brewing trouble
January 6, 2020 9:42 AM   Subscribe

I'm fairly sure that discounted gift cards on eBay are an easy way to launder credit card fraud into clean money. Whether they're physically buying the cards en masse from retailers using a forged credit card and selling the codes or if it's 100% digital I couldn't say, but it seems like a straightforward way to quickly convert tainted income into clean income.
posted by Kyol at 9:54 AM on January 6 [4 favorites]

I'm fairly sure that discounted gift cards on eBay are an easy way to launder credit card fraud into clean money.

The only issue is that sometimes companies use eBay to sell legitimately discounted gift cards, though they're more often $100 credit for $80.

Cutting to the message:

So maybe next time think twice before hitting "purchase" on that great eBay deal from a brand-new seller with no reviews. It may be cheap, but you also might be acting an unwilling money mule in the weird world of online fraud.

It's a solid message, but I'm not sure how this is weird. Stolen personal or financial information is only as useful as the money you can wring out of it. It seems akin to money laundering -- stolen credentials in, clean money out.

Along the way, someone gets cheap luxury goods, eBay gets its cut, and the elderly who are scammed either lose a lot of money, or their financial institution closes that account and refunds them.

The only weird thing is that someone didn't bother to list the machine on its own. In other words, not a well-run group of thieves, if they're not maximizing their returns.
posted by filthy light thief at 9:57 AM on January 6 [4 favorites]

So maybe next time think twice before hitting "purchase" on that great eBay deal from a brand-new seller with no reviews.

Meh, it's not my responsibility to vet every seller of products in the world. eBay is well aware this money laundering fraud is happening with their service and just doesn't care. They bear the responsibility.
posted by Nelson at 10:02 AM on January 6 [7 favorites]

Meh, it's not my responsibility

Whatever, it is everyone's responsibility, particularly if you are informed about potential indicators. You're still a participant in the fraud and theft if you're getting the goods for half off.
posted by grumpybear69 at 10:15 AM on January 6 [15 favorites]

Yeah, if the standard is 'individuals should take responsibility for ameliorating systemic fraud' then everyone should have cut up their Citibank cards 30 years ago.
posted by 99_ at 10:15 AM on January 6 [32 favorites]

Whatever, it is everyone's responsibility

No, really, it's not. Mostly because I don't have the power to stop the fraud. eBay does. Instead eBay is profiting off the fraud, either because they genuinely just want the money or because they don't feel it's worth the bother trying to stop it. The way to solve this problem is law enforcement. Against eBay, and against the fraudster. (Also to fix credit cards so they are more secure, but that's a different conversation.)

I'm not talking about some obvious theft here either, some guy approaching me with a car stereo headunit with the wires still dangling out the back offering it to me for $20. People sell things at deep discounts on eBay all the time. I buy coffee at 50% off retail on Amazon regularly, because of stupid retail price shenanigans. How am I supposed to distinguish which online discount prices are legit? I mean obviously if an item looks stolen I'm not going to buy it. But "50% off coffee" doesn't look stolen. (I'd sure be suspicious if a free coffee maker showed up though. WTF?)
posted by Nelson at 10:20 AM on January 6 [27 favorites]

Pretty sure this is a rogue AI testing the waters. 👀
posted by Foci for Analysis at 10:21 AM on January 6 [5 favorites]

Right, I think our regular going price for Keurig pods _from Keurig_ is about half retail? I wouldn't even think twice about someone selling them under retail cost on eBay. Great, they bought a bunch at deep discount and they're breaking up the brick at a price between what they paid and what Target wants for it, good job on 'em.
posted by Kyol at 10:28 AM on January 6 [4 favorites]

I think there's a difference between finding a good deal and buying it, and being warned that this sort of fraud is out there and still buying it knowing it is likely fraud. There's a real victim on the other end of it, and if you suspect that's the case, then pinning it entirely on eBay doesn't really absolve you of your role in the transaction.

But yeah, eBay (and Amazon, and a bunch of other retailers) really need to stop allowing this to take place on their sites. They're the far bigger responsible party
posted by Mchelly at 10:32 AM on January 6 [11 favorites]

Either you are buying from some sort of criminal underground gang or you are buying from Nestle, there isnt a lot of difference in my book.
The whole idea of proprietary coffee pods needs to die.
posted by Lanark at 10:43 AM on January 6 [36 favorites]

On the other hand, how does eBay prevent this? They have no way to verify whether an item on their platform is legit, stolen, fake, or whatever. I can't think of a way to verify either. Only after a purchase can a customer report an item, and I presume any bad actors on eBay can be booted. I had an issue where I accidentally bought a bootleg Game Boy Advance game and after filing a complaint with eBay, the seller literally begged me to rescind the report so they could keep selling stuff—and sent me a legit copy of the game.

