AILSA CHANG, HOST:
There are a lot of scams on the internet. Recently, Nick Fountain from our Planet Money podcast heard about one that is so brilliant, he had to figure out how it works.
NICK FOUNTAIN, BYLINE: The story starts innocently enough - when Nina Kollars bought discount coffee pods on eBay. When her order arrived, there were some weird things about it. For one, she expected a, you know, frumpy package someone packed at home.
NINA KOLLARS: And it's not. It's a legit Nespresso box packed beautifully.
FOUNTAIN: OK.
KOLLARS: And I'm thinking to myself, this is a little weird.
FOUNTAIN: Plus, there were two boxes. And the second one contained a fancy Nespresso coffee machine.
KOLLARS: So I was like, whoa, hold on.
FOUNTAIN: Yes.
KOLLARS: I didn't pay for that.
FOUNTAIN: Very strange.
KOLLARS: They are expensive.
FOUNTAIN: To most people, this would be sweet - a free gift. But Kollars is a hacker - the kind that tries to do good. So for her, this free coffee machine was a red flag - a sign that something was wrong on the internet.
KOLLARS: So I call Nespresso, and it is almost impossible to explain to them what is going on (laughter).
FOUNTAIN: Hey, somebody here is complaining about getting too much stuff.
KOLLARS: Exactly.
FOUNTAIN: It, like - it doesn't fit in the decision tree of the call center.
KOLLARS: Does not fit.
FOUNTAIN: But she does learn that even though she ordered from eBay and has a credit card charge to prove it, Nespresso has her name in their system for the pods and the machine paid for at full price. Kollars decides to run an experiment. She orders more pods on eBay. Each time, same thing - straight from Nespresso and with more freebies. She's pretty sure it's a scam, but what kind of scam sends you free stuff? To answer that, I called up a kind of historian of internet fraud. His name is Patrick McKenzie.
PATRICK MCKENZIE: But I try to stay anonymous in the sketchy parts of the internet.
FOUNTAIN: He works for the payments processor Stripe, and he says what Kollars ran into is a credit card scam called triangulation fraud that's particularly hard to detect.
MCKENZIE: And that's why it is the new hotness in fraud circles.
FOUNTAIN: Here's how the scam works. Kollars orders from eBay, but the eBay seller is fake. They don't have any coffee pods. Instead, they have stolen credit card numbers. So they pocket the money she sent eBay and use a stolen credit card to order from Nespresso. They are a secret middleman. And what's so devious about the scam is everybody comes out ahead. eBay gets their commission. Nespresso gets a sale. Kollars gets exactly what she ordered, plus a little bonus to keep her coming back. Where it all starts to unravel is with the person whose credit card was stolen. They'll report it to their bank, and then the bank will force the merchant to foot the bill.
MCKENZIE: And the business will look at their records and say, well, shoot, we're going to write that off to fraud losses and go about our merry way.
FOUNTAIN: This is the final tricky detail working for the fraudster. Lots of retailers are losing little bits of money but not enough to get them to muster the resources to shut the scam down. But it seems like Kollars did shut down her fraudster. She sent her findings to the FBI. And a few months later, the discount pods disappeared from eBay. And, you know, personally, I'm a sucker for an online freebie. But Kollars says, beware.
KOLLARS: If you're getting something for free on the internet, somebody somewhere is paying for it.
FOUNTAIN: Oh.
KOLLARS: And you should probably think about that.
FOUNTAIN: Ooh, that - I - ooh, that makes me feel personally...
KOLLARS: Attacked?
FOUNTAIN: Yeah.
Feeling personally attacked, Nick Fountain, NPR News. Transcript provided by NPR, Copyright NPR.
