Tag Archives: point of sale

Selling Where Life Happens

Every moment of every day, retail operations are under scrutiny. Executives and management teams for grocery stores, gas stations, big box home goods, home repair and department stores are obsessed with merchandising. Product placement is always in flux. Endcaps are changed for a season or a weekend. Special displays are constructed as demand is anticipated.

And now executives are equally obsessed with their digital storefronts – the digital version of the physical store – highlighting new products and sales and suggesting items to customers based on their behaviors and engagement. 

A great deal of thought goes into both the digital and in-store experience – the same questions, just addressed differently. What is the flow like? Can we drive the flow of our store offerings to add more impulse purchases? How can we construct our checkout process to make it quick and easy? Can we accommodate for visual space for products at the point of purchase? May we suggest something else that may go with the purchases? In some cases, this results in a mini-maze just prior to checkout, where by chance some last glimpse of something will trigger an additional sale at the point of purchase. Do I add a warranty? Should I get a Starbucks gift card for my neighbor who took care of watering my plants? At the point of sale – whether in person or digitally – the retailer buys the space that’s in our heads. We advertise to ourselves. We make the decision.

And the process works and creates growth opportunities for retailers that are rapidly moving to offer both in-person and digital, like Walmart, to meet customer needs and expectations. When Walmart recently announced second-quarter results – crushing the numbers! – it said e-commerce sales in the U.S. shot up by 97% and same-store sales grew by 9.3% as customers had packages shipped to their homes and used curbside pickup. This was the biggest earnings surprise in 31 years for Walmart! A company that disrupted retail decades ago and was in the crosshairs of disruption by Amazon is reinventing itself once again.

Walmart is leveraging its massive store base – which is accessible by nearly every person in the U.S. – with investments in its e-commerce platform to expand reach, engage customers and grow the business. If you go on the platform, you will see brands that you don’t see in the store — partners selling through Walmart. And with this platform Walmart is now looking to expand by adding a membership service. This traditional retailer has reinvented itself to meet the expectations and needs of customers and create an experience – like Amazon – that creates loyalty and deepens the relationship with the customer as the place to buy and manage different aspects of their life. 

Which makes us wonder, what if life insurers reinvented themselves to be obsessed with the point of purchase – digitally and in-person?

In 2020, life insurers, annuity providers and voluntary benefits providers should remind themselves that, when it comes to point of purchase, this new retail mindset can be a game-changer. This is the very first step in establishing the need for a flexible, ecosystem approach that will fit as comfortably at any digital checkout queue as it will at the adviser’s office. If we can establish the points of life where purchase can be seamless, easy and almost frictionless, then we’ll drive growth – something that has been elusive the last few decades.

The Point of Purchase

In Majesco’s latest thought-leadership report, Rethinking Life Insurance: From a Transaction to a Life, Health, Wealth and Wellness Customer Experience, we take a closer look at what is driving buyers of life insurance and other related products to cross the line and make the purchase. In our analysis, we identified some indicators regarding product location and the easiest ways to construct simplified purchase experiences. Digging deeper, we looked at how we can help customers sell to themselves through new digitally enabled opportunities, which may still be connected to in-person engagement.

To better understand just how people’s life experiences relate to their potential life insurance transactions, we surveyed consumers, asking them a range of questions related to health, wealth, wellness, life insurance and purchasing habits. The details of the survey results highlight a rapid shift, particularly by millennials and Gen Z, to wanting a lifestyle experience rather than just a transaction.

This blending of the purchase experience into the life experience is the key to unlocking the point of purchase in insurance.

See also: Reigniting Growth in U.S. Life Insurance

Trends in Life Insurance Ownership

Ownership of life insurance has seen significant declines over the last 50 years. In our survey, the older generation segment, Gen X and Boomers, has overall lower ownership than the younger generations, Gen Z and nillennials, as shown in Figure 1. Across the three categories of traditional, universal life (UL)/variable life (VL) and annuity, the younger generation’s total ownership level is 35% more than the older generation, reflecting a potential upswing in the life insurance market as the younger generation matures and expands their need for insurance. Most interesting is that both generations clearly gravitate to traditional insurance – term and whole life – as opposed to investment-backed products such as UL, VL and annuities by a factor of three to nine times, depending on the product. 

