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Call tag fraud schemes increasing

Posted by Michael Bloch in ecommerce (Thursday April 6, 2006 )

It’s the first time I’ve heard of this kind of fraud, but supposedly it’s a scam that’s been around a long while. While it’s been somewhat dormant for a few years, it resurfaced during the last holiday season according to reports from some major retailers. I’ve often thought that if scammers put as much thought and effort into legitimate business; they could make more money; but eh..

The way the scam works:

– Fraudster first steals/obtains credit card details and other accompanying identification – nothing new there.

– With those details, they then place an order with a merchant; using the *cardholders address* as the delivery address. This helps to make the order seem 100% legitimate and would easily pass most merchants’ fraud screening processes.

– The fraudster then contacts the recipient of the goods on or around the day of delivery posing as the merchant, stating that a mistake had been made and that the goods had been delivered to the wrong address. He asks the recipient to leave the goods outside for a shipping company to pick up the next day. The second shipping company will usually be a different one to the original delivery service.

– The fraudster then creates a “call tag” (hence the name of the scheme) via the other shipping company who then pick up the goods and delivers it to the fraudster. Call Tags are usually generated by a merchant through their freight agency when a client needs to return goods they’ve purchased.

– The recipient then invariably notices a charge on their card statement for the goods they never ordered, is understandably upset and then issues a chargeback via their bank to the merchant.

As you can imagine, if the recipient isn’t around when the second shipping company picks up the goods, it can be very hard to track down the fraudster; but the Merchant Risk Council advises that affected merchants should follow up with the cardholder to at least attempt to trace the final delivery address. This is just to keep the pressure on fraudsters to have to keep moving around and finding merchants that don’t follow up on call tag scheme losses. It doesn’t solve the problem, but it can help minimize it and perhaps discourage a few of the parasites.

Learn more about preventing credit card fraud and minimizing chargebacks



 

 
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