Amazon doesn't have this excuse, though.
posted by SansPoint at 10:44 AM on January 6

One could watch the entire video to the end where she explains the problem with Nelson's point of view.

Or not, meh, whatever...
posted by humboldt32 at 10:50 AM on January 6 [2 favorites]

If personal responsibility dictates that we shouldn't buy suspiciously discounted coffee pods on ebay, then doesn't personal responsibility dictate that we shouldn't be drinking pod style coffee, or any coffee, at all? Coffee, like chocolate, is an industry rife with exploitation and pods are really wasteful... It's almost like the bottom of this rabbit hole is deeper than I thought...
posted by youthenrage at 10:52 AM on January 6 [6 favorites]

FTFA: "Importantly, however, this was not a victimless crime. Kollars investigated and found that the people actually being charged for this goods were at or past retirement age. In other words, it was possible that elderly individuals were intentionally being targeted. "

Either you are buying from some sort of criminal underground gang or you are buying from Nestle, there isnt a lot of difference in my book.

You and I have vastly different books, then. I'd rather pay more and know that someone's grandmom isn't having to deal with credit card fraud.
posted by kimberussell at 10:54 AM on January 6 [16 favorites]

How am I supposed to distinguish which online discount prices are legit?

I mean, the article pretty explicitly points out what the digital-coffee-analog to your dangling wires is: a significantly discounted good, specifically on ebay, specifically by a new seller with no reviews, and specifically when there are MANY new sellers with no reviews offering the same good at similarly discounted prices.

Once you say you aren't talking about "obvious theft," you are admitting that individual purchasers DO have some responsibility to discriminate their sources; we're really just discussing what's "obvious" vs what is not.

Or basically, what humboldt32 said. From the end of the video (17m 36s): "For this kind of scheme, it's easy to be unknowingly complicit. It's also super easy to be knowingly complicit."
posted by solotoro at 10:55 AM on January 6 [9 favorites]

You and I have vastly different books, then.
I didnt mean I was OK with this, I just wouldn't buy pods from anyone. I guess criminal characters with low morals are attracted to the idea of selling enviromentally damaging pods.
posted by Lanark at 10:58 AM on January 6 [1 favorite]

This happened to me once, in the other direction - years ago, my card was fraudulently used to order LEGO kits in a way that almost certainly was a laundering scheme of this same sort. While I keep track of my bills and didn't lose any money, I certainly wasted a lot of time cleaning up the mess, filing a dispute, changing credit card numbers, etc.

I spent some time on the phone with both my credit card issuer and LEGO to see what happened, both out of concern and curiosity. It was frustrating as it is very difficult to get information on the other parties involved, as nobody will provide names, phone numbers or addresses out over the phone, and the dollar amount is low enough that law enforcement doesn't want to spend time on an investigation. However, I was able to get far enough with LEGO as to confirm that *my* contact information was not used to make the order.

This was important to me, because that seemed to indicate that all the fraudster had on me was what was printed on my credit card, and I didn't have to engage in a full identity theft defense. As much as this seems like an online fraud vector, it isn't necessarily - a server at a restaurant could have simply snapped a photo of my card when they took it back to their POS and then used it to call in an order.

But it did raise concern about LEGO's credit card verification procedures at the time (I sure hope they've improved), and I suspect that this is a similar situation with Nespresso and that they should shoulder some of the blame here. Unless there is full identity theft at play, this kind of fraud can be largely eliminated by either verifying the zip code on the credit card at the time of order or only shipping to the billing address registered to the card.
posted by eschatfische at 11:04 AM on January 6 [4 favorites]

You can still find great deals on luxury goods on eBay, however, suggesting this type of scheme is ongoing.
I thought any "great deal" on a luxe good on ebay was a fake/forgery, rather than money laundering, but that might be splitting hairs. (And I'm not sure I'd count coffee pods as a luxury good?)
posted by k5.user at 11:05 AM on January 6 [1 favorite]

Unless there is full identity theft at play, this kind of fraud can be largely eliminated by either verifying the zip code on the credit card or only shipping to the billing address on the card.

