Planet Money #1568 (26 Aug 2022): Wake up and smell the fraud
Nina gets a coffee machine that takes coffee pods, and then orders some Nespresso pods from ebay at like half the price they should be. She wonders why they’re so cheap, but there’s explanations other than them being stolen (like someone having a bunch close to expiry, or getting them free as a loyalty perk or something) so she figures it’s probably fine.
But then they show up delivered direct from Nespresso, and a $200 coffee machine shows up along with them. Rather than being like “yay free stuff” she’s like “wtf” and tries to investigate. It’s difficult to get Nespresso customer service to understand the problem but there’s a name on the receipt that isn’t hers. She thinks there’s probably some kind of scam going on but isn’t sure whether that name belongs to the scammer or the victim.
She buys a few more suspiciously-cheap boxes of pods from ebay. One comes with a milk frother, another with twice as many pods as it should. The names on the receipts are different, so she thinks these are probably victims. After a while one says they can’t deliver the thing with the sort of bad-grammar-and-sob-story-about-my-mother that screams “internet scam”.
Patrick McKenzie comes on to help explain. Credit card fraud is an industry with forums and ratings and conferences and division of labor—“carders” steal credit card numbers and “cashers” turn credit card numbers into money.
An easy thing to do is buy stuff and then sell it at a flea market. But then it shows up at your door which is kinda sus. Or you can set up a fake business and use the credit card numbers at it, but usage patterns there will be pretty sus too. (Plus chargebacks, but those aren’t mentioned at this point for some reason?)
So what’s going on here is called triangulation fraud. The scammer gets Nina’s real money, then uses the victim’s card to buy an actual product and send it to her. Nina is (expected to be) happy, the scammer is happy. The victim is sad but the bank makes them whole, and the bank does a chargeback from Nespresso. So Nespresso is the one who loses out. But this scam can easily target lots of different companies, and they all expect a small number of chargebacks, so none of them notice anything particularly off.
But Nina does do something, I forget what, and after a while the cheap coffee pod sellers on ebay disappear.
Why the free coffee machine and other stuff? Unclear, but Nina guesses it’s for loyalty and to improve seller ratings on ebay. But she probably wouldn’t have investigated if it hadn’t arrived.
Planet Money #1568 (26 Aug 2022): Wake up and smell the fraud
Nina gets a coffee machine that takes coffee pods, and then orders some Nespresso pods from ebay at like half the price they should be. She wonders why they’re so cheap, but there’s explanations other than them being stolen (like someone having a bunch close to expiry, or getting them free as a loyalty perk or something) so she figures it’s probably fine.
But then they show up delivered direct from Nespresso, and a $200 coffee machine shows up along with them. Rather than being like “yay free stuff” she’s like “wtf” and tries to investigate. It’s difficult to get Nespresso customer service to understand the problem but there’s a name on the receipt that isn’t hers. She thinks there’s probably some kind of scam going on but isn’t sure whether that name belongs to the scammer or the victim.
She buys a few more suspiciously-cheap boxes of pods from ebay. One comes with a milk frother, another with twice as many pods as it should. The names on the receipts are different, so she thinks these are probably victims. After a while one says they can’t deliver the thing with the sort of bad-grammar-and-sob-story-about-my-mother that screams “internet scam”.
Patrick McKenzie comes on to help explain. Credit card fraud is an industry with forums and ratings and conferences and division of labor—“carders” steal credit card numbers and “cashers” turn credit card numbers into money.
An easy thing to do is buy stuff and then sell it at a flea market. But then it shows up at your door which is kinda sus. Or you can set up a fake business and use the credit card numbers at it, but usage patterns there will be pretty sus too. (Plus chargebacks, but those aren’t mentioned at this point for some reason?)
So what’s going on here is called triangulation fraud. The scammer gets Nina’s real money, then uses the victim’s card to buy an actual product and send it to her. Nina is (expected to be) happy, the scammer is happy. The victim is sad but the bank makes them whole, and the bank does a chargeback from Nespresso. So Nespresso is the one who loses out. But this scam can easily target lots of different companies, and they all expect a small number of chargebacks, so none of them notice anything particularly off.
But Nina does do something, I forget what, and after a while the cheap coffee pod sellers on ebay disappear.
Why the free coffee machine and other stuff? Unclear, but Nina guesses it’s for loyalty and to improve seller ratings on ebay. But she probably wouldn’t have investigated if it hadn’t arrived.