March 31, 2006, 12:00 AM

Criminals call out the `call tag` scam again

The Merchant Risk Council warns retailers and consumers about the re-emergence of the "call tag" scheme, in which criminals use stolen credit card information to order something from an online retailer, have it shipped to the legitimate cardholder`s address, then pose as the retailer and arrange to pick up the package.

Some online scams never die. The latest: the so-called “call tag” scheme has re-emerged. The Merchant Risk Council, a professional organization that serves as a forum for retailers to exchange fraud war stories and techniques for fighting criminals, reports that the scam re-emerged over the holidays and that several of its large merchants suffered losses.

Under the scheme, criminals use stolen credit card information to purchase goods online for shipment to the legitimate cardholder. The perpetrator then calls the cardholder and falsely identifies himself as the merchant, saying that the merchandise was mistakenly shipped and that the merchant is arranging a call tag to pick up the merchandise to be returned to the merchant. When the cardholder surrenders the item at pick-up, she’s actually turning it over to a second shipping company, hired by the scammer, which has no knowledge it’s participating in a fraud scheme.

Julie Fergerson, co-chair of the Merchant Risk Council and vice president of payment processor eFunds, says when the cardholder then contests that charge for the merchandise she’s surrendered in good faith, it becomes a chargeback. Following where the chargeback leads by locating the call tag that resulted in the re-directing of the merchandise is the merchant’s best-and probably only-shot at fending off repeat visits from call tag scammers.

“When you follow up on the chargeback, you will know where the fraudster’s delivery address is,” she says. “Work with that consumer to find out who picked up the products and where they went. When fraudsters notice the merchants who are following up and going after them, they’ll go to someone who isn’t following up, so it’s your best defense.”

Fergerson adds some online merchants are taking an even stronger line by stating on their web sites that they prosecute all fraudulent claims.

While Fergerson says she’s seen such language come and go on web sites, she’s seen more of it in the past year than in prior years. “The security people put it up, then the marketing people make them take it down,” she says. “It’s like a teeter-totter. Right now, there has been enough fraud so that the security people have more control.”


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