Interestingly, this strong interest in traditional products aligns with the growth of non-traditional, fluidless, rapid-issue life insurance from companies like Haven Life, Ladder Life and other insurers. The two are increasingly compatible.

Figure 1: Types of life insurance owned

Even more interesting and encouraging is that the younger generation believes more strongly than the older generation in the importance of life insurance, at 79% versus 69% (Figure 2). The key will be to meet their expectations in the risk product, customer experience and value-added services areas. 

Figure 2: Importance of life insurance

Interestingly, 70% of the younger generation who do not have life insurance still believe it is important – indicating a strong market opportunity for insurers who can meet their needs, demands and expectations. In contrast, only half (49%) of the older generation who do not have life insurance believe it is important.

With the value and importance of life insurance established, what will prompt each of the generations to purchase life insurance? Our research has shown that the younger segment has more life event needs on the horizon that would motivate them toward a life insurance purchase. They are interested. They find it to be important. So…

Why aren’t many of them acting on their need at common moments of impulse? 

Something is standing in the way of the insurance purchase. There is an understood need. There are relevant life events. So, something within current product offerings or the sales and engagement process does not align with their expectations. A hint emerges when you compare preferences for coverage periods.

For typical term insurance, everyone still favors monthly payments. However, coverage for a specific event or short period – on-demand insurance – is of higher interest to the younger generation and on par with the other payment options.

What this indicates is the need for different options to meet different needs at any point for life insurance, whether planning for a long-term coverage for death, or meeting the need for short-term insurance for an activity like a vacation. It is all about need and placement. The younger generation is poised to purchase at the point of need – and likely digitally.

Validating these assertions, we found that the younger generation is significantly more engaged in activities that would cause them to buy insurance. Nearly a third of the younger generation participated in a sport or activity that could result in injury or death as compared with 8% of the older generationMillennial and Gen Z generations participate more in extreme sports, they travel more, they do more shopping online. They are the generations that value experiences over ownership, which makes them highly likely to want to protect themselves and their experiences. This sheds new light on ways to capture and grow new customer relationships. 

With the Gen Z/millennials valuing and showing interest in buying life insurance, where and how will they buy?

Unsurprisingly, members of the younger generations are open to buying life insurance from a wide array of options, as highlighted in Figure 3. Agents and insurer websites are at the top, but, of the 16 options we included in our survey, seven of them exceed the 50% level of interest (a rating of three on the five-point scale), with the balance of them within just a few tenths of a point of this level – and a majority of these are digital, focused on the point of sale. In contrast, the older generation has only three of the 16 options at 50% interest or greater. 

The acceptance of a wider range of purchase options highlights the need for insurers to consider how and where they interact with the younger generation, and to be there with timely purchase prompts. This is where having partnerships and an ecosystem becomes very strategic in helping insurers expand their reach and presence to where their customers will be.

Figure 3: Preferences for different life insurance purchase sources

The Case for Point-of-Purchase Preparedness

If customers are interested and willing to purchase insurance from so many different sources and in so many different ways, then we can begin to innovate around what it will take for insurers to place their products in any place at any time – including their own digital platform. Walmart and Amazon are proving that product sales are most effective when they are multi-channel, multi-delivery-type and easily accessible. They are placing related products, such as warranties and accessories in front of buyers at precisely the right times. Each of them is successful because they understand their market’s purchase patterns and customer behaviors and they customize the purchase process to fit – with a digital platform that also uses sophisticated data and analytics.

See also: Fundamental Shift in Life Insurance?

When the process conforms to the person, retailers and insurers alike will be able to relax and know that they are not just capturing the up-and-coming generations, but, like Walmart and Amazon, they are giving the best service possible to every generation.

