- Fake retail stores used to mask gambling payments
- Scam allows illegal gambling across global territories
A network of dummy websites selling mundane household goods have been set up to hide illicit online gambling payments, an investigation by news agency Reuters has found.
Their report has revealed that an unknown but significant number of fraudulent retail sites exist on the internet, which have the sole purpose of masking gambling transactions.
Payments made to the gambling companies are processed by the fake companies, so the transactions are not recorded as gambling payments. The scheme gets around international e-commerce and gambling laws, which could amount to a criminal offence in some jurisdictions and is known commonly as ‘transaction laundering’.
Online gambling is illegal in much of the USA, for example, and, where appropriate is blocked by credit card companies like Visa and Mastercard.
Investigators uncover fake retail sites
The websites in question are fake store fronts, which are designed to look like a real e-commerce store. The ‘companies’ which are represented by the sites are usually registered in Europe – often in the UK. Instead of selling goods to consumers, these sites are simply designed to avoid detection by authorities; payments made through the site actually represent gambling transactions.
According to Reuters, the scam has been under investigation for several months after an anonymous internet user stumbled upon one of these retail sites and tried to make a purchase in good faith. On discovering this company, and two others, did not actually deliver the gods, they posted their findings online.
Reporters responded by placing their own orders, and discovered that indeed, no delivery was made.
Scam prevents gambling transactions appearing on statements
In many cases, the consumer is completely unaware that their payments are going to these fraudulent sites. The gambling operator takes payment through their site, but re-routes that payment to one of the dummy merchants. The only clue a consumer may have is when their statement reveals the name of the merchant – and some may argue this benefits the consumer by masking their gambling activity, especially if they indulge in illegal gambling.
Many states in the US do not permit gambling, and it is theorized that these sites are allowing gamblers to play where they are not allowed to. If the gambling site is being freely advertised and if the consumer is allowed to sign up and play, they might be unaware that they are breaking the law. There is also significant risk to that consumer when third party payment merchants are involved. If a transaction can be traced from payer to payee, it is easy to investigate any loss that occurs. If a consumer is a victim of identity fraud and a third party has processed the payment, it might be far harder to prove liability and recover lost funds.
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