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New Fraud Trend – Watch those Slippery Agents

by Avivah Litan  |  July 30, 2012  |  Comments Off on New Fraud Trend – Watch those Slippery Agents

I’ve been hearing more and more from our clients about a new fraud trend involving agent and distributor based sales programs. These are the types of programs where distributors work at home and sell goods and products like makeup or nutritional supplements over the web either directly to consumers, or through other distributors who they in turn sign up. In all cases the distributors – fake or real – get a commission on each sale.

In the fraud scheme, a bad guy sets up a distributor under a fake identity – then sets up another dozen or so fake distributors under his or her fake identity. Step two- the fake distributor(s) uses a bunch of stolen credit cards to order goods and have them shipped to the people whose credit cards were stolen. (The credit card theft victims may not even complain, at least for a while, if they like the goods received…)

The payout: commissions that are paid by the sponsoring company to the fake distributor(s).

The solution: we’ve published lots of research on a layered identity proofing approach, where for example a simple check of the applicant’s phone number and/or endpoint (e.g. PC) can spot most of this nefarious activity. Monitoring the accounts after they are set up is also a must and we cover the vendors who can do this in our Magic Quadrant on Web Fraud Detection.

Bottom Line – anyone who runs a sales distribution network should be on the lookout for bad players. You don’t want to reward these crooks with anything, let alone precious commissions. Instead, spend a little money on processes and technology that can knock them off your network quickly and definitively.


Avivah Litan
VP Distinguished Analyst
19 years at Gartner
34 years IT industry

Avivah Litan is a Vice President and Distinguished Analyst in Gartner Research. Ms. Litan's areas of expertise include endpoint security, security analytics for cybersecurity and fraud, user and entity behavioral analytics, and insider threat detection. Read Full Bio

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