Identity Theft: 8 Signs Fraudsters Are Catfishing You

Identity theft is a rapidly growing concern in the United States and globally, affecting both merchants and shoppers. More than one-third of chargebacks are reported as fraudulent. The market for identity theft protection services is expected to reach $34.7 billion by 2032 (according to Market.us), up from last year’s $12.5 billion. Identity theft continues to worsen, as evidenced by the following findings:

• In 2023, the Federal Trade Commission (FTC) received 5.7 million total fraud and identity theft reports, with 1.4 million being identity theft cases.
• Identity theft reports have increased 68.3% since 2019.
• 24 of the 100 largest U.S. metro areas saw identity theft reports double per 100,000 residents between 2019 and 2023.
• Every U.S. state has experienced an increase of more than 11% in identity theft reports per 100,000 residents since 2019.
• Credit card fraud is the most common type of identity theft, but government documents or benefits fraud is rising.

As theft methods become more sophisticated, individuals are encouraged to take proactive measures to safeguard their personal information, including using antivirus protection software, password managers, identity theft protection services, and Virtual Private Networks (VPNs) to mitigate the risk of falling victim to identity theft. While nearly half of consumers feel they’ve taken sufficient steps to prevent identity theft, close to 70% still feel more vulnerable to an identity theft attack than a few years ago.

Catfishing, a term borrowed from online dating, refers to creating a fake identity or persona to deceive someone into believing they are interacting with a legitimate individual. In eCommerce, catfishing involves fraudsters posing as genuine customers, suppliers, or partners to exploit online merchants. Using social engineering tactics, these individuals can be highly skilled in manipulating situations to their advantage, making it imperative for merchants to be aware of the signs of catfishing.

Catfishing is related to identity theft in the sense that both involve deceptive practices aimed at assuming false identities for fraudulent purposes. While they are distinct concepts, they share common elements and may overlap in certain situations. Here is how they are similar:

• False identity creation: In both catfishing and identity theft, individuals or entities create fake identities or personas. Catfishing is done to deceive others online, while identity theft involves stealing or impersonating a real person’s identity.
• Deceptive intent: Both catfishing and identity theft involve deceptive intentions. Catfishers deceive others for various reasons, such as fraudulently obtaining goods or money. Identity thieves use stolen identities for fraudulent activities, such as opening credit accounts, making unauthorized purchases, or committing financial crimes.
• Online exploitation: Catfishing typically occurs in online environments where individuals interact with others, such as social media, dating websites, or eCommerce platforms. Identity theft takes things further and often involves hacking into accounts, stealing personal information, or engaging in cybercrimes.
• Financial implications: Both catfishing and identity theft can have financial consequences for victims. Catfishing victims may lose money or assets, while identity theft victims can face financial losses resulting from fraudulent transactions and unauthorized use of their financial information.
• Legal consequences: Catfishing and identity theft are illegal activities in many jurisdictions. Perpetrators can face criminal charges and legal consequences for their actions.

• Fake customer orders: Fraudsters create fake customer accounts and place orders for products or services with no intention of actually paying for them. Merchants may ship the items only to realize the payment was never genuine.
• Supplier impersonation: Fraudsters may pose as suppliers or wholesalers, offering attractive product deals to eCommerce businesses. Once the payment is made, the scammer disappears without delivering the promised goods.
• Chargeback scams: A catfisher may make a legitimate purchase from an eCommerce store and then file a fraudulent chargeback claim, falsely claiming that the product was never received or was of poor quality. This can result in the merchant losing both the product and the payment.
• Affiliate marketing fraud: Some fraudsters engage in affiliate marketing fraud by pretending to be affiliates of an eCommerce site. They may generate fake clicks, leads, or sales to earn commissions, which ultimately results in financial losses for the legitimate business.
• Fake reviews and ratings: Catfishers may leave fake positive reviews or ratings on their products or negative reviews on competitors’ products to manipulate the perception of the product’s quality.

To protect against catfishing in eCommerce, merchants should implement robust security measures, verify the identities of customers and suppliers, monitor transactions for suspicious activity, and educate their staff to recognize potential signs of fraud. Utilizing anti-fraud tools and working with payment processors that offer chargeback protection can also help mitigate the risks associated with catfishing.

Unusual Order Patterns

One of the earliest signs of catfishing in eCommerce is unusual order patterns. Fraudsters may place multiple orders in a short period, often with high-value items. These orders may seem too good to be true and are typically intended to quickly drain inventory before you realize what’s happening.

Rapid Shipping Requests

Fraudsters often request expedited shipping for their orders, claiming urgency or special circumstances. This tactic is used to receive products quickly before their fraudulent activities are discovered, leaving merchants with little time to react.

Anonymous or Fake Contact Information

Be wary of customers or suppliers who provide anonymous or suspicious contact information. Catfishers might use disposable email addresses, fake phone numbers, or refuse to share any contact details altogether. Legitimate individuals usually provide accurate and verifiable contact information.

Inconsistent Communication

Pay close attention to inconsistencies in communication with your customers or partners. Fraudsters may use broken or awkward language, make contradictory statements, or avoid answering specific questions. Their goal is to deflect suspicion and maintain their false identity.

Unusual Payment Methods

Catfishers often use unusual payment methods, such as prepaid debit cards, cryptocurrency, or international wire transfers. These methods make it harder to trace the transaction and recover funds in case of fraud.

Frequent Returns or Disputes

Another red flag is a high number of returns or payment disputes from the same customer or supplier. Fraudsters may exploit return policies or initiate chargebacks, leaving you with both financial losses and lost inventory.

Suspicious IP Addresses

Monitor the IP addresses associated with transactions. Multiple orders from different customers originating from the same IP address may indicate fraudulent activity. Catfishers might use proxies or VPNs to hide their true location.

Inadequate Verification

Lastly, be cautious if a customer or partner is resistant to providing additional verification information when asked. Genuine individuals are usually willing to confirm their identity through various means, such as providing a copy of their ID or verifying their billing address.

Now that we’ve identified the signs of catfishing, let’s discuss preventive measures you can take to protect your eCommerce business:

• Implement robust verification procedures: Establish stringent verification processes for high-value orders, new customers, or unfamiliar suppliers. This may include requesting additional identification or conducting background checks. 
• Monitor and analyze transactions: Leverage a solution like NoFraud to detect unusual transaction patterns and identify potential catfishing attempts in real-time. 
• Educate your team: Train employees to recognize the signs of catfishing and encourage them to report any suspicious activity promptly. Help them understand social engineering tactics so they don’t inadvertently compromise accounts or secure information.
• Keep software updated: Ensure that your eCommerce platform, payment gateways, and security software are up-to-date with the latest security patches and protocols.
• Seek professional assistance: Consider partnering with fraud prevention services that specialize in eCommerce security. Experts can provide advanced tools and strategies to combat catfishing and are often apprised of the latest catfishing trends. Learn more about how NoFraud Chargeback Management can help your business ward off catfishers so your team can focus on driving business growth.

Catfishing is a growing threat to eCommerce merchants, and it’s crucial to be vigilant in protecting your business from fraudulent activity. By recognizing the warning signs of catfishing and implementing robust prevention measures, you can minimize the risk of financial losses, protect your reputation, and provide a secure online shopping experience for your genuine customers.