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Reshipping Fraud

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Welcome back to part 7 of our series, “The top 10 phrases in the fraud industry (and what they really mean!)”

What is Reshipping Fraud and Why is it Illegal?

Today we are tackling a big one that predates the Internet. We are talking about reshipping fraud. Reshipping fraud has many names, such as delivery address fraud and fake address fraud. Reshipping fraud works directly hand in hand with identity theft. Reshipping fraud operates on a basic premise. Person A is an online criminal and can live anywhere on the globe. Person B is an innocent individual and most likely unaware of what reshipping fraud is and its penalty. Person A has the financial and personal details of Person C, an identity theft victim of Person A. Person A intends to make purchases with Person C’s money, but this individual cannot ship to their own address out of fear of being tracked down by the authorities. So Person A needs an intermediary (Person B) to receive the online goods at their address and reship them to their (Person A’s) address.

So how does Person A and Person B meet? Well, they almost always meet under false pretenses, to start with. There have been a variety of methods that Person A has used to trick Person B into accepting the illegally purchased goods on his behalf. The USPS has posted an online PSA highlighting the top 3 lies used by Person A to get Person B to accept the goods. 1. Work-at-Home Scams. 2. Sweetheart Scams. 3. Charity Scams.  All of these reshipping scams involve individuals A and B meeting through the internet, and through one method or another involve Person A sending a good to Person B with instructions for Person B then to send it to Person A.

Reshipping fraud naturally is a major concern for the USPS, shipping companies such as FedEx and UPS, as well as any business that ships goods to its customers over the internet. Whether we know it or not, almost all of us have encountered measures to prevent this type of fraudulent activity. Have you ever signed for a package? Well then you have interacted with a preventative measure to stop reshipping fraud. Businesses that have concerns about shipping will normally pass along the ‘sign for the package’ measure to prevent fraud from occurring. But there are a variety of methods that retailers take to stop reshipping fraud.

How have merchants been fighting Reshipping Fraud?

Some merchants will point blank refuse to ship to a customer that enters a different shipping address than the billing address. Some merchants call the customer, while other merchants do address lookups in an attempt to draw a connection between person B and Person C. There are other measures that merchants can take, such as proxy server detection or velocity detection but these effective techniques are not universally utilized by all merchants. The most effective way to stop reshipping fraud in our scenario is to determine that in fact Person C (the cardholder) knows Person B (the delivery recipient). Short of calling person C, merchants have had sporadic success in stopping reshipping fraud using online tools. So, is there an effective way to establish the relationship between Person B and Person C?

Person B hopes after this reshipment Person A will finally deliver on all that Nigerian cash he's promised. I mean, who would lie on the internet?!

Person B hopes after this reshipment Person A will finally deliver on all that Nigerian cash he’s promised. I mean, who would lie on the internet?!

One of the most effective fraud prevention tools in a merchant’s arsenal is the litany of social media sites available. With LinkedIn, Facebook, Twitter and many other social networks as well as data bases of public information, merchants should be able to draw a verified connection (if there is any) between a buyer and the recipient. Lack of a verified connection doesn’t mean it’s bad, it just means that the merchant will have to do more checks to validate the data provided. Things like the IP address of the purchasing computer, pattern detection to detect if this order is consistent with Person A’s shopping behavior as well as dozens of other checks that fraud solution providers like Signifyd provide in real time to verify every purchase.

Final Thoughts

Reshipping fraud is just one of many different forms of fraud online merchants have to deal with. From users with multiple email addresses trying to take advantage of an offer to consumers committing friendly fraud with chargebacks, knowing who to ship to and who to decline can seem at times an unsolvable question. Signifyd can answer these questions for you on every order in real time. Thanks for reading!


Signifyd provides an end-to-end Commerce Protection Platform that leverages its Commerce Network to maximize conversion, automate customer experience and eliminate fraud and customer abuse for retailers. Signifyd counts among its customers a number of companies on the Fortune 1000 and Internet Retailer Top 500 lists.

Signifyd

Signifyd provides an end-to-end Commerce Protection Platform that leverages its Commerce Network to maximize conversion, automate customer experience and eliminate fraud and customer abuse for retailers. Signifyd counts among its customers a number of companies on the Fortune 1000 and Internet Retailer Top 500 lists. Signifyd is headquartered in San Jose, CA., with locations in Denver, New York, Belfast, and London.