Research on Logistics Fraud Risks in the E-Commerce Industry

This article aims to introduce readers to the risks of logistics fraud within the e-commerce industry focusing on the operational methods and practice of using fraudulent tracking numbers.

Threat Hunter, an anti-fraud intelligence security company has revealed that e-commerce platforms encounter a variety of risks through their research. The primary risks faced by these platforms includes order brushing risks, account risks, logistics fraud risks, product information data scraping risks, malicious refund fraud risk, authentication bypass risks, internal-external collusion risks and inventory risks.

Logistics Fraud refers to actions committed by E-commerce sellers to evade regional restrictions, under-declare weight or avoid taxes in order to reduce sales cost. The actions practiced typically include using fake shipping labels or manipulated courier tracking numbers for delivery. If discovered by logistics companies, the goods may be confiscated and sellers may be forced to pay additional shipping fees. This would not only cause significant delays in the product delivery but also undermine user confidence in the platform. Additionally, to obtain subsidies and benefit from price differences in e-commerce platforms, sellers may use fake tracking numbers to generate orders.

Shipment Misdirection：The practice where sellers misreport the delivery location of goods to a lower cost region instead of the actual delivery region during the transportation process. This practice is done to reduce shipping fees.

Weight Fraud：The practice where sellers intentionally under-report the weight of goods during the transportation process to reduce logistics cost

Research done by Threat Hunter has identified three main types of fraudulent logistics tracking numbers in the market: recycled tracking numbers, fake tracking numbers, and tech-generated tracking numbers. Within normal circumstances, the use of recycled tracking numbers does not require sellers to actually ship goods out while the use of manipulated tracking numbers requires actual shipments. However, Threat Hunter's research has uncovered that the use of fake tracking numbers to commit fraud would not only generate profits from the shipping of actual shipments, sellers also stand to gain profits by sending empty packages or not shipping anything at all.

1、Recycled Tracking Numbers

Recycled Tracking Numbers refers to tracking numbers that have been leaked or sold by logistics numbers to be reused. Malicious groups sell these numbers through online tracking number sales marketplaces or private channels (such as telegram). For example, in America, over 4000 US logistics tracking numbers are updated daily on a single online marketplace.

Usage Conditions：These tracking numbers can be matched using details such as shipping time, delivery address, postal code or even the delivery time.

2、Tech-generated counterfeit shipping labels

Tech-generated counterfeit shipping labels refer to the courier labels that are generated by malicious groups after cracking the rules that govern the generation of shipping label information. These labels can be recognized by some tracking number scanners. In addition, their corresponding logistics tracking numbers and logistics paths can be queried on official websites. Although the enhancement of postal systems and policy crackdowns has contributed to a decrease in the number of tech-generated shipping labels circulating in the market, some perpetrators have claimed that they still have usable tech-generated counterfeit shipping labels.

Usage Conditions：These shipping labels are generally printed with real addresses and are used for real shipments

Courier Shipping Label: The document that is used in the courier industry to record information such as the sender, recipient, product weight, price and other relevant details during the transportation of goods.

3、Fake Tracking Numbers

Fake Tracking Number refers to a shipping label that is generated using a fraudulent account. The label itself contains a legitimate tracking number. However, as the associated account defaults on shipping fees or uses stolen credit cards to pay for shipping, all the documents and warehouses that are linked to the fraudulent account face shipping risks, leading to losses and a possibility of encountering penalties.

Usage Condition：These shipping labels are generally printed with real addresses and are used for real shipments.

Fake Tracking Number: The fraudulent logistics account that defaults on shipping fees or uses stolen credit cards to pay for shipping fees.

As mentioned earlier, sellers using fake shipping labels to commit fraud can either generate fake orders without shipping goods, send empty packages to brush for tracking numbers or ship goods normally.

Pricing of the Logistics Tracking Number: Fake Tracking Number > Recycled Tracking Number > Tech-generated Tracking Number

Threat Hunter's research into the pricing of the three types of fraudulent tracking numbers have found that the use of fake tracking numbers is the most expensive, followed by recycled tracking numbers and lastly, the least expensive tech-generated tracking numbers.

1. Fake tracking numbers are the most expensive, with an average price of 10 yuan per number. The high cost is primarily attributed to the need for a real delivery address for shipping. Additionally, the price fluctuates based on the size, weight, and other specifications of the product.

2. Recycled tracking numbers cost about 2.5 yuan per number on average. These numbers are derived based on information such as shipping time, delivery address, sender address, and postal code without the need to actually ship the product out.

3. Tech-generated tracking numbers are the cheapest, costing only 0.6 yuan per number. The per-use cost can be priced relatively low as these numbers are obtained by cracking the number generation rules. Once the rules are cracked, no additional costs are necessary to obtain subsequent numbers. This allows the cost to be kept low.

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