Scammers are creative, you have to give them that I suppose. Recently we’ve started seeing a new chargeback fraud technique. Here’s how it works:
- A thief possesses a stolen credit card and also knows the billing address of the owner of the credit card.
- They purchase a large e-gift certificate, using the billing and shipping address of the actual owner of the card.
- They then use the gift certificate to place several smaller orders under a variety of aliases.
- After they receive their orders, they then file one large chargeback for the gift certificate.
This technique can circumvent some (maybe most?) fraud filters because:
- There is an AVS match (address verified) on the original purchase. They can get away with that because the gift certificate is sent electronically and never sent to the original card owner.
- All subsequent orders don’t use a credit card or PayPal, and thus aren’t subject to failing an address verification check.
Luckily we keep a pretty close eye on orders. Thus far we’ve foiled these attempts prior to any products leaving our warehouse, so we have yet to fall victim to this particular scam. But this just reaffirms how creative credit card thieves can be, and how important it is for us to stay one step ahead with our fraud detection.