A report by Reuters found seven European-based online sites that purport to sell household items, but were actually part of a multinational system to disguise payments for the $40 billion global online gambling industry.
The sites are part of a strategy called “transaction laundering,” where one online merchant processes payment card transactions on behalf of another, which can help disguise the true nature of payments, the report said.
Credit card companies require online purchases to be coded. This allows them to identify the type of purchase so they can determine if the transaction is legal in various jurisdictions.
According to the report, the websites accepted payments for household items from a reporter but did not deliver any products. Instead, staff who answered helpdesk numbers on the sites said the outlets did not sell the product advertised, but that they were used to help process gambling payments, mostly for Americans.
Fraud experts consulted by Reuters said transaction laundering could be masking a number of high risk transactions that credit card companies would normally block, such as gaming, pornography or drugs.
“It is the digital evolution of money laundering,” said Ron Teicher, CEO of Evercompliant, a cyber-intelligence firm that works with banks to identify suspect sites. “The only thing is it is much easier to do, and much harder to get caught.”
