Recently, professional cybercriminals have specifically targeting direct selling companies and their customers. The damage these criminals can inflict for unwary and unprepared companies can be truly catastrophic.
How Direct Selling Fraud Works
It all starts with stolen credit card information, which can be obtained through an illegal marketplace for between $5-$15 each. Amateur fraudsters often attempt to use the credit card information of family members, friends or co-workers for direct selling fraud, but typically on a much smaller scale.
The pros use this information to attack direct selling companies in a very systematic, calculated manner. They begin by enrolling as distributors, often directly through the direct selling company’s corporate website as an “orphan”, unaffiliated with an existing company sponsor. This opens up access to purchase products and become eligible for sales commissions.
Using their status as a new distributor, they enroll other fake distributors providing what appears to be more legitimate, sanctioned entry to the business for those that follow them. All these new distributors begin by purchasing significant amounts of product, using illegal credit card information, shipping it to temporary addresses at vacant homes, mailbox locations or other locations. In some cases, this product is quickly whisked away to secret locations for storage and are posted for sale on various discount, classified websites at extremely heavy discounts.
Even without a single sale of this ill-gotten product, these fake distributors are often paid sales commissions on the fake sakes long before there is any detection of wrong-doing. Add to that the money made from any product they are able to sell and it’s clear to see how this type of criminal could do significant damage to an organization not prepared for this style of sophisticated criminal. Add on the impact of flooding the market with heavily discounted product, reputation damage and difficulty differentiating between incredibly valuable, legitimate distributors and illegal operators and now the problem is even more massive.
ProPay Can Help
Through ProPay Guardian CyberShield, there is a way to go after this more insidious style of criminal. Guardian CyberShield uses a variety of mechanisms to identify the bad guys and stop them before they can get started. The service uses a Device ID feature that can detect when multiple accounts are created or managed from a single device, creating alerts and preventing entry when appropriate.
ProPay Guardian CyberShield also features a highly sophisticated, and customizable rules engine that can be adjusted to the unique needs of the direct selling industry. This feature could be used to develop rules around establishing orphan accounts, shipping product to unverified new distributors or creating other complex validation or authentication mechanisms. Designed to be customized and built as a more advanced fraud prevention solution, Guardian CyberShield can be an essential tool in the direct selling battle against the new wave of fraud.
Learn more about ProPay Guardian CyberShield. Visit www.propay.com or call 888.227.9856.