Marketplace fraud: The start of a sophisticated criminal scheme
According to a study by Lloyds Banking Group, more than a third of the ads on Facebook Marketplace could be scams.
Scammers use e-commerce and marketplace platforms because they can create fake profiles to sell non-existent or counterfeit products.
Criminals have two main goals when carrying out marketplace scams:
- Deceive individuals into transferring money for goods that don’t actually exist.
- Use social engineering to manipulate buyers into sharing personal information during the exchange.
The social engineering element means that marketplace fraud can be the first step in a larger criminal scheme designed to defraud the same victim multiple times.
In this blog, Tony Sales, CIO at We Fight Fraud, Author, and a former fraudster, shares an anonymised victim story based on real-life events to illustrate how marketplace fraud works.
Tony’s perspective is unique, as he was once a career criminal who now works to raise awareness of financial crime to protect victims and help the industry adopt a more proactive approach.
The following scam is taken from our e-book Inside the Scam: How APP Fraud Fits into the Fraudsters playbook.
How marketplace fraud works: an example
Step 1: Lure in victims using fake ads on social selling sites
Criminals use social selling platforms like Facebook Marketplace to create fake ads for desirable items at attractive prices to create a sense of urgency. Cars, especially popular or slightly rare models, are a common choice.
Criminals are very intentional with the items and the prices they choose.
“Criminals will pick something that’s in high demand but short supply. They want to get the people looking for the bargain who will move quickly,” — Tony Sales, CIO at We Fight Fraud.
Step 2: Chat with potential buyers to find victims
A potential victim replies to the ad. They have no idea that they are chatting to a fraudster and the car they interested in buying doesn’t exist.
The seller sounds professional and trustworthy throughout the conversation, building trust by making multiple assurances, including a kind offer to drop the car off. The two even chat over the phone, laughing and joking by the end of their five-minute call.
Contracts and other onboarding-style documents convince the buyer that they are dealing with a legitimate seller. They fill out a form as requested by the criminal seller, share various personal details, and sends a scan of his passport and a bank statement. Much of this information that the victim has shared can be used against them in later scams
“It will all seem very official. There will even be documents from supposed past owners.” — Tony Sales, CIO at We Fight Fraud.
Step 3: A victim transfers money for the car
The buyer is keen to get the deal done and get their dream car for a bargain price of just €2400. Once all the paperwork is complete, the buyer transfers the payment to the bank account the seller provides. As soon as the payment goes through the seller vanishes, and their Facebook account gets deleted.
How marketplace fraud is used within a wider criminal scheme
Not only have the criminals gained financially. During the exchange, they gained various personal details they can use to dupe the victim further by impersonating their bank or utility provider.
To see what happens in the next step of the criminal playbook, based on real victim accounts, read our e-book Inside the Scam: How APP Fraud Fits into the Fraudsters Playbook.
