Fw: Online Railroad Book Scam UPDATE

Jim Mischke

The Conrail Historical Society folks sent me this scam warning.   Not spam, this is wire fraud.

All of us ebay lurkers need to know about this.   While the initial perpetrator is in deep doodoo and known by real name and address, some of this fraud persists despite his recent, permanent absence in legitimate places.

It's a bit long in the telling, yet I am not in a positon to edit it down.

Buyer beware.  Go hug your B&O stuff.

----- Forwarded Message -----

From: mbrestel@... <mbrestel@...>
To: "jmischke@..." <jmischke@...>
Sent: Tuesday, June 22, 2021, 03:23:54 PM MDT
Subject: Fwd: Online Railroad Book Scam UPDATE

Jim--This came to me as a warning to the NMRA store. I thought you might want to pass it along to the folks who run the B&O Store. You all may already know about it, but better to hear about it twice than not at all. If someone would like to contact the Conrail Historical Society for more details, their info is at the bottom of the email.

Mike Brestel
NMRA President, 2006-2012

Begin forwarded message:

On Monday, June 21, 2021, 9:39 PM, The Conrail Historical Society <info@...> wrote:

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on Last Week's PSA for CRHS Members & Supporters
Monday, June 21, 2021

Dear CRHS Members & Supporters,

Last week (on June 17th), we sent out an email regarding fraudulent transactions received in the Conrail Shoppe, the online store of The Conrail Historical Society (The CRHS). After receiving emails from several other dealers in the railroad hobby that have been impacted with fraudulent book and model sales in the past few weeks, we have worked with them to compare notes, assess the situation, and report it to the proper authorities. This scam is far more widespread throughout the railroad hobby than we originally anticipated, but the extent has provided a litany of documentation from multiple sources. We therefore have some clarifying remarks and some updates to provide on the situation.

In summary, the scam works as follows:

  • A legitimate customer (“Mr. Smith”) places an order on eBay for a vastly discounted product. These products are typically listed at over 30 percent off the list price with free shipping and a “Buy It Now” price to make them especially enticing to buyers shopping for a bargain. The account will have been created within the past year and will have very little feedback. 
  • The eBay seller (the “scammer”) does not actually have the product in stock. The scammer uses the information from the eBay order to impersonate Mr. Smith and place an order with a merchant – in our case, the Conrail Shoppe – for the same product. The scammer uses a stolen credit card number or a hacked PayPal account for the payment method, and enters a fake phone number, a fake email address, and Mr. Smith’s real name and shipping address for the order.
  • The Conrail Shoppe receives the order from the scammer and ships the product it to Mr. Smith, whose shipping information was included in the order. The scammer receives the shipping confirmation and tracking number from the Conrail Shoppe and adds it to the eBay transaction. Therefore, Mr. Smith receives the actual tracking number for the product he receives a few days later.
  • Meanwhile, the rightful credit card owner discovers that their card number has been stolen and there is a transaction they do not recognize. The card owner issues a chargeback against the Conrail Shoppe for a fraudulent transaction. The scammer is not impacted by this, because they did not include any identifying information in their order with the Conrail Shoppe.
  • Therefore, the scammer receives the payout from the eBay transaction and Mr. Smith receives the product he ordered, but the Conrail Shoppe loses the product that it shipped to Mr. Smith and the money collected from the credit card owner for the order. Mr. Smith has no idea that a fraud has occurred. Since Mr. Smith did not place the order directly with the Conrail Shoppe and the phone number and email were fake, the Conrail Shoppe has no recourse for recovering the product that was shipped. And since the credit card number was stolen, the chargeback is valid, leaving the Conrail Shoppe with no recourse to recover the money collected from the order.

This scam was discovered due to the fact that one of the “Mr. Smith” purchasers happened to be a member of The Conrail Historical Society. Despite the fact that the phone number and email address provided with the scammer’s order were fake, we had the buyer’s real contact information on our membership roster, so we were able to reach out to him directly and put together the pieces of what happened. This matches the series of events that have occurred to several other major dealers in the railroad book and model industries.

Unfortunately, it appears that there are two other fraudulent orders that went through the Conrail Shoppe and were shipped before we discovered the scam, so we are expecting to receive chargebacks on those orders, as well. We are looking at a total potential loss of roughly $300 from our chargebacks to date, but there are several other dealers that have been impacted for thousands of dollars in losses. 

Since discovering this fraud on Wednesday, June 16th, we have increased the strength of our fraud filters by increasing the number of data entry mismatches that will flag an order as fraud, and we have voided five more suspicious orders that managed to slip through those filters. In each of these cases, we have attempted to locate and contact the actual buyers and, in one case, the rightful credit card owner to inform them of the situation.

We have reported this fraud to eBay, PayPal, and the U.S. Postal Inspectors (as it qualifies as mail fraud). We are also working with the other affected dealers and buyers who have agreed to assist to provide evidence of this nationwide (and potentially international) scam to the FBI. Other dealers have reported this widespread fraud to their local authorities and state Attorneys General. The affected dealers are preparing a press release to the major railroad magazines and several national newspapers that should be released in the following week.

The Conrail Shoppe’s fraud protection has been increased and now forces purchasers to verify the entire billing address with the credit card being used. For any orders that slip through with suspicious data, we will be either voiding the orders entirely or contacting the purchasers directly to confirm their order details. One of the holes in this process is the use of a PayPal account for payment, which does not require address verification. At least one of the fraudulent orders used a hacked PayPal account for payment – for this reason, we have disabled PayPal as a payment method on the Conrail Shoppe until further notice, and we recommend the same course of action to other affected dealers.

For those of you shopping for railroad products on the internet, there are a few ways you can keep yourselves and your favorite dealers safe from this fraud:

  • If shopping on eBay, check for signs of a fraudulent seller. Is the price “too good to be true”? Is it the account created within the last year? Are there multiple recently released items listed for “Buy It Now” prices that are significantly lower than the retail price for these items? Is there a limited amount of feedback from previous transactions? If the answer to any of these questions is “yes”, this may be a fraudulent seller.
  • If possible, avoid eBay altogether and make your purchase directly through the website of one of your favorite railroad dealers, historical societies, or hobby shops. This is the best way to be 100 percent certain of the identity of the merchant from which you are purchasing. The prices found on the websites of most legitimate dealers are the lowest possible prices due to their volume of purchases and sales, and any lower prices for the same goods on eBay are immediately suspicious. Most legitimate dealers that maintain their own online stores on their websites do not also maintain eBay stores, and individual eBay sellers often do not have the volume of sales to sustain the lower prices found at legitimate dealers.
  • If you DO place an order on eBay, always check the return address on the label. All legitimate dealers will provide a return address for any products they ship. If the return address on your order does not match the eBay seller from which you have purchased your product, please reach out to the dealer directly (NOT to the eBay seller) to confirm the shipment information and determine if a fraudulent transaction has occurred.

Please spread this information to anyone in the railroad hobby, including booksellers, model dealers, hobby shops, and especially to your friends that may be unknowingly making eBay purchases and contributing to this scam. If anyone feels they have been a part of this scam, either as a dealer or as an unwitting eBay buyer, please reach out to me directly at rudy.garbely@.... By raising awareness within the hobby, we can mitigate the impact to our favorite dealers, hobby stores, and historical societies while the appropriate authorities conduct the necessary investigative work to catch these scammers.

Rudy Garbely
CRHS President & Conrail Shoppe Manager

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