Fake books sold on Amazon could be used for money laundering
theguardian.com
theguardian.com
Edit: To be fair to Stripe, they did tell me that it was not them, but their underwriters that were responsible for the decision.
The original plan was to sell certain retro items on Amazon's Marketplace and possibly Ebay. I figured that the fees and taxation requirements were a logical expense in exchange for increased traffic and ease of payment.
While I wasn't concerned about getting hit with accusations of money laundering, I was extremely concerned about chargebacks and Amazon siding with the buyer instead of the seller for pretty much any reason.
Which got me thinking-- how and when did it get this bad? A wad of cash or a check in envelopes isn't the most scalable or amazingly convenient payment solution on Earth, but it is more equitable and irreversible than the current system.
In fact, I was surprised to learn that Venmo doesn't do chargebacks. Aside from Venmo's strict and arbitrary laws about money laundering ("ISIS beer funds" is a fun googleable term here), it is an infinitely more ideal way to pay than Paypal or etc.
"Want to buy something? Venmo me the money and I will send you the item. If you don't trust me as a seller, then find someone you trust who is also selling this item, because by default I do not trust any buyer."
"It is not possible to cancel a payment without the consent of the payee".
Aka, if i give you money and you say you don't want it, you can cancel the payment.
But on Amazon or Ebay, you pay me for an Xbox, I ship it, and 3 days later "IT'S BROKEN" and I lose all my profit + shipping fees
Cash gets counterfeited. Checks bounce. Invoices go unpaid. Debtors go bankrupt. Packages get pilfered. The world is full of shoplifters, skimmers, change raisers, rip dealers, embezzlers, commercial burglars and opportunists.
It didn't "get this bad" - it used to be much worse. Shrinkage is a cost of doing business and it's priced in to margins. If your business venture can't withstand a normal level of shrinkage that all your competitors deal with, then you didn't have a business to begin with.
I buy almost everything online (normally eBay, because I like the convenient price comparison between different vendors, and the consistent search and checkout interfaces). I almost never have any issue.
I don't do invoices. I don't do credit.
And if the package is stolen from the mailing service I choose, then hopefully I purchased some type of tracking service for it to fulfill an insurance claim from the post office.
There is no justification for the new "chargeback culture" that exists in our society. Only the most centralized sellers can eat these costs. This is a temporary win for consumers-- just wait until friendly indie sellers are pinched out of existence.
Customer protection. A lot of those "friendly indie sellers" are selling substandard goods, failing to ship products or engaged in outright fraud. Chargebacks exist as a dispute resolution mechanism of last resort.
If you can't eat those costs, you don't have a business. If your chargeback rate is over 1%, you're doing something seriously wrong and your merchant will eventually close your account. If you can't comfortably absorb the shrinkage from a chargeback rate of below 1%, your margins are far too small.
There's nothing stopping you from running a mail-order business that only accepts cash, but customers will quite reasonably baulk at the risk and inconvenience. If you don't trust your customers enough to accept credit cards, why should they trust you enough to send you an envelope full of greenbacks?
Everyone agrees on this point.
>If your chargeback rate is over 1%, you're doing something seriously wrong
Not everyone agrees on this point.
The point the gp is making is that the chargeback rates are too high due to circumstances beyond his control.
He can't stop people from taking advantage of the system as it currently operates and basically committing fraud against him at a higher rate. There's no policy he can implement to prevent this. Because he's not in control.
It still boggles my mind that in most major US retail chains, if you return a high value item, e.g. a TV or appliance, you can get a refund without the store clerk checking the merchandise.
It’s an unfortunate reality that in the US, consumers have been conditioned to expect lengthy return periods, and then still game the return system with various tricks. Need a tent for a camping trip? Great, use it for camping season, and return it within the 60 day return window for a full refund, no questions asked!
In my personal experience, when my company receives shipping containers with returned “defective” products, anywhere from 25-50% of the returns are working just fine.
In contrast, in Canada, Mexico, or many European countries, return periods rarely extend beyond 30 days.
With online sales, the same issues seem to have cropped up in a different form. Amazon can’t be bothered to actually verify whether returned merchