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Table of Contents

Lead Story

Bitcoin gold rush continues

Ann Train

News

Industry Update

CFPB urges faster, safer consumer payments

PayPal gets wings, makes mobile play

ETA returns to San Francisco for Transact Tech

Bitcoin exchanges gain traction, dodge VAT

PCI SSC revamps P2PE, device standards

Features

Pitfalls of proliferating payment speak

Serving the connected customer of the future

The Mobile Buzz: Digital wallets face uphill battle

Views

New credit card scam at resort area hotels

Chris O'Donnell
Instabill Corp.

Insider's report on payments: Fighting online scammers

Patti Murphy
ProScribes Inc.

The most valuable merchant portfolio

Adam Hark
MerchantPortfolios.com

Education

Street SmartsSM:
How can I grow my business?

Jeffrey I. Shavitz
TrafficJamming LLC

Staying informed in the payments biz: A sane approach

Jeff Fortney
Clearent LLC

EMV: The clock is ticking

Michael Gavin
Cayan

The one man show: Selecting ISO partners

John Tucker
1st Capital Loans LLC

Company Profile

Opus

Topcreditcardprocessors.com

New Products

Global payments, localized currencies

Snapcard
Snapcard Inc.

Multifaceted, omnichannel POS technology

Retail Pro Prism
Retail Pro International LLC

Inspiration

The Jurassic world of work

Departments

Readers Speak

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

August 10, 2015  •  Issue 15:08:01

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Insider's report on payments: Fighting online scammers

By Patti Murphy

The Internet has been a huge agent of change, for lawful and unlawful enterprises alike. Recently, I had the misfortune to learn first-hand about the latter category. In retrospect, I realize I ignored key signs that something was amiss. Too eager to make a purchase, I let my guard down. I had been looking for a vehicle for some time, and I found just what I'd been looking for online a few days before the Fourth of July weekend. At $1,500, it was a good price. Maybe too good.

Shortly after I paid $1,500 for a truck that never materialized, I discovered it was too small a sum for law enforcement to care. And the Federal Trade Commission merely took a report and referred me to the Internet Crime Complaint Center, or IC3, which tracks and reports on crimes involving the Internet. I wish I'd known about IC3 before, because perusing the site, I quickly learned I'd gotten caught in a scam that's being orchestrated from Romania and relies on the popularity of prepaid cards.

Fraudsters getting smarter

Now, I spend a significant amount of time online. As a journalist, I have come to rely on the Internet for the ready access it provides to information sources from all over the world. And as a consumer, I find it is often faster and less expensive to shop online than at brick-and-mortar stores. It's not unusual for me to spend 30 to 40 hours a week online. Plus I have email accounts that attract hundreds of phishing expeditions each week. I've gotten proficient at spotting potential fraud and wasn't prone to falling prey. Or so I thought.

I'm relating this tale now as a warning: Internet scammers are getting smarter, folks. The gang that scammed me had excellent command of the English language, at least the written language. My call to what was supposed to have been an eBay Inc. support center was answered by someone with a foreign accent, but I figured eBay was using off-shore call centers. Had I done a reverse lookup on the number I would have learned it was listed as a mobile tied to an Indiana address not affiliated with eBay. But in my eagerness to get that truck it never crossed my mind.

Gift card scams prevalent

According to the IC3, gift card fraud is an escalating problem. Several scams involving the cards, also referred to as closed-loop prepaid debit cards, have been reported to the center. Many involve the secondary market for gift cards that consumers frequent to sell or exchange unwanted cards. Others, like the one that snagged me, take advantage of the relative anonymity of online auctions sites.

Victims purchase items on an auction site and are advised to pay using prepaid cards. I was advised to use PayPal My Cash prepaid cards. I was led to believe the money would be held in escrow by eBay until the vehicle was delivered and inspected. It was a short week, because of the holiday weekend, but I was assured the vehicle would be delivered July 2, and the seller requested detailed information to facilitate timely delivery. But the vehicle never arrived.

Skepticism required

My message is this: buyer beware, especially when shopping via online auction sites. There are steps consumers can and should take to protect themselves when frequenting online auctions, as well as when shopping the secondary gift card market. First and foremost, be a skeptic. If a deal seems to be too good to be true, it probably is. Offer to telephone or ask the seller to telephone you to discuss logistics of the sale. If the seller can't or won't do this, do not proceed. Legitimate sellers are motivated and will make every effort to meet potential buyers.

In my case, the seller said he was with the military and leaving within days on an overseas assignment. Plus, he offered to have the vehicle delivered to me at no extra cost; he just needed to get rid of the vehicle before he shipped out to avoid the cost of storage, or so the email messages stated. I was swayed by a combination of patriotism and thirst for a good deal.

Being a skeptic includes searching the web for information about scams for any that might resemble the transaction you're considering. Also be sure to visit www.ic3.gov.

Verify any claims a seller makes suggesting your purchase is protected by a third party. I was told the transaction would be covered by "eBay Buyer Protection," and that eBay would not release funds to the seller for five days to provide enough time for me to have it inspected and cancel the transaction if it failed inspection. I knew eBay offered buyer protections. Had I searched the eBay site I would have discovered those programs are limited in scope and go by the names "Vehicle Purchase Protection" and "Seller Condition Assurance."

The email I thought I had received from eBay regarding its Buyer Protection program looked official. The logos looked legitimate and the grammar and syntax were spot on. Also, someone purportedly shipping off to defend our country had already hooked me on the legitimacy of the program. Only later did I think to examine more closely the email I thought was from eBay, whereupon I realized the sender's email address was not at www.ebay.com.

Although all the emails associated with this scam were well written, in retrospect, I see that the English was a little too formal. Recently, I found on the eBay site an alert about the scammers who caught me off guard. "Criminals want to lure you into feeling safe and may also disguise their websites or emails to look like they are from eBay, when they are not," the eBay alert states in part.

Costly lesson learned

"Lessons learned are like bridges burned; you only need to cross them but once," wrote Dan Fogelberg, folksinger/songwriter from the 1970s. Well, I've learned some lessons, among them is don't purchase automobiles over the Internet. Sometimes, for some purchases, it is necessary to feel and touch (and test drive) a purchase before any money changes hands.

I've also come to understand that there's a dark side to closed-loop prepaid cards: the anonymity makes these a perfect tool for picking the pockets of American consumers, and to do so without ever even having to step foot inside the country.

Patti Murphy is Senior Editor of The Green Sheet and President of ProScribes Inc. She is also the founder of InsideMicrofinance.com. Email her at patti@greensheet.com.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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