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Consumers caught in credit card scam 'triangle'

In an almost flawless scam, thieves are using eBay and Amazon to neatly turn stolen credit cards into cash.

It was odd that the package arrived in a box stamped Amazon.com, but the price was right, so Yung-Chi didn't think much about it. Later, he went back online and bought another 12 or so items from the same eBay seller; they all arrived from Amazon.

He didn't think anything of it until U.S. Postal Inspector Barry Mew showed up at the door asking questions about the packages.

"All of the sudden I thought, 'Um, what did I buy?' It was certainly a bad feeling," said Yung-Chi, who asked that his last name not be published.

Yung-Chi told Mew everything he could about the auctions he'd recently won on eBay. He said he assumed the seller had some business relationship with Amazon, and that's why the packages kept arriving from the online retailer. Since he was getting the items at about half retail price, he gladly sent money orders to a New York City address as payment, and continued doing business with the seller until Mew showed up at his door.

But behind the scenes, the seller was simply ordering the merchandise from Amazon with stolen credit cards and having it shipped to the buyer marked as a gift to disguise billing information. The unwitting buyer paid with a money order, enabling the seller to easily turn stolen credit card numbers into cash. 

This type of scam isn't new to the Internet. In the fraud business, it's known as "triangulation," said Julie Fergerson of the Merchant Risk Council, an Austin, Texas-based consortium of companies that studies online fraud trends.

The old-fashioned scheme has reared its ugly head again, said Mew, an online fraud expert -- and Amazon isn't the only victim.

"We're having a big problem out there right now. ... This has happened to hundreds of people," Mew said. Along with Amazon, the con artists seem to be targeting small, specialized e-commerce sites that sell tools and appliances. Among the merchandise being dangled as bait to unwary auction users: cordless leaf blowers, electric drills, robotic vacuum cleaners and sewing machines.

"There's Internet merchants sending stuff all over the United States."

EBay spokesman Hani Durzy said his firm's site has been used in triangulation schemes "on rare occasions," but said there hasn't been an increase of incidents lately. Amazon didn't immediately return requests for an interview.

The scheme is so sophisticated that Fergerson suspects a single group or individual is behind the scam, which seems to come and go in spurts.

"These guys definitely know what they are doing," Fergerson said. "This is a guess, but they may get between $50,000 and $500,000 in cash during a three to nine month period. Then, when we actually feel like law enforcement is getting close, he, or they, disappear."

Mew said the recent spurt of activity has been going on for about six months.

"The package is ordered as a gift so there's no billing information inside," he said. A glance at the packing slip won't reveal anything out of the ordinary. In fact, it's nearly impossible for consumers to spot the scam ahead of time -- outside the red flag of a seller insisting on a money order or electronic funds transfer for payment. EBay strongly advises against using such payment methods, because there is no way for consumers to get refunds once they have sent the money.

The auction pages posted on eBay look professional, and they ought to. All the text and images are stolen right from Amazon's site.

Consumers caught up in the scheme may find out they have more trouble than a surprise visit from law enforcement -- they might be out the cash. Young-Chi said it's not yet clear what will happen to the items he unwittingly helped steal from Amazon, but he might be forced to return them, or pay for them.

There are a few other clues consumers can watch out for, said Young-Chi: The sellers always use the exact description of the item that can be found at Amazon. The items always include the text "Please allow 5 BUSINESS DAYS for shipping after receipt of payment."  Shipping always costs $10, and the sellers generally deal in tools, household appliances and electronics. And the auctions are almost always one-day auctions, probably because the scam artist is always in a race against time, trying to order the merchandise before the stolen credit card account is shut down.

The Merchant Risk Council urges consumers to guard against this scam by asking that the seller provide a serial number for the product on offer before engaging in the transaction. The agency also recommends that small merchants regularly search Google and auction sites for evidence that their product descriptions have been pilfered.