If a deal looks too good to be true, it probably is.
The president of the Conrail Historical Society, Inc., and a railroad bookseller are blowing the whistle on a scam that has resulted in fraudulent billing of hundreds if not thousands of dollars’ worth of railroad-hobby merchandise, using the online auction site eBay. They’re working with postal inspectors, the FBI, and state attorneys general to halt the illegal practice.
Rudy Garbely, president of the historical society and operator of the nonprofit organization’s retail site, The Conrail Shoppe, and Lee Rosenberg, owner of Ron’s Books of Harrison, N.Y., among others, have been victims of the fraud. Customers are mostly unaware of the situation, which has involved the products of not only the historical society but also Kalmbach Media, White River Productions, Withers Publishing, Garbely Publishing, and other railroad historical societies. The items offered for sale on eBay include books, railroad models, model-railroading tools, board games, puzzles, and DVDs.
Here’s how the scheme works:
The scammer posts new items for sale on eBay at well below list price. A customer — attracted by the low price — orders the item. The scammer then places an order with the legitimate retailer for “drop shipment” to the customer, using stolen credit-card credentials. This information theft may occur, among other methods, through a data breach.
The legitimate retailer then ships the item to the customer and proceeds to bill the (stolen) credit-card account. When the account owners receive a statement, they recognize that they didn’t place the order and dispute the charge. The credit card company then issues a “chargeback” to the retailer, thus taking back the money paid under the stolen account.
As a result, the customer receives the item ordered at a bargain price and thinks nothing is amiss. But the legitimate retailer is out both the book and the money he or she paid to purchase the inventory in the first place.
Rosenberg cited as an example the Withers Publishing book The Stylish EMD GP30, which retails for $59.95. His store, Ron‘s books, sells it for $55.75, but the eBay seller was offering it for $39.95 postpaid. He shipped seven copies of the book before being alerted that the transactions were fraudulent.
Among the range of prices of books that have been shipped under this scheme are Guide to North American Cabooses (Kalmbach), which normally retails for $24.99, up to Southern Pacific’s San Antonio Division 1960-1996 (Southern Pacific Historical & Technical Society), which normally retails for $90. The Conrail Shoppe filled an order for an HO-scale Atlas-brand bicentennial GP38 model, which sells for $150.
Because the credit cards are stolen, the victims — The Conrail Shoppe, Rosenberg and others — cannot fight the “chargebacks,” because the account owners are in fact correct that they didn’t order the merchandise.
Rosenberg contacted eBay and received a response that the practice goes against the company’s policy and that the firm would be investigating.
Garbely and Rosenberg have taken steps to identify suspect transactions and cancel them before they go through, including restricting the use of the online vendor-payment site PayPal, and instituting other security measures. Garbely put up warnings on his own publishing company’s website on June 17, and has updated it since then.
The story began to unravel when a CRHS member bought a book through eBay by this method. When it arrived, he noticed that it was shipped from Ron’s Books, and he knew that he hadn’t ordered it from that seller. He contacted Rosenberg, saying, “I think I’m involved in this.” Rosenberg was able to match records to determine that it was, in fact, a scammed transaction. He said the first such incident took place on May 5.
The scammer tried to order a book from Ron’s Books but Rosenberg, recognizing that it was probably a shady purchase, declined it. Soon thereafter, the same person tried to order the same book from The Conrail Shoppe, and was likewise declined.
For buyers who want to avoid being involved, Garbely said the red flags to be aware of are eBay listings that offer a combination of these three elements: a low price, a “buy it now” option, and shipping being included.
“I hate to tell people not to use eBay,” said Garbely, “but the most secure way to avoid this is to go to the seller’s own website — go to Ron’s Books, go to the Conrail Shoppe. We (CRHS) do offer low prices; that’s why we’re being targeted. Get it from a reputable dealer merchant’s website and not some random person on eBay.”
Rosenberg said although user names that have been identified with fraudulent transactions have been changing to avoid detection, some of those associated with these activities are:
Garbely and Rosenberg ask anyone who suspects that he or she has been an innocent party to help them provide information to the authorities by contacting them at firstname.lastname@example.org or 973-800-9251, or Rosenberg at email@example.com or 914-967-7541.
— Updated at 11:20 a.m. CDT with new phone number for Rosenberg.