Innovate for the Future

Will your products one day sell on auto screens? Will they sell through smart homes? Will they be as easy as a tap on an Apple Watch? Will they be part of another purchase – like buying a home and getting a mortgage?

Your best life ideas will come from watching lives and lifestyles and thinking, “We could place ourselves right there.” It all begins with insights and the initiative to transform the insurance model from a transaction to an experience.

‘Do You Want Fries With That? Insurance?’

By now, most of us are so familiar with McDonald’s “do you want fries with that?” strategy that it’s easy to forget how brilliant it is. Let me refresh your memory. In 1993, McDonald’s implemented a new policy: Every time a customer placed an order that didn’t include fries, the cashier would ask if the customer wanted fries with that.

The result: an added 15% to 40% in annual revenue.

Just as important: The boost didn’t require any expensive training or investments from the company.

So how does all of this apply to insurance sellers? Turns out, many insurance companies can implement a similar point-of-sale upselling strategy to increase market penetration and revenue. Here, I’ll offer examples of several other companies doing this successfully and offer takeaways for those in the insurance industry.

1: Partner to Be Present at the Point of Sale

One of the biggest struggles for insurance sellers is getting customers to come to us. Even when they want and need insurance, it’s easy to forget to make the purchase, which isn’t good for anyone.

The solution is to be present at the point of sale for the item that needs to be insured.

One company that’s been doing this for a long time is Expedia, an online travel agency. The site helps you search, compare and purchase your plane tickets, rental car and hotel stay. At several points during the checkout process, you’re offered the opportunity to add travel insurance to back up your trip. As you approach the “Complete Purchase” button, this coverage only seems to make more sense.

This strategy is brilliant because it makes life easier for everyone: the customers who are about to make a big purchase (which could be derailed by bad weather); the airlines, which want to make sure their customers have a great experience; and the insurance provider, for obvious reasons.

Of course, not everyone will buy right away. To make this strategy as effective as possible…

  • Ask for contact information from those who don’t buy so you can follow up later.
  • Be explicit about your plans for contacting people; otherwise, they may ignore your communications or mark them as spam.
  • Remind customers of your connection when you contact them. Mention the company you partnered with in your first communication.

Of course, many insurable purchases are still made in person. When it’s not possible to integrate via an app, it’s time to…

See also: How to Keep Humanity in Online Sales  

2: Unite Disconnected Systems

The classic example here (and one that my company, BriteCo, addresses) is buying an engagement ring. In a typical transaction, the seller may be able to offer an appraisal, which buyers must then take to their homeowners or renters insurance provider to see if they can get the ring scheduled.

That’s not ideal for a number of reasons, chief of which is that the purchaser is likely to forget to follow up (and may even lose track of the appraisal), meaning that the valuable asset goes uninsured.

We’ve found success by creating a software system to handle the entire appraisal and insurance flow. First, our jeweler partner logs in to a simple-to-use, cloud-based platform to create an appraisal in minutes. That appraisal triggers an insurance engine, which generates a customized insurance quote. A customer who buys from a BriteCo jeweler partner will get a digital copy of the appraisal via email or text, immediately followed by a separate message with the insurance quote for the appraised piece(s). The customer can purchase insurance right then and there, on a smartphone, and leave the store fully covered.

Many buyers won’t immediately be ready to purchase insurance, but with the ability to access a policy in their pocket (literally!), they can easily follow up later. This removes much of the confusion about the insurance process that can cause customer dropoff and, of course, helps prevent valuable jewelry from going uninsured.

3: Add Value for All Parties

As you cultivate partners who can help you connect with customers, it helps to be able to offer tangible benefits to everyone involved.

For example, human resources software giant ADP has a partnership with the small business insurance agency Insureon that lets ADP customers easily apply for business insurance, which nearly every business needs and which tends to be difficult for small-business owners to find.

Everyone wins in this partnership: Business owners get access to essential coverage that can prevent major financial losses, ADP manages its risks by helping its customers get insured (including for professional liabilities such as workplace discrimination), and Insureon gets an opportunity to sell to those in ADP’s large customer database.

