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Triangulation Fraud

TL;DR
  • Triangulation = Fraudster runs fake store, takes real payment, fulfills order with stolen card from another retailer
  • The end customer receives real goods and doesn't know fraud occurred
  • Victim is the retailer + cardholder; fraudster keeps entire customer payment
  • Detect via: below-market pricing, different retailer packaging complaints, billing/shipping mismatches
  • Related to third-party fraud and card testing

A three-party scheme using stolen cards to fulfill legitimate orders.

Definition​

Triangulation fraud is a sophisticated scheme where a fraudster operates a fake or discount storefront, collects payment from legitimate customers, then fulfills orders using stolen credit cards from another retailer.

How It Works​

         Customer                    Fraudster                   Retailer
            │                            │                           │
   1. Places order ─────────────────────>│                           │
      (pays $80)                         │                           │
            │                            │                           │
            │                  2. Places order ──────────────────────>│
            │                     (stolen card)                       │
            │                            │                           │
            │                            │<───────── 3. Ships item ──│
            │                            │      (to customer address) │
            │<────────── 4. Receives ────│                           │
            │              item                                       │
            │                            │                           │
            │                     5. Keeps $80                        │
            │                        profit                           │

The Fraudster's Profit Model​

  • Sells at 10-30% below retail (to attract buyers)
  • Pays $0 for goods (stolen card)
  • Keeps entire payment from customer
  • Shipping goes directly to victim's address (harder to trace)

Why It's Effective​

AdvantageDescription
Customer is happyThey receive real goods
Customer is unwittingOften no idea fraud occurred
Hard to traceGoods ship to legitimate addresses
Scales easilyCan process high volume
Multiple victimsCardholder AND retailer suffer

Detection Signals​

For Retailers (Victim Side)​

SignalRisk Level
Multiple orders, different cards, similar shipping patterns🔴 High
Orders from new customer with unusual ship-to patterns⚠️ Medium
Billing/shipping mismatch (typical of triangulation)⚠️ Medium
Order sources from discount/unknown marketplaces⚠️ Medium

For Platforms (Marketplace Side)​

SignalRisk Level
Seller with prices significantly below market🔴 High
New seller with sudden high volume🔴 High
Drop-shipping from other retailers⚠️ Medium
Customer complaints of retailer packaging🔴 High

Prevention Strategies​

For Retailers​

  1. Shipping analysis – Unusual ship-to velocity patterns
  2. Device fingerprinting – Link suspicious orders
  3. Network analysis – Connect related orders/accounts
  4. Marketplace monitoring – Watch for your products at steep discounts

For Marketplaces​

  1. Seller verification – Identify and vet sellers
  2. Pricing anomaly detection – Flag below-cost pricing
  3. Fulfillment verification – Require inventory proof
  4. Customer feedback analysis – "Came from [other retailer]" complaints

Impact​

PartyHarm
CardholderFraudulent charge on card
RetailerChargeback + lost goods
MarketplaceReputation damage
Legitimate sellersUndercut on price
End customerMay face investigation, confiscation