This is what CVVs are for, right? But I know from working in e-commerce that merchants can choose as much or as little fraud checking as they desire, including not verifying CVV. And working with the credit processors directly I can tell you with authority that they absolutely do not have their shit together.
posted by grumpybear69 at 11:07 AM on January 6

The obvious way to stop this from happening is for some vigilante inventor to start selling even cheaper coffee pods that are boobytrapped to explode glitter all over your kitchen, with a tiny camera that livestreams the results
posted by oulipian at 11:10 AM on January 6 [16 favorites]

This is what CVVs are for, right?

Not in the scenario I mentioned. A CVV code has limited utility in that it can be used to verify that someone physically has had access to the actual card (ie, the credentials likely weren't skimmed or duped or guessed), but that's about it.

Since the CVV is simply printed right on the card, anyone you give the card to, like that hypothetical server at a restaurant, can easily take that information and use it to place online or phone orders. However, it's far less likely in most environments that people handling your card physically would know your billing address or zip, making address verification a valuable verification step.

(I once got a credit card issued with the CVV 000, which is technically valid. It was maddening, because one out of every five or so online vendors I tried to use the card with wouldn't accept it, almost certainly because they were validating for 001-999. I had to call in and get it replaced.)
posted by eschatfische at 11:26 AM on January 6 [5 favorites]

It seems like some people here are fighting about Responsibility in a binary way, ie if it's eBay's responsibility for policing fraud, then it's obviously not my responsibility at all. In today's world this binary splitting of responsibility/blame/obligation leads to really extreme behavior demands: Either you are morally required to perfectly validate the moral goodness of the entire supply chain before purchasing anything, or you are completely blameless and it's someone else's fault. It also leads to the weird thing where learning something is morally sketchy retroactively makes you feel like a worse person for consuming it, so people are incentivized to not learn how things actually work.

For cases like this I think it helps to think about shared responsibility: The fraudsters, eBay, Credit Cards, and Nestle share most of the responsibility for the harm done by this scheme. But by purchasing pods off eBay I would be taking some amount of responsibility for the harm. It's impossible to correctly quantify exactly how much responsibility or harm, so I use my moral judgement to decide if the harm I would be responsible for is worth the benefit I or others would receive for buying them. It wouldn't be for me because I hate coffee, but if you get a lot of enjoyment out of Nespresso Pods specifically and can't afford them normally, my personal moral judgement says that's pretty close to neutral
posted by JZig at 11:48 AM on January 6 [24 favorites]

You can still be complicit in wrongs you're not directly responsible for. It's up to you how you feel about that, and what that makes you.
posted by mhoye at 12:12 PM on January 6 [4 favorites]

I recently ran into a Twitter thread that gives a pretty decent primer on money laundering recently, how it gets its tendrils into everything (especially real estate) and how it's related to the current Iran and Russia geopolitical situation. Seems relevant to this topic!
posted by foxfirefey at 12:32 PM on January 6 [17 favorites]

I think about how we divide responsibilities and then pretend they’re gone a lot, JZig. I think it’s a later legal development than the joint stock corporation, even.
posted by clew at 2:14 PM on January 6 [2 favorites]

To paraphrase the wisdom of philosophers, CC fraud is a victimless crime, like punching someone in the dark.
posted by They sucked his brains out! at 2:20 PM on January 6 [18 favorites]

So maybe next time think twice before hitting "purchase" on that great eBay deal from a brand-new seller with no reviews.

But don't believe the reviews either, because those are bought and sold.

caveat emptor, all around.
posted by Dashy at 2:38 PM on January 6

What if I like fraud??
posted by atoxyl at 3:53 PM on January 6 [1 favorite]

How many utils do you like it?
posted by clew at 3:59 PM on January 6

Nespresso pods kinda are what you make of them. You can buy the ethically sourced single origin ones and diligently mail the 100% recyclable aluminum pods back to Nespresso (at their expense) where they'll then be reliably recycled, apparently usually ending up in auto parts. There are still arguments to be made about the carbon footprint of sending stuff back and forth, the loss of the magic of doing it old school, etc. But it's reasonably defensible, in its way.

(Incidentally, Nestle has a public plan to work toward 100% Fairtrade coffee that they have been sticking to so far. They're at 55% (with a goal of 70% by end of this year) and pushing the single origin stuff hard. They also continue to promote and invest in the recycling component.)

