This article also answers the questions surrounding “The Strange Case of the Counterfeit Trade Dollar” from a couple of weeks ago.
I received a phone call the other day from my father who lives 2 hours away from me. He was sort of laughing on the phone and asked me to guess what he received in the mail. After a few failed attempts he informed me that he too had received a counterfeit coin in the mail. Both coins originated from China and both required a signature. The only thing my father, myself, and China have in common is one purchase made on eBay a couple of weeks back.
Through investigating and pressing the PayPal representative for details here is how the scam seems to work.
- First they build up an account to a point where it has a fairly good positive feedback rating. The seller I purchased from had been around for 2 years and had 500+ positive feedback with only one negative in the last year.
- Next comes the big day. The seller starts offering sought after items at a deep discount. They maintain the quantity of these items at only a few and keep updating the available quantity throughout the day. The seller in question here had GoPro cameras, Android tablets, and phones all for ridiculous prices. When I put an order in for a GoPro Camera they had an available quantity of 4. By the end of the day they had available quantity of 6 and had sold over 500 units of just this one product.
- Next you will eventually start to see the negative feedback flooding in for the seller. The seller will most likely turn their feedback to private to hook the last couple of people making purchases. (I was unaware of this option on eBay)
- Now is when they start playing the percentage game. A certain percentage of buyers will do nothing and the seller keeps the money. Score one for the Bad Guy. If the buyer starts a dispute through PayPal it goes to PayPal remediation for review. The buyer will say this is clearly fraud and they are not going to ship my product. The seller will respond to PayPal with a real tracking#
- Now at this point the percentages are still working for the fraudster. Opening a case with PayPal is not the same as filing a claim. So we have to assume that a certain percentage of buyers will open a case but not return within the 20 days to escalate it to a claim. The bad guy wins again.
- So if the buyer has been diligent to this point and stayed on top of things then they have both opened a case with PayPal and escalated it to a claim but it doesn’t end here. The case is now “Being Reviewed” by PayPal. Remember that legitimate tracking number from step 4?
- This is the final opportunity for our fraudster to get his illegitimate gains. The seller has indeed sent something via China post to the buyer and it does have the same tracking number as the claim. This package will require a signature for delivery. It will not have a packing slip or return address or reference any purchase of any kind. The only way you can make the connection between the two transactions is if you match the tracking number stamped on the envelope to the one the seller provided to PayPal in the dispute.
- Finally if you don’t call PayPal or change your dispute to “item not as described” in time they will award the case to the seller. After all, you purchased something, they shipped something, and you signed for it. What more does PayPal need to know?
This was really enlightening to discover the lengths that these people are going to when operating these scams. The burden is really on the buyer and the built in policies inherent in the system gives ample opportunity for the criminal to keep the money. I would love to see the actual numbers in a spreadsheet for one of these scams. I bet the number of people that go through the entire process to get their money back is pretty low.
At the end of the day I got a full refund and the Criminal is out the cost of shipping and one fake coin. This makes me feel better but I doubt it made any impact on their bottom line. Hey at least I got a souvenir.