06 Apr

Real Life Launderers: The Transaction Laundering Coffee Scandal

By: Austin Denson, Marketing Coordinator

 

This series follows real cases of transaction laundering.

 

Often, innocent looking sites can harbor transaction laundering. At G2, each website in an acquiring bank’s portfolio is carefully assessed for suspicious activity — first through technology and second by the human eyes of our expert analysts. However, even merchants categorized at low risk can quickly revert to selling drugs and or other illegal content. It is essential that these websites undergo ongoing monitoring in order to detect any unusual changes.

 

Most transaction laundering cases begin with a registered front site that claims to be selling legal goods such as clothing, sporting goods, vitamin supplements and more. This front site is then linked to a hidden URL, or in some cases multiple violating sites that customers can purchase illegal products from.

 

The Story:

A G2 client reached out to our analyst team to report suspicious activity on a merchant website located within their portfolio (See Figure 1). The website claimed to sell gourmet coffee, mugs, grinders and coffee makers. Transaction analysis found inconsistencies that suggested other products were being sold, namely health supplements. The products on their website have unusual pricing with many common signs of transaction laundering. Our analyst team further investigated the coffee company and found multiple indications of
illegal activity.

 

Figure 1: Front site selling unusually priced coffee products

 

Our  team was able to find another site connected to the coffee website (See Figure 2). The connected site fostered illegal online gambling. Our analyst team also found connections to two other sites that had web designs nearly identical to the gambling website.

 

With this information, our team was able to confirm that the coffee website was laundering for an illegal online gambling site.

 

Illegal online gambling website

Figure 2: Illegal online gambling website

 

Upon further research, our G2 analyst found that the registrant had also registered some suspicious sounding URL names. None of these sites were active, but “Rx”, “prescription”, and “poker” in the URL names look worrisome. Also, the contact information was suspicious when analyzed using the G2 Merchant Map™.

 

Figure 3: Illegal gambling site connected to three inactive URLS

 

Overall, with the information received from our client and analyst team, the coffee website is likely laundering for gambling sites and looks very suspicious for all the reasons stated above. By providing this information back to the client, they were able to terminate the merchant and avoid any violations in their portfolio.

 

For more information on combating the growing threat of transaction laundering, please visit our resource library page where you will find a variety of case studies, webinars and infographics.

 

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