Mobile accounted for 25% of Ulta's e-commerce revenue during Q2.
The work of organized rings, the scam directs delivery of online orders placed from overseas to a legitimate U.S. freight forwarding address – where the merchandise is then shipped out of the country and liquidated for money.
Orders placed online in the U.S. from outside the U.S. have historically represented a higher risk of fraud for merchants–one study from ClearCommece has estimated that such transactions account for about half of all credit card chargebacks. While that’s a risk profile well known to U.S. online retailers, a newer risk profile is gaining in predominance, says Progressive Distribution Services Inc. president John McGovern, one in which the overseas fraudster requests merchandise shipment to a U.S. address, from which it`s aggregated and freight-forwarded out of the country.
The scheme is the work of organized rings, McGovern tells Internet Retailer. “Essentially, the merchandise goes in the front door and is shipped out the back door though a legitimate freight forwarding service to another country, where it’s liquidated for money, possibly to fund terrorism,” he says. By the time the merchant is aware the transaction is fraudulent, the merchandise is long gone–some industry estimates have placed the average length of time between a fraudulent transaction and a chargeback notification to the merchant at about 70 days.
Progressive, which provides integrated e-commerce and distribution management services service for b2c businesses, has seen this variety of online fraud attempts on the increase among several risk profiles it also monitors for clients, says McGovern. The company is working with carriers and federal agencies to identify shipping venues involved, he adds.
“A number of people have gotten caught up in re-shipping,” says Vic Dolcourt, senior manager of risk management products for CyberSource Corp., a provider of payment processing and risk management services. One re-shipping scam, he adds, e-mailed a photo of an attractive woman with a note saying she wanted to get to the know the recipient. The note goes on to say that the woman has been trying unsuccessfuly to buy something online from another country, then asks the recipient to use her (stolen) credit card number to make an online purchase and have it sent to her.