This type of fraud involves someone using a different address for an order to receive items that were never sent to them. This includes situations where someone orders from a store and uses an address that is associated with an account that the store does not own, or even where the address is completely made up.
It can also include situations where someone uses a family member’s address for an order and then refuses to send the items as promised.
Fake address fraud may be illegal, but it tends to happen more often in stores that have a limited return policy or do not have any way of verifying the validity of the shipping information provided by customers.
There are two main types of this type of fraud: delivery address fraud and order abandonment fraud.
Delivery address fraud occurs when someone uses an invalid or fraudulent delivery address to receive items they did not order.
Order abandonment fraud happens when someone orders a product and then decides not to accept the package after it has already been delivered.
Criminal law experts differ on whether reshipping is a crime. It is often viewed as a masking tactic, but it doesn’t directly violate any federal or state laws. Reshippers who commit fraud are rarely charged with a crime – only when specific laws are broken as part of the reshipping scheme.
Most reshipping cases are prosecuted in civil courts, where the penalty is monetary damages. Reshipping scammers can be sued for money lost on the deal, including administrative costs and fines, as well as damaged reputation.
A civil lawsuit can also result in a court order to permanently ban the reshipper from future online selling. Such bans can be imposed by the online marketplaces where the reshippers sold the items.
Reshipping fraud as a Service, or RFaaS for short, is a term coined by ecommerce businesses to describe the act of a business that hires individuals to conduct reshipping fraud. RFaaS represents a growing concern among law enforcement and ecommerce stakeholders.
A common reshipping scam goes like this: A criminal will post a job opening online, often on websites like Craigslist, with a promise of easy money.
Job seekers respond to the ad, and the criminal will ask potential reshippers to send a deposit. This deposit is either mailed to the criminal or paid through a service like Western Union.
When the reshipping ‘employee’ receives the product, they are instructed to repackage the item and ship it to another address. This might be a fake address, like a drop-off store. The reshipping employee is usually paid a portion of the sale price after the item is sold.
Finding evidence of RFaaS can be challenging. Reshippers often have little to no knowledge of the criminal activity associated with the goods they are sent. They sometimes don’t even know who the buyer was or what item was purchased.
Reshipping fraud can cause immeasurable damage to online retailers, ecommerce marketplaces and individuals. Ecommerce businesses can lose money due to fraud, as well as suffer a hit to their reputation as they may be held responsible for the scam.
Marketplaces like eBay have a significant impact on the economy, driving $1.2 trillion in U.S. gross domestic product annually. Reshipping fraud is a major issue for marketplaces. eBay reported that less than 1% of sellers are responsible for nearly 50% of all open fraud cases and that many cases are related to reshipping fraud.
Other marketplaces like Wish, Amazon and Alibaba have seen a rise in reshipping fraud in recent years.
There are many ways reshippers can commit fraud. The most common is when the scammer purchases a single item from an online marketplace and ships it to the reshipping address of the reshipping service.
The reshipping service receives the item, repackages it and resends it to the original buyer, receiving a fee from the buyer along with their address. The scammer then receives the item at their address and either sells it again or keeps it.
Some scammers will also use stolen credit cards to purchase items online, and then ship them to the reshipping address. The most common way reshipping scammers make money is by stealing credit card information.
They will take the information directly from an order or use stolen credentials to order items themselves. They then reship the items to a fake address.
Some key ways to prevent reshipping fraud include:
Reshipping remains popular as it is a low-risk way to make money. As ecommerce grows, so does reshipping fraud. Reshipping is a complicated issue, as it involves many players including online marketplaces, payment providers and, most importantly, customers.
It is important to remember that, just like any other type of fraud, reshipping is a crime. For businesses, it is crucial to have a fraud prevention strategy in place.
This means not only relying on fraud prevention services from a third-party, but also having internal protocols and procedures in place to detect suspicious activity and respond quickly.