Just as important, the partnership offers business owners a third-party vote of confidence as they make a decision about commercial insurance, a product that many have little or no experience with and so often feel uncomfortable evaluating independently.

4: Aim to Be Subtle and Persistent

Once you start looking for masterful upselling, you’ll see it everywhere. Apple gently offers AppleCare as an add-on throughout its checkout process, without ever shifting into a hard sell. Amazon and Office Depot surface additional warranty coverage for higher-ticket and tech products in checkout as you complete your purchase.

See also: Bold Prediction on Customer Experience

Think about these experiences from a customer point of view: There aren’t obnoxious pop-up windows you have to click past. Instead, the add-ons are part of the array of available support being offered as a part of an extremely fluid sales process.

That’s an important model to follow for an industry that hasn’t always had the friendliest reputation.

The Worst They Can Say Is “No”

Remember: McDonald’s managed to increase revenue by at least 15% by asking a simple question at checkout. Part of this strategy’s brilliance is that not everyone has to buy fries – or insurance – for it to work. Even if many customers decline the offer, the ones who accept it will make a difference.

As hockey legend Wayne Gretsky once famously quipped, “You miss 100% of the shots you don’t take.”

Questionable statistical analysis aside, the man has a point.

Changing Point of Sale for Insurance

The world of insurance is changing rapidly. From transformational advancements driven by insurtech, artificial intelligence, robotics process automation, blockchain and wearables, to changes in the way insurance companies design and implement new products (e.g., design thinking, minimum viable product and behavioral economics), innovation is happening all around us. As Karen A. Morris said in her article “Innovation Lessons From the Flock,” “The feather in every innovator’s cap is the ability to question, relentlessly and with energetic humility.” There is no doubt that insurance companies across the country are questioning the impact of changes on their ability to compete.

However, the insurance industry may need to spend a little more time thinking about how their customers are purchasing insurance and how the point of sale is potentially changing. This article will share some examples of areas where insurance companies may need to rethink how they attract and retain insurance customers in the very near future as purchasing habits evolve.

The Rise of Subscription Models

In the CNBC article titled “The ‘Netflix’ Model of Car Ownership Is on the Rise for Drivers Who Need Wheels – Without the Debt,” the author discusses the growing trend of automakers, dealers and startups that are offering subscriptions as an alternative way to get into a vehicle. By subscribing to a vehicle, a person can avoid the traditional leasing of a vehicle or financing the vehicle through the auto manufacturer, used car dealer or bank.

For insurance companies, perhaps the most important feature to note about a subscription model is that the automaker, dealer or startup will charge a flat monthly fee packaging together all the expenses associated with owning or leasing a vehicle. Included in that fee, you guessed it, is personal automobile insurance. The article mentions a number of companies offering subscription options. A visit to the news sections of these companies shows how fast dealership partnerships and car subscriptions are growing.

See also: Digitalization – the Great Disappointment  

Professional Employer Organizations (PEOs)

For the workers’ compensation line of business, insurance companies will need to monitor the impact of PEOs and aggregators of services that offer to own the insurance risk for multiple clients across multiple states. Through the law of large numbers, mobile claim reporting apps, strategic partnerships with pharmacy benefit managers, third party administrators and insurance companies, PEOs are able to sell the fact that they are better equipped to handle the workers’ compensation claim life cycle. As you can tell from reading the financial results of a number of the largest PEOs, they are growing rapidly… translating into more and more companies where somebody other than the insurance companies competing in the open market are owning the insurance relationship directly through a relationship with the PEO.

Why the Point of Sale Matters

For insurance companies that are relying on their traditional sales channels of agents and direct sales to renew their current customers or attract new business, they may be in for a surprise some day soon. As subscription models and PEOs continue to attract and rapidly grow their customer base, traditional insurers will lose customers who are shifting to these new low-hassle business models. A good analogy in this case would be the boiling frog in a pot. If you place a frog in a pot of boiling water, it will jump out immediately. If you put a frog in a warm pot and slowly raise the temperature, the frog will continue with business as usual. In a similar manner, if insurance companies don’t recognize that these new models are slowly but surely taking away business, an insurance company could some day wake up and find that a lot of customers have disappeared from the market.

