January 6, 2011
By the ZippyCart Shopping Cart Reviews Content Team
Two Vietnamese exchange students have been charged with defrauding hundreds of eBay and PayPal users. The students, Tram Vo and Khoi Van, were apparently “mules” within a larger identity theft organization based in Vietnam. Their fraudulent activities netted them over a million dollars, much of which was transferred directly to offshore accounts in Canada and Vietnam.
The scheme was intricate but direct: hackers and other fraudsters in Vietnam gained access to genuine credit card and bank account information, either through “underground sites” or other means. The financial information was then funnelled to the students, who used it to set up PayPal and eBay accounts. They would then auction normally expensive products (such as Rosetta Stone language software) at a discount rate.
At this point, a new player enters, an unwitting consumer. The consumer would bid on the item. When the auction closed, the students would purchase a genuine item (usually direct from the supplier) and ship it to the auction winner. The winner would pay the students via PayPal. All that was left was for the students to transfer the money from PayPal to a bank account, then to their accomplices overseas.
The relationship between these two online services and the middleman of the credit card companies is what allowed the students and this fraud ring to operate so successfully. The money from the auction winners was genuine. This is the money that actually made its way to Vietnam and elsewhere. The credit card information used to purchase the items sent to auction winners was also genuine, but when the cards’ owners saw the fraudulent charges, they would dispute them, leaving the credit card companies stuck in the middle between the cardholders and the companies that shipped the auction items.
Tram Vo and Khoi Van had been attending Minnesota’s Winnona State University and were in the United States on F1 visas, which allowed them to work only at approved jobs to cover their living and school expenses. They were caught as a result of the Department of Homeland Security’s “Operation eMule.” This type of complex, well-orchestrated fraud might well strike a fearful chord within the ecommerce community. It’s not always easy to know when you are dealing with a genuine buyer and not someone seeking to perpetuate some kind of fraud. Even well-known and trusted sites like PayPal can be used to bad ends.