Also known as credit card laundering or factoring, this type of fraud occurs when legitimate merchant accounts are used to process unknown transactions for another line of business, both legal and illegal. In online sales, transaction laundering tops USD 200 billion a year in the US alone, of which at least USD 6 billion involves some type of illicit goods or services, sold by nearly 335,000 unregistered merchants.

Moreover, popular online marketplaces have become targets for transaction launderers looking to abuse the online payment system to facilitate illegal activities. In August 2017 the Wall Street Journal reported that the Islamic State allegedly used PayPal and fake eBay transactions to channel money to an agent in the US.

Three months later, in November, scammers leveraged Airbnb to launder dirty cash from stolen credit cards. Fraudsters used stolen credits cards to launder the dirty money through Airbnb bookings that never actually happened, benefiting both parties through large value transactions.

Because transactions may come from a variety of different sources (shopping carts, payment pages, virtual terminals, etc.), can be made via different payment methods (credit cards, digital currency, e-wallets), and can be processed through a page that the acquirer may or may not have visibility of, transaction laundering is difficult to detect and prevent. The tactics deployed by transaction launderers typically include using alternative payment networks and bank payments, or relying on cryptocurrencies.

Using the dark web for refuge, payment hustlers can freely conduct illegal commerce as well as lurk and browse undetected to find the illicit products or services they are looking to buy or sell. Another reason why these criminals are able to operate online without being shut down is the fact that sometimes the victims themselves are using the online to purchase illicit products and services. Read more from…

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