Reshipping

What Is Reshipping?

Reshipping is when a middleman receives, repackages and sends forward goods that were acquired through illegal means or are part of an illegal scheme.

This is also called reshipment, delivery address fraud or fake address fraud. 

Although some reshippers are involved in the crime, most reshipping is conducted by unwitting participants, often recruited online with the promise of easy and well-paid work they can do from home. Criminals resort to reshipping methods to better hide their tracks. 

With $4.28 trillion retail ecommerce sales worldwide, and online sales expected to reach 21.8% of total retail sales worldwide according to Statista, reshipping remains a popular scam targeting both companies and job seekers. 

Individuals caught knowingly or unknowingly reshipping can face criminal charges. What’s more, they often fall victim to fraud themselves, by being sent payments that don’t clear, not getting paid, or by having their own identity stolen. 

How Do Reshipping Scams Work?

There are several steps involved:

1. The criminal recruits the accomplice: usually unwitting, these are people looking for work-from-home positions online.
   
2. The criminal uses stolen cards and/or accounts to order goods.
   
3. The criminal provides the reshipping mule’s address as the delivery address.
   
4. The reshipper receives the product and follows the criminal’s instructions:
   1. Repackage the item
   2. Ship it to a new address – often a depot or another intermediary
      
5. From the logistics depot, the products are sent to the criminal.
   
6. When the card/account is flagged as stolen, the authorities track the activity and arrest the reshipper rather than the criminal.
   
7. The reshipper has to prove they did not mastermind the operation as, though accomplices, they were not the end recipients of the stolen goods. 

The scammer resorts to using an intermediary because shipping directly to themselves would make them more likely to get caught using stolen credit cards.

If the reshipper fails to provide sufficient proof that their participation in the scheme was minimal, they can be convicted of the entire operation. 

Naturally, there are variations on this method. For example, a reshipper could pick up the packages in person. Sometimes, the goods are acquired legitimately and the goal is to evade import/export or local tax. 

In a sense, reshipping is akin to money muling, because it enlists the help of a third party, but reshippers work with drops of physical goods rather than money, obtaining them and forwarding them elsewhere. These goods are considered to be contraband.

It is interesting to note that reshipping as a technique predates the internet and has been used for online fraud throughout the web’s life. 

For instance, a Krebs on Security report from October 2011 pointed out popular classifieds website Craigslist as well as now-defunct, dedicated websites as commonly hosting job ads for reshippers, in a feature that was written in response to the arrest of NYC crime gang who bought and resold an estimated $13 million in Apple products using reshipping and stolen credit cards. 

What Is Reshipping as a Service?

Essentially, reshipping as a service is a reshipping ring. Set up by scammers to recruit and coordinate dozens, if not hundreds, of reshipping mules, reshipping as a service provides such services at scale and can be hired by other criminals. 

A fraudster who identifies himself as Anonymous D spoke to the Cat and Mouse podcast in September 2021 about online store fraud “drops”. 

He explains that:

“There are multiple ways to set up these drops, for example, […] a re-shipping service. There are many services out there where you can rent a virtual post box and then you can use this address to send goods from this place to another.”

Is Reshipping a Crime?

Yes, reshipping is a crime as it involves receiving goods obtained via illegal means and/or sent via unlawful methods.

Is true that mules involved in reshipping, as well as money mules, are sometimes unwitting accomplices, not realizing they are taking part in illegal activities. However, they do face criminal charges for their actions. 

Despite starting out offline, with people transporting contraband goods, reshipping has found fertile ground online. In 2020, the Better Business Bureau reported that 65% of fake job ads published online seemed reshipping-related, as their descriptions matched keywords such as “reshipment”, “gift wrapper”, “logistics expert” and “warehouse coordinator” or “distributor”. 

Naturally and unfortunately, 53% of those found to be falling for such scams are already unemployed, according to the same source. 

Which Businesses Are Impacted by Reshipping Fraud? 

Different types of businesses are affected.

1. Ecommerce companies

Directly affected by reshipping scams are eshops of various types and guises, with electronics outlets the most susceptible, due to the popularity, high price and relatively small size of gadgets and devices. Also targeted are clothing and nutrition products. 

A 2015 paper from the 22nd ACM Conference on Computer and Communications Security notes that over half (57.05%) of the products moved through reshipping mules were by Apple, with digital cameras and their accessories in second place (19.58%), then computers and other electronics. In fact, only 4.68% of the activity observed did not involve electronics of any type. 

2. Payment gateways and card issuers 

For service providers who work to enable digital payments, be they fintech brands, banks or payment gateways, the main risk linked to reshipping is chargebacks. 

Although chargeback requests involve a number of players and are getting increasingly complex, for any given case, each of these payment enablers might end up paying part of the chargeback or all of it out of pocket.

3. Companies whose name is appropriated

Companies of all types can be used as a friendly and trusted name using which to recruit new reshippers, without the company’s knowledge or consent. 

In this case, the scammers are simply impersonating the company in question to appear more legitimate to their victims – reshippers who are promised employment. 

For instance, in January 2020, the Better Business Bureau reported that a St. Louis, Missouri company called Westerman’s Express had offered employment to local residents, asking them to receive packages at home and then ship them overseas. 

However, the real Westerman’s Express had nothing to do with the criminals, who used its name and promised a woman $3,000. She never received this money and was instead implicated in illegal activity. This can cause reputational loss – or even financial loss, as a worst case scenario.

How to Prevent Reshipping Fraud 

Methods include:

• Banning different shipping and billing addresses
• Personal contact with shoppers and recipients for confirmation
• Data enrichment via social media 
• Know your customer (KYC) protocols 
• Intelligent platforms to calculate risk 

To prevent shipping fraud, ecommerce retailers generally deploy measures to target fraudsters who use stolen identities and stolen credit cards. 

That is because, for businesses in the ecommerce sector, reshipping is a symptom of fraud rather than something to mitigate against directly.

The risk of having to pay for chargebacks out of pocket remains, however, and can be catastrophic for smaller merchants. 

Depending on the size and nature of each eshop, best practices can include banning high-risk payment methods, only shipping products to each card’s billing address, contacting new customers via phone for verification, and requiring multi-factor authentication. 

There are also other sophisticated, customizable solutions for those more susceptible to reshipping fraud. Data enrichment platforms can identify likely connections between buyer and recipient, assigning risk scores that fraud analysts can follow up on.  

Reshipping scams rely on criminal techniques such as carding and identity theft, often being one of the very last pieces of a bigger puzzle some criminals use to make money at the expense of ecommerce retailers.

Sources

• ResearchGate: Drops for Stuff: An Analysis of Reshipping Mule Scams
• Better Business Bureau: Employment Scams Report
• Krebs on Security: Shady Reshipping Centers Exposed, Part I
• Statista: E-commerce worldwide – statistics & facts

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