But... the pods made from Fairtrade coffee cost more and some folks can't/won't pay for them. Plus, only 28% of Nespresso pods get recycled. Worse still, you can buy cut-rate off brand pods from companies who don't pretend to make an effort to get Fairtrade coffee and package their pods in plastic and those are essentially as bad as the worst K cups.

And so now, you also have the option of getting your pods cheap from defrauded elderly people.

It's interesting really, because your experience with this coffee can run the gamut from paying a bit extra to support local coffee growers and conscientiously recycling to doing those things but ripping off grandmas to do it to ripping off third world people to get cheap plastic pods destined for the landfill.
posted by DirtyOldTown at 4:41 PM on January 6 [5 favorites]

Doing any business at all with Nestle is essentially doing business with Satan. "Fair trade" coffee is just marketing bullshit for them to get you to buy their product, they literally don't give a shit about ethics. They're among the world's worst companies, from unnecessarily pushing baby formula to hundreds of millions of mothers, to pumping aquifers dry to fill water bottles -- they're horrible and you can be sure that any kind of "recycling" going on with pods is being paid for by you, not them, and any descriptions of honest practices will be just the barest veneer of truth over an industrial program of making shit up.

No sir, I don't like them.
posted by seanmpuckett at 6:14 PM on January 6 [14 favorites]

There was a similar issue with grey market / discount cd-keys for games and software. Sometimes it was much cheaper because it was from a different (poorer) region with lower pricing that would still work in your region. Sometimes, it was because the seller had committed fraud with a stolen credit card and purchased a bunch of keys and was trying to sell it off before the fraud gets detected, the charges reversed, and the keys revoked. Game developers were on the record saying they would prefer the gamers outright pirated those games - at least that way the developer wouldn't have to suffer the costly financial penalties associated with charge-backs from credit card fraud.
posted by xdvesper at 7:39 PM on January 6

I had fraud show up on a Wells Fargo credit card on a new account that had literally never been used in a purchase, either swiped or online. I suppose it was stolen from inside Wells Fargo.

On my statement, it looked just like an Amazon charge. So be sure to cross-check your Amazon order history with your credit card statement, so you can detect which Amazon charges are fraud.
posted by ryanrs at 8:41 PM on January 6

I’ve come across weird things on Amazon like random paperback books being sold for thousands of dollars. Must be a method people use for transferring large sums of cash to others. And I’ve heard of stolen iPhones and laundry detergent being used for transferring drug money, because they are less traceable and they hold their value well. Makes me wonder what proportion of Amazon/eBay products from third party sellers were somehow involved in criminal activity.

My credit card info once got swiped and was used solely for buying gift cards. My CC company immediately caught it and canceled the card, so it is possible to identify this kind of fraud if you have a monetary incentive for doing so.
posted by mantecol at 8:54 PM on January 6

weird things on Amazon like random paperback books being sold for thousands of dollars

That's a different problem: stupid algorithmic pricing for unusual books. See this recent Ask Me for more info.

But yeah, anyone who sets up an Internet service that involves paying money to people has to tackle money laundering at some point. Both practically (it's usually connected to fraud and resulting credit card chargebacks) and also legally (know your customer laws). It's one of the costs of doing business on the Internet. eBay and Amazon are experts at this. My guess why eBay isn't on the coffee story is that it's been too small to qualify for attention. At least until someone writes an article about it..
posted by Nelson at 9:48 AM on January 7 [1 favorite]

That's a different problem: stupid algorithmic pricing for unusual books.

Yes, but there are still situations where things selling for absurdly high amounts are likely related to fraud/money laundering. I'm thinking of mobile apps, mostly. Things like a flashlight app that costs $1,000 or shitty e-books that are basically 100+ pages of spam selling for hundreds of dollars.
posted by asnider at 10:19 AM on January 7

Sometimes the high prices are just a way to pause sales of something for a while, removing something from an app store and re-adding it requires jumping through a bunch of hoops.
posted by Lanark at 10:41 AM on January 7

> Amazon doesn't have this excuse, though.

Why not? eBay was taken over by actual stores selling new products with 'buy it now' pricing in the early 2000s, if not before, and started selling used items in 2010s, if not before.

Some (most?) things on Amazon aren't ordered by Amazon, only shipped from an Amazon warehouse. Sellers sell on and run fulfillment through Amazon (FBA). Is it materially different when items from suppliers that Amazon ordered from get sent to warehouses all over the world, vs items that sellers that sell on via the FBA program get sent to warehouses all over the world?
posted by fragmede at 2:39 PM on January 9

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