Researching Who Owns the Relationships

There is no doubt that some companies have gotten out ahead of the curve when it comes to recognizing that the point of sale for insurance has started to change for auto liability, workers’ compensation and a few other lines of business. Although we won’t name the insurance partners of subscription companies and PEOs, there are some easy ways one can find out the information.

For publicly traded companies, searching for insurance keywords in the company’s 10-K/10-Q is a fine place to start. For both public and private companies, searching their website and visiting areas that address frequently asked questions related to accidents and filing a claim can also be helpful. For one subscription company, the authors identified the startup’s insurance partner by downloading the app and visiting the FAQ section. By looking for answers related to questions about accidents and insurance, we found the number for the insurance provider, dialed it and heard the name of the insurance partner. For one PEO, we were able to visit the insurance resources section of the website and learn everything about the workers’ compensation program (e.g., certificate of insurance form, claim reporting form, pharmacy benefits provider, etc.).

See also: Reinventing Sales: Shifting Channels  


As Larry Keeley said in his book, “Ten Types of Innovation – The Discipline of Building Breakthroughs,” “Successful innovators analyze the patterns of their industry. Then they make conscious, considered choices to innovate in different ways.” Based on the trends and patterns we have described, it will be important for insurance companies to rethink where they should focus their energy when it comes to the point of sale for certain lines of business. As the competitive landscape continues to evolve, those who adapt first and recognize shifting points of sale will likely have a first mover advantage from a data analysis, relationship and diversification perspective.

The State of Cyber Insurance

Cyber attacks are escalating in their frequency and intensity and pose a growing threat to the business community as well as the national security of countries. High-profile cyber incidents in 2014 reflected the expanding spectrum of cyber threats, from point-of-sale (POS) breaches against customer accounts to targeted denial-of-service (DoS) attacks meant to disable a company’s network. Businesses in ever-greater numbers sought financial protection through insurance, buying coverage for losses from data breaches and business outages.

Boost in Cyber Insurance Demand Drives Insurers’ Response

Healthcare facilities, universities and schools continue to be on cybercriminals’ radar, but attacks in the hospitality and gaming, power and utilities and other sectors reveal that no organization is immune to a cyber attack or failure of technology.

Healthcare and education clients had the highest cyber insurance take-up rates in 2014, followed by hospitality and gaming and services. Universities and schools present attractive targets because they house a vast array of personal information of students, parents, employees, alumni and others: Social Security numbers, healthcare information, financial data and research papers can all be compromised.

The broader scope of hacktivists contributed to the increase in cyber insurance purchases in 2014. Sectors that again showed notable year-over-year increases in the number of clients purchasing cyber coverage included hospitality and gaming and education. Other areas that stood out in 2014 included the power and utilities sector, with more clients buying standalone cyber coverage. Power and utilities companies frequently cite the risks and vulnerabilities associated with the use of supervisory control and data acquisition networks — which control remote equipment — and the cost of regulatory investigations as driving factors behind their cyber coverage purchases.

The reasons for purchasing cyber coverage vary from board mandates seeking to protect corporate reputations to companies looking to mitigate potential revenue loss from cyber-induced interruptions of operations. Insurers responded to this demand by offering broader cyber insurance coverage in 2014, including coverage for contingent business interruption and cyber-induced bodily injury and property damages. They also expanded availability of loss-control services, including risk-assessment tools, breach counseling and event response assistance.

Cyber Limits Rise

Companies with revenues of more than $1 billion have increased their cyber insurance limits worldwide by 42% on average since 2012, according to Marsh Global Analytics estimates. Over the same time period, healthcare companies have bought 178% more cyber insurance, and power and utilities firms have expanded their coverage by 98%.

