Purchase Scams: When The Love Of A Good Bargain Comes With A Higher Price Tag

October 1, 2024 by Becky Holmes

Becky Holmes is an acclaimed author known for her witty and insightful take on the world of online scams and fraud. With a sharp sense of humor and a keen eye for detail, Becky has regularly highlights the human stories behind modern scams, making complex cybersecurity topics more relatable and engaging for her readers. In addition to her writing, Becky actively contributes to public discussions on fraud awareness.

Let’s face it, we all love a bargain.

The feeling of getting something you want at a greatly reduced price is oh, so sweet. What isn’t sweet though is the feeling of paying a greatly reduced price only to receive… absolutely nothing.

Call it greed, call it frugal, call it good with money; our love of a ‘good deal’ is exactly what purchase scams have been designed around. And they work!

Let’s consider Facebook Marketplace for a moment. It launched in 2016 and was immediately incredibly popular. It’s not hard to see why; people can sell locally, pick up or drop off the same day, no admin fees and they can pay cash. All sounds great, but of course where there are financial transactions there are also unscrupulous types looking for ways to illegally cash in.

Only last year TSB reported that Facebook Marketplace accounts for 73 percent of all their purchase fraud cases1. Additionally, at the beginning of this year, financial website This Is Money reported that £60 million could have been lost by customers of all banks via Facebook Marketplace in 20232. These are arresting statistics and something we should all take very seriously, particularly as this is likely to just be the tip of the iceberg, with most scams going unreported.

Seller beware; reverse payment scams

There are sellers who sell faulty or stolen items, ‘bait and switch’ transactions where the sale conditions change at the last minute, sellers who insist on posting items rather than them being collected, and giveaways which usually involve clicking on a link to an external site with malicious software.

And those are just the ones that target the buyers. There are also purchase scams that target people trying to legitimately sell items through online marketplaces. These are perhaps less well known to consumers but incredibly effective for the bad guys. Reversed payment scams where buyers purchase using fake or stolen cards are particularly rife, as are scams where the buyer sends money through fake means and then asks for a refund. Prepaid shipping scams mean the fraudster can claim to never have received the item. Lastly, but perhaps the most important to take note of are the scams where buyers ask for verification codes to prove that you’re not a scammer (oh, the irony). These codes can be used to take over the seller’s marketplace accounts and possibly go on to gain access to bank accounts.

On that last point it’s important to remember that criminals are interested in longevity. They don’t just want a consumer’s money or goods, they want their information. They want to learn where they live, what their birthday is, where they bank and what their passwords are. TikTok has been identified as being of particular concern as it requires users to give permission for the app to access data such as contacts, location and device. The data is then collected by Bytedance, TikTok’s Chinese parent company.

It’s easy to understand how accessing a single password from a customer can cause utter mayhem when you consider one thing: around 65% of people use the same password for multiple accounts3. Up until I started working in the counter fraud industry I was one of those people, holding the typical mindset of “it won’t happen to me and even if it does I’ve not got much money to steal anyway”. I didn’t consider the dangers posed by hackers getting into my credit card statements, mobile phone account, email inboxes and even my social media platforms.

Where does the responsibility of purchase scams lie?

Purchase scams are everywhere – Facebook, Amazon, eBay, Temu and TikTok being some of the bigger platforms where they occur, and for scammers operating on the sites that don’t have built-in payment security features it is easy to commit fraud.

Discussions about marketplace scams regularly end in hot debate as no one can agree where the responsibility lies. Is it the likes of Facebook and eBay? Is it the banks? Is it the buyers? We can easily forget that actually it’s none of these – it’s the fraudsters behind the scams who are laughing at us as we fight among ourselves pointing the finger at one another.

Despite this, I would like to think that all parties agree they should shoulder a little of the responsibility in terms of prevention. Sadly, Meta in particular has shown worryingly little interest in improving Facebook Marketplace to keep genuine users safe, nor take more proactive steps to keep fraudulent users off the platform. I’m not entirely surprised given that Zuckerberg seems wholly determined to ignore consumer feedback on any issue.

Sharing best practice within the industry is, of course, key to understanding the problem and going into battle against fraudsters armed with every piece of weaponry available, but it’s my view that more effort also needs to be put into educating the public on how online marketplaces are being used by criminals. This is something that banks and the platforms themselves can readily assist with by communicating to customers. And maybe it’s time to do something different to a text-heavy warning before a transaction, as consumers simply tick those boxes and continue.

Equally technology plays a part. Criminals are using the weaknesses of digital banking platforms to their advantage. Banks should provide additional measures to protect their customers during their everyday banking transactions, including those that are the result of a scam. Equally, even when data is stolen by the most cunning of criminals, there is tech available to banks to protect customer’s assets and my view is that banks need to be more proactive.

If there’s one thing I want to get across here it’s that marketplace scams are going nowhere. They are ever-increasing and the people behind them are becoming more and more devious to trick people out of their money, whether that be through their bank, an app such as Paypal, credit card or even cash. They are also using a greater number of mule accounts to detract from where they are based and put more steps between the victim and the criminal.

Going back to the point I made earlier about fraudsters using purchase scams to steal information and harvest data, the analogy for me is a simple one: I have known people who have moved house after they have been burgled as they say their home no longer feels safe and it feels somehow ‘dirty’. Having personal details stolen is the digital equivalent. Knowing that a criminal has been rooting through emails, phone contacts, purchase history and so on is incredibly intrusive and I have spoken to numerous people who have switched their bank to act as a ‘fresh start’.

The amounts of money that individual people lose through purchase scams may be typically a lot smaller than, say, investment fraud, but added together the amount is staggering, the emotional effects long-lasting and it affects us all, no matter which industry we work in or who we bank with.