Contributed by NerdWallet
25/04/2022 - Statista
The COVID-19 pandemic was a double-edged sword for businesses. While organisations were adapting to the changing environment and new enterprises flourished online, ecommerce fraud rings became more abundant, more versatile, and more automated.
The evolution of ecommerce fraud techniques during the pandemic manifested in a number of ways. The work-at-home mule fraud is one of the most prominent ones, as outlined in Signifyd’s ecommerce data report. In a range of sectors, fraudsters are targeting people looking for alternative work from home and tricking them into ingenuine jobs.
Today, we explore the rise of the work-at-home mule fraud to help with fraud prevention, detection, and protection for both businesses and employees.
Working from home never reached such a large scale before the COVID-19 pandemic. Prior to the pandemic in Great Britain, only 11% of employees were working from home full-time, 21% worked from home some of the time, and 65% have never worked from home. Now that we’re coming out of lockdown, 20% of workers were full-time home office workers, 37% were occasionally working from home, and 37% have still not experienced remote working.
The sectors which saw the most people working from home in 2020 in the UK include agriculture, forestry, and fishing (52.4%); information and communication (36%); and household employment (34.8%).
In 2022, the work from home landscape continues to flourish, with 38% of those aged between 30 and 49 in the UK claiming that they are working from home as of February 2022.
For fraudsters, employees who are looking for a home-based job are easy targets. “The expansion of ecommerce has opened up new opportunities for criminals to scam businesses and customers,” commented Andrew Cregan, head of financial policy at the British Retail Consortium.
That expansion has given rise to the work-at-home mule fraud schemes. This is an upgrade of the previous romance mule fraud, which uses an emotional bond to trick people into helping fraudsters move fraudulently purchased goods across the country and the globe.
While the romance mule scheme takes months, even years to build an emotional bond, the work-at-home mule fraud scheme is much quicker because it’s transactional. The latter is based on fake companies with real recruiters who target people looking for a home-based job. They offer exorbitant high salaries to jobseekers who agree to the job, provide a photo ID, and sign a contract.
However, the employees are being given credit cards purchased on the dark web, meaning the owners of the credit cards started receiving invoices and filing chargebacks. The retailers were faced with numerous chargebacks, while the mules never received payment.
There are several reasons why employees would prefer to work from home, including government advice, reluctance to return to the office, or lack of childcare. Others may have been made redundant from their current jobs. Unfortunately, a lot of people fell for the trap during lockdowns. At the beginning of the pandemic, Signifyd detected and prevented nearly 2,000 mule fraud attacks across its Commerce Network.
Anyone can become a victim of mule fraud, especially with more and more people working from home. A single stay-at-home mum living in the U.S. state of Pennsylvania, for example, was lured into a social-media job advertisement by a fake logistics provider. On the surface, the firm called Jerry & Sam Logistics had a legitimately looking website. In reality, the fraudsters replicated a legitimate website by only changing a few things.
The victim was instructed to purchase high-value goods online with a stolen credit card. Everything about the orders looked legitimate. Once she received them, she was asked to open them and take pictures of the goods to upload to the online portal of the firm. After that, she repackaged them, printed a pre-paid shipping label, and shipped the items via a standard shipping carrier to the criminal.
After shipping dozens and dozens of packages for a month, the woman’s employer went silent, and she was never paid. That was devastating for the single mother. The fraud scheme was busted when the person whose stolen payment credentials were used started filing chargebacks.
To prevent mule fraud, fraudulent patterns need to be identified and uploaded into an algorithm that can spot similar schemes in the future. However, this wouldn’t stop fraud rings completely.
The work-at-home mule fraud is just one of the innovative fraud techniques that fraud rings have adopted during the pandemic. By having awareness of dangers and taking the right precautions, fraud schemes can be minimised so that businesses can optimise their revenue.
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