The haunting specter of triangulation fraud is hitting major merchants hard this holiday season. Three players create the perfect storm - an innocent buyer seeking deals on marketplaces, a fraudster selling products they don't own, and a stolen credit card victim who gets hit with the chargeback.

Here's how it works: A legitimate shopper finds your product listed below retail price on a marketplace. When they buy it, the fraudster uses a stolen credit card to purchase that same item from your actual store, shipping it directly to the buyer using their contact information. The buyer gets their discounted product in official packaging, but when the real cardholder sees the charge, they file a chargeback that lands on your merchant account.

The warning signs are clear - marketplace listings under your retail price, sellers with few reviews or reviews for unrelated products, international shipping locations, and sponsored listings designed to appear first in search results.

Key topics covered:

[00:00] Intro

[03:52] Triangulation fraud schemes targeting major merchants

[06:36] Dark triangle fraud explained simply

[08:42] How legitimate buyers get scammed unknowingly

[10:08] Spotting triangulation fraud marketplace red flags

[12:04] Call stolen card holders directly

[14:21] Contact buyers who received stolen goods

[18:42] Incentivize direct website purchases over marketplaces

[24:31] Card testing targets higher value products

[26:48] Gift cards see 10,000 order spikes

[28:36] Quarter of good traffic uses VPNs

[30:09] Second look recovers declined revenue

[32:15] Free decline traffic evaluation offer

[34:24] Fraudster manipulates customer service for refunds

[37:37] AI generates convincing refund requests

[40:01] Marketplace AI blocks legitimate fraud reports

Card testing has evolved beyond cheap items. With checker services disappearing, fraudsters now target products between 15 and 30 dollars. One merchant saw a 25 dollar gift card go from 5 orders per week to over 10,000 in a single day. Meanwhile, legitimate VPN usage has jumped from 11% to over 25% of good traffic, forcing risk teams to reconsider their proxy-based rules.

The second look strategy offers massive potential. Taking declined orders and having them evaluated outside your data silo can recover 20 to 45 percent of falsely declined transactions. These recovered orders complete without chargebacks, turning your decline bucket into a revenue opportunity.

The Fraudcast community shares real experiences with triangulation schemes, from marketplace sellers manipulating return tracking to fraudsters using AI-generated customer service requests. Legal teams are successfully shutting down marketplace accounts when merchants document the fraud properly and contact both the cardholder and the recipient.

For merchants dealing with these attacks during the busy season, the key is knowing your products, monitoring volume spikes, and not being afraid to pick up the phone. When you call the person who received the item, they'll often admit they bought it from a marketplace at a discount, giving you the evidence needed to take action.

Connect with other fraud professionals dealing with these same challenges in our Slack community where the conversation continues beyond these weekly sessions.