Rising spending on cyber insurance

Source: Marsh Global Analytics. Percentage increase in spending by companies with more than $1 billion in revenues on cyber-risk insurance from 2012 through 2014.

Cyber Rates and Coverage

Increases in the frequency and severity of losses and near-constant headlines about attacks and outages kept cyber insurance premiums generally volatile in 2014. Average rate increases at renewal for both primary layers and total programs were lower in the fourth quarter than in the first. The increased loss activity prompted pricing challenges for some insureds, particularly retailers, where renewal rates rose 5% on average and as much as 10% for some clients.

Market capacity also varied according to industry. Most industries were able to secure cyber coverage with aggregate limits in excess of $200 million, while the most targeted industries, like retailers and financial institutions, faced a challenging market.

Insureds also face heightened due diligence from underwriters seeking to drill down beyond simple reviews of the company’s general information security policies. For example, insureds in the retail sector are being asked about their deployment of encryption and EMV (credit card) technology. And all insureds are now routinely asked whether they have formal incident response plans in place that outline procedures for protecting data and vendor networks and, more importantly, if such plans have been tested.

A Growing Concern

In 2015, managing cyber risk is clearly a top priority for organizations. For example, business interruption (BI) drew a lot of attention in 2014, a trend likely to continue throughout 2015. While BI has historically been thought of as the effect of a critical system going down for an extended period, technology failures and cyber attacks can create far-reaching outages affecting secondary systems, clients and even vendors. Such events can also lead to higher recovery costs, which are becoming a concern for boards of directors and senior management.

There is also concern stemming from the expansion of regulation and litigation. Regulators were active in policing cyber risks in 2014, and oversight is likely to expand significantly in coming years. With cyber risk seen as a critical issue on both sides of the aisle in Washington, D.C., companies will face regulatory challenges in 2015 and beyond.

Sectors that have already seen significant regulatory activity — for example, healthcare, financial services and education — will likely face more stringent regulations and larger fines. All industries should pay attention to existing and impending regulations, tighten controls and prepare to present and defend their compliance regime. Civil litigation in the wake of a breach or disclosure of a cyber event also escalated in 2014, with class actions at times following the disclosure of a breach by mere hours.

As demand for cyber insurance grows, remember that risk transfer is only part of the solution. Enhanced information sharing between industry and government is another step toward having a comprehensive risk-mitigation strategy. Insurers and brokers are expanding the availability of loss-prevention and risk-mitigation services such as risk-assessment tools, breach preparation counseling and breach response assistance. The expanded roster of services and enhanced coverage can provide additional value from policies, usually without a specific added premium.

How Stolen Credit-Card Data Is Used

Reports of high-profile data breaches have been hard to miss over the past year. Most recently, it was a breach involving 56 million customers’ personal and credit card information at Home Depot.

This is just the latest volley in a wave of sophisticated electronic thefts including Target, Neiman Marcus, Michael’s, P.F. Chang’s and Supervalu. Much like in the other attacks, the suspected culprit in the Home Depot data breach is a type of malware called a RAM scraper that effectively steals card data while it’s briefly unencrypted at the point of sale (POS) to authorize a transaction.  Reports of this type of attack have become increasingly common in the months since the Target breach.

Whether the cause is a RAM scraper or an “older” threat like a physical skimmer placed directly on a POS machine used to swipe a credit or debit card, a phishing attack storing customers’ card information insecurely, the result is the same: Credit card data for millions of people winds up in the hands of criminals eager to sell it for profit. How does that process unfold? And how can you – or people you know – get sucked into it?

The Basic Process: The journey from initial credit card data theft to fraudulent use of that data to steal goods from other retailers involves multiple layers of transactions. The actual thief taking the card numbers from the victim business’ POS or database doesn’t use it him or herself.

First, a hacker – or a team of them – steals the credit card data electronically. Most of these schemes begin in Russia or other parts of Eastern Europe, and much of what you might call the “carding trade” is centered there.

