National Business Crime Solution disrupts ‘friendly fraud’ scam

The National Business Crime Solution, itself a not-for-profit data and intelligence sharing organisation working with leading UK High Street retailers, is now warning other non-member businesses to check their ‘goods lost in transit’ (GLIT) refund data in order to make sure they too have not fallen victim to the scam.

After one retail member raised suspicions about anomalous patterns in courier-related refund claims linked to GLIT, the National Business Crime Solution began an investigation using its Claims Detect Online software, which works by monitoring thousands of transactions to identify and disrupt the growing trend of refund fraud, before instigating civil recovery claims on behalf of multiple High Street retailers.

Specific incidents of so-called ‘friendly fraud’ work through third parties or moderators who advertise their ‘Fraud-as-a-Service’ scam across social media after having obtained access to the courier company’s confidential tracking details by using social engineering deception techniques.

The National Business Crime Solution discovered that, once inside the tracking software, the fraudsters have been able to manipulate the proof of delivery data such as the GPS tracking and even the doorstep drop-off photographs to make it look like a different property.

The customer then makes a ‘goods not received’ claim, keeps the product for themselves or for re-sale on the black market and then obtains a full refund, the end result being that the retailer at which the order was placed is not once, but twice out of pocket, while the courier business is out of favour.

The ‘middleman’ fraudsters who market their service through non-regulated social media platform Telegram, as well as closed Facebook groups, then take their percentage – as much as 20% of the refund, in fact – through cryptocurrency accounts, which are notoriously difficult to monitor.

Access procedures

Impacted courier companies are now tightening access procedures to their handheld device PIN numbers that record proof of delivery to prevent them falling into the wrong hands, while also mandating the National Business Crime Solution to target the fraudsters by infiltrating the social media platform forums and then instigating civil recovery claims against those involved through the Claims Detect Online software.

The known fraud that has come to light so far from the scam is more than £395,000 in refunds for one company alone (claims which have now been challenged and recovered by the National Business Crime Solution on behalf of the retailers in question through civil recovery claims. The latter include the threat of County Court Judgements for any failure to comply with the order.

“It was almost the perfect crime,” observed Lyndsey Owen (online fraud and risk specialist at the National Business Crime Solution), “with fraudsters readily able to create an ecosystem whereby those purchasing their service receive their ordered goods and then a complete refund, almost without leaving a trace. They are then in the position of either keeping the goods for themselves or selling them on the black market. No-one is any the wiser, while the courier company involved shoulders all of the blame.”

Owen added: “Once the refund has been received, the moderator who has been able to manipulate the delivery data receives their cut, often through cryptocurrency that’s difficult to trace.”

Analyse refund data

Having passed the detailed evidence package to Action Fraud for investigation, the National Business Crime Solution is now urging other retailers and courier companies to analyse their own refund data.

“What we have uncovered is likely to be the tip of a very large iceberg,” warned Owen. “Other retailers will be targeted and, at present, will not be aware of this sophisticated hack.”

Criminals are making thousands of pounds through hundreds of willing customers investing in these ‘Fraud-as-a-Service’ scams, which are seen as proxy crimes (wherein others are taking the risk by exploiting loopholes and system vulnerabilities).

The courier company underpinning part of the investigation –there are likely to be more delivery business impacted – is now working in tandem with Action Fraud and the National Cyber Security Centre. It has launched its own dedicated Task Force within the own business to crack down on the practice.

Civil recovery demand

“On behalf of one of our members,” added Owen, “we issued a civil recovery demand for just shy of £20,00. That sum was paid immediately in full to avoid us taking it to the next level with a County Court Judgement and launching a criminal prosecution.”

On that note, Owen stated: “In a world where many civil recovery claims for a few hundred pounds are negotiated for repayment in instalments, who can afford to pay back such sums right away, other than those with the kind of deep pockets created from the proceeds of crime?”

*Interested parties wishing to explore suspicious claims can contact the National Business Crime Solution direct for an analysis of refund data and, if necessary, the instigation of civil recovery claims to recover any losses and disrupt online fraud activities. Visit www.nationalbusinesscrimesolution,com for further details