How fraudsters steal from merchants online - Fraud Library

The Fraud Practice eCommerce Fraud Consulting Services

Why do fraudsters steal? To make money. So when a fraudster is stealing from a merchant it is their intent to make money. They may do this by directly reselling the goods or services they got from a merchant or by tricking a merchant into refunding cash or other monetary devices (gift cards) for goods or services that were theirs to begin with.

The fraudster is going to make themselves look and “feel” like they are someone else, and they are good at it!

Enter your search terms Submit search form

Web www.fraudpractice.com

Don't short-change yourself..

In this section of the website we are going to dive deeper into understanding the fraudster. We are going to look at the history of fraudulent activity, the types of schemes they use, and ways to describe specific fraudster “personalities.” To begin our discussion I want to segment fraudulent activity into four categories, Identity Theft, Social Engineering, Convenience (ease of use), and Internal Fraud.

         These four categories give us a generic way to describe a fraudster’s trick or scam by describing the activities and characteristics of the order the fraudster is presenting.

These four categories are just the beginning, as you read through this section you will get more specific descriptive discussions on schemes and fraudster personalities. The main reason I start with these four categories is to give you a starting context for describing fraudsters so you can start to tie historical fraud knowledge with types of schemes and personalities.

Why is it important that we describe and categorize fraudster activities? The main reason is it helps us detect patterns and develop fraud-prevention techniques to stop these types of fraudulent behaviors. In working in fraud prevention it is important to not only build strategies that can detect sophisticated fraud activity but that can also shut the door once you have spotted a fraud pattern. No fraud practitioner wants to be known as the one that could stop the most sophisticated fraudster, but let the dumb ones keep coming back for more. I say this because it is easy to focus so hard on one type of fraudster, one point of attack, that we lose sight of the bigger picture. Remember, fraud has always been around. The moment you successfully stop a fraudster’s attack they will be looking for a new attack. Likewise, if you don’t stop them, they will keep coming back until you do.

Take another look at the four general categories listed above. Where would you focus your attention to try and spot (“Spotting”) this type of fraud activity? What would you do to shut the door and stop (“Stopping”) that type of fraud from reoccurring? The following table shows some of the places you can look for these activities and how you could shut the door.

If this still doesn’t make sense, don’t worry. I will be discussing the schemes, personalities and fraud-prevention techniques in much more detail as we go through the website. The intent of this exercise is to share a mindset. When you read stories of fraudulent activity, or share stories with peers, put on your fraud practitioner hat and analyze the activities that let the fraudster gain access and commit fraud (spotting), and then think about how you would prevent that same fraudster from returning (stopping).  

Property of The Fraud Practice, all rights reserved, no unauthorized duplication, reproduction or distribution without the express written permission of The Fraud Practice.