scam. So, what exactly is it—and how can you protect yourself? Let's take a look.

What Is the Triangulation Scam?

The triangulation scam combines elements of dropshipping with credit card fraud.

It typically involves three parties: an innocent consumer, an eCommerce store, and a criminal who aims to appear invisible to both.

When the fraud goes to plan, the criminal steals from the store and the consumer is tricked into being an accomplice.

How Does Triangulation Fraud Work?

Illustration of online shopping tabs on a screen

The triangulation scam starts with a product being put up for sale. This often happens on popular marketplaces like eBay. But more sophisticated examples involve the use of fake eCommerce stores created with platforms such as Shopify.

The product advertised can be just about anything. What most of these ads have in common, however, is that the price will typically be too low for a legitimate seller to make a profit.

At this point, the seller doesn't actually own the product. Instead, they wait until somebody places an order for it. They then buy the product from another eCommerce store and have it delivered to the buyer.

The scam is profitable because when the seller buys the product, they use a stolen credit card. This allows them to charge anything for the product because their only expense is the price of obtaining the stolen card.

Related: How Does Credit Card Fraud Work?

If all goes to plan, everybody wins at least initially. The seller gets paid, the buyer receives the product and the ecommerce store makes a sale.

The problems start when the owner of the stolen card looks at their monthly statement. At this point, a chargeback is typically initiated and the payment to the ecommerce store is reversed.

Who Is Hurt by the Triangulation Scheme?

The primary victim of triangulation is the eCommerce store. Once the payment is reversed, they've essentially been tricked into shipping the product for free.

Triangulation is particularly damaging to small businesses. Large eCommerce stores can usually absorb these things and remain profitable. Smaller businesses with small profit margins, however, cannot.

To make matters worse, it's small businesses that are typically the least capable of defending against such attacks. The best fraud prevention software is often outside of their budget.

The buyer is usually allowed to keep the item. They may he contacted and investigated. But it's often not practical to force them to return the item. Keep in mind that they are innocent, and they have technically paid for the product.

The owner of the card usually gets their money back along with a new card. Credit card companies typically offer fraud protection and this usually entitles them to a full refund.

If it happens once, their credit rating won't be harmed. But if a card owner is repeatedly targeted, suspicion may eventually fall their way.

By the time fraud is discovered, the criminal has usually disappeared with the money. This is achieved by using fake details and withdrawing any money sent to them before their account is even questioned.

The Triangulation Scam vs. Dropshipping

Image illustrating dropshipping delivery through a computer

Triangulation is not to be confused with dropshipping. They involve many of the same actors and steps but dropshipping has nothing to do with credit card fraud.

A dropshipping retailer will accept orders for a product that they don't already have. And they will then place an order at another retailer to purchase the item, before having it shipped to the buyer.

The difference is that the dropshipper pays for the item themselves, and makes a profit from the markup—rather than from credit card fraud.

Dropshipping isn't popular with everyone. The consumer often isn't aware of the business model, and usually ends up paying a higher price than they would if they bought directly elsewhere.

Many dropshippers also resell very cheap products that are subsequently delivered very slowly from faraway countries.

It is, however, a legitimate business model and one that many of the worlds largest retailers use in some fashion.

How to Avoid the Triangulation Scam

Illustration of an online commerce store

All parties involved in the scam are capable of taking steps to avoid it. Unfortunately, it's not always possible to avoid it entirely.

The card holder can try to keep their card details private. They can achieve this by being careful where they shop, using anti-virus software on their computer, and educating themselves about the latest phishing techniques.

Unfortunately, these steps offer no protection against one of their favorite retailers being hacked.

The customer can avoid such scams by being careful about what they buy, and who they buy it from. If a product is too cheap, there's usually a reason for this. The odds of being involved in this scam can also be reduced by only making purchases from highly reputable retailers.

The problem with these strategies is that these products aren't always suspiciously cheap. Criminals are also known to outsource the actual selling to retailers with existing reputations.

An eCommerce store can avoid this scam by investing in anti-fraud software. But the problem with this approach is that despite being expensive, it's not always effective.

Criminals constantly look for ways to bypass such software and many have become adept at doing so. And the harder such software is to trick, the more likely it will prevent legitimate purchases.

What Happens If You Are Involved in a Triangulation Scam?

If you think you might have been the victim of a triangulation scam, the good news is that the authorities are well aware of its existence.

If you buy something from a fraudulent seller, how they paid for it is usually their problem, not yours. And if your credit card was involved, you're highly likely to get your money back.

Unfortunately, if a retailer is caught in such a scam, there is very little recourse.

Protect Yourself From Triangulation Fraud

The triangulation scam is a sly way for criminals to make profits online while hurting eCommerce stores. And sadly, it often happens without either the buyer or the store having any idea.

Fortunately, you can take steps to mitigate the risk of becoming a victim of this scheme—regardless of whether you're a shopper or seller. And this article should have given you the knowledge you need to take those initial steps.

About The Author


Elliot Nesbo (24 Articles Published)

Elliot is a freelance tech writer. He primarily writes about fintech and cybersecurity.

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