Next, brokers (also referred to as “re-sellers”) buy the stolen card numbers and related information in bulk and trade them in online carding forums. A hacker may also sell the card data directly to keep more of the profits, though that’s riskier and more time-consuming than using a broker. These exchanges are found on the dark net (aka the dark web). That’s a part of the Internet you won’t find through Google, where all manner of illegal and unsavory things can take place. Online prices vary depending on:

  • The type of card,
  • Credit limit (if known),
  • How much additional data is available (CVV codes from the backs of cards and associated Zip codes make stolen cards more valuable),
  • The card owner’s geographic location (a fake card used in the vicinity of the legitimate card holder is less likely to raise suspicion), and
  • How recently the cards began appearing in the carding forums (which relates to the likelihood of card cancellation).

Prices for the individual cards have come down significantly in the past few years because of the sheer amount of records available, though brokers can still do quite well from bulk sales of card data. Despite being on the dark web, many of the brokers conduct themselves like regular online businesses and will provide replacements or the equivalent of store credit if cards purchased from them don’t work.

The people who buy the card data from the brokers are called “carders.” Once the carders have the stolen card data, there are at least two distinct variations on the scam:

1) Physical, in-store purchases using fake credit cards.

2) Stolen card numbers used to charge pre-paid credit cards that are, in turn, used to purchase store-specific gift cards (which are less suspicious than general gift cards). Purchases are made online.

Variant 1 (“Mystery Shopper”): This variation starts with carders printing up the fake credit cards for use in stores. Once they have the stolen card data, the equipment needed to make the fake cards isn’t that expensive. The carder then usually works with one or more recruiters to find people to use the fake cards (though a carder may do the recruiting himself). The enticement to get people to use the fake cards will generally be in the form of email spam and ads in Craigslist or similar sites offering easy money to be a “mystery shopper” or “secret shopper” as part of a “marketing study” or some other semi-plausible justification.

Not surprisingly, the items purchased tend to have high resale value. After the physical purchases are made, the “mystery shopper” can either send items to the recruiter/carder (generally via a secure drop site like a vacant office) or directly to someone who has “purchased” an item via an auction site in response to a posting from the recruiter/carder. If sent straight to the carder, she then auctions the items directly on eBay, Craigslist or an underground forum on the dark web.

The people who actually make the purchases with the fake cards may have no clue what they’re involved in (though sometimes they’re active participants in the scheme or simply low-level criminals looking to use the cards for themselves). They are effectively the “drug mules” of the credit card scam, taking the most risk and getting paid the least.

You’ve probably seen one step retailers take to try and stop in-person card fraud. On a counterfeit credit card, the numbers on the magnetic strip and the front of the card generally don’t match — it’s too expensive to create individual fakes. Some retailers have their personnel type in the last four digits on the physical card into the register after the card is swiped. If the numbers don’t match, the card is rejected as a fake.

Variant 2 (“Re-shipping”): Rather than making physical cards, in this variation carders use the stolen card data to purchase pre-paid credit cards that are then used to buy store-specific gift cards (Amazon, Best Buy, etc.). As with the “mystery shopper” scheme, recruiters typically use ads and spam emails to entice people, though this time it’s people (especially in the U.S.) seeing “work from home” promises. Sometimes, the recruiters will employ a more personalized approach, even going so far as to start a fake “relationship” with the intended target. Then — wait, there’s more — the gift cards are used to purchase items online, and those items are shipped to the people responding to the ads, spam or “relationship” overtures. That’s where the “work from home” angle comes in.

The people initially receiving the packages directly from an online retailer are called “re-shippers.” People in the U.S. are used because U.S.-based addresses raise fewer red flags with the retailers. Like the “mystery shoppers,” the re-shippers are the drug mules here (and they are sometimes referred to as  “money mules” or “shipping mules”). And, as with the “mystery shopper” scheme, re-shippers can either send items to the recruiter/carder or directly to someone who has “purchased” the item through an auction site.

While this may sound a little convoluted, the shell game-like nature of using one card to buy another and then another makes it more difficult for stores to catch onto this scheme before the purchase has already been made and shipped out.  After that, it’s generally too late.