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The Lengths Criminals Will Go to Perpetuate Fraud

Post Categories: Blog

By: Greg Baxley, Marketing Coordinator


Fraud is the Name of the Game

It’s no secret that fraudsters are notoriously devious, enacting broad schemes of deceit that can span multiple offenses. Every time a fraudster changes their tactics, it makes tracking them more difficult for merchant acquirers and law enforcement. In the 11+ years that G2 Web Services has been offering risk solutions to the acquiring market, we have identified millions of violations, and helped to shut down hundreds of thousands of violators. We’ve been tracking traditional transaction laundering for quite a while, and a new spin on TL that we are seeing is harvesting websites.


In a traditional transaction laundering scheme, the criminals usually utilize a legitimate front site. This is a normal looking retailer, registered under a seemingly valid merchant account. They seem mundane to acquirers, but secretly process transactions for other unknown sites selling illicit goods.
A harvesting site may sound like something from a horror movie, and it truly is something just as scary.
Harvesting websites are designed to obtain credit card credentials to sell on the black market. Often referred to as honeypots, they are public sites that trick consumers into initiating transactions that are not valid. What makes this scary is that it is unclear how or when the captured card information will be used.


Global Hotel Chain Falls Victim to Misappropriation

A recent example involved a reputable and well known global hotel chain being targeted by a sophisticated criminal in a bold and interesting way. The violator built a website that mirrored the look and feel of an actual lodging and travel website, complete with a legitimate looking URL (See Figure 1). Using misappropriated images and graphics to perpetuate the illusion, dozens of pages were created, complete with sections for meetings and events, reservations, rewards points and even employment listings (See Figure 2). An unknowing consumer could potentially browse the fake site, never realizing that he or she was actually visiting a facade peddling dangerous narcotics including heroin, ketamine and rohypnol.


Figure 1

Figure 1: Harvesting website masquerading as a hotel chain


Figure 2

Figure 2: Advertising exclusive offers, hotel deals, rewards and events to disguise the site’s true purpose


But that wasn’t all. Customers could place orders for banned research chemicals and medications including Xanax, Vicodin, and OxyContin without a prescription. Using direct URLs known to potential customers, or accessed through the click of an appropriate tab, users could visit a storefront listing product descriptions, pricing and shipping information. Illegal drugs and pharmaceuticals could be purchased with a credit card, easily, quickly and discretely (See Figure 3). This is not an uncommon scenario.


Figure 3

Figure 3: Illegal drugs, banned research chemicals and prescription medications


This violating site introduced a unique juxtaposition between hotel marketing and illegal drug sales.


How Many Laws Can One Criminal Break?

Whether this criminal possessed the capability to fulfill drug orders is undetermined, but the intent and reward were apparent. By having users enter their credit card information, the fraudster could then harvest accounts to offload to black market buyers and sellers. This nefarious operation was orchestrated to derive revenue from multiple streams — all illegal, and all coming from this one “hotel” website.


To further aid in presenting a valid front, the violator also referenced the name of a reputable online pharmacy and copied the “terms and conditions” directly from their website.


This violator succeeded in crafting an intricate facade, breaking numerous laws in the process. Credit card fraud and identity theft were just the tip of the iceberg. By stealing trademarked and copyrighted graphics and imagery from established brands, numerous intellectual property rights laws were being broken. By purporting to sell illegal drugs, intent-to-sell was established, and if the violator actually shipped any drugs, trafficking of illegal goods would also be committed. If any funds were funneled from this operation through legitimate sources, then international anti-money laundering crimes would be violated.


Identify and Eliminate Violators from Your Portfolio

This is the reality of criminal enterprises that threaten acquiring banks, PSPs and ISOs with card scheme fines, regulatory penalties, government scrutiny, consumer litigation and unwanted attention from law enforcement agencies internationally.

Criminals who run sites like this are cunning, and sometimes very hard to detect. The only way to defeat them is to be eternally vigilant. Bad actors have evolved, sometimes working in syndicates, broadening their capabilities to bypass merchant acquiring guidelines. To efficiently identify and eliminate fraud from your portfolio, you must use a mixture of technology and human expertise to pinpoint the highest risk factors present in transactions.

To learn more about risk solutions, download the fact sheets for G2 Persistent Merchant Monitoring, G2 Transaction Laundering Detection and G2 Global Boarding. For additional insight into better positioning your company against fraud, download our solution brief: An Organizational Framework for Transaction
Laundering Detection


See how our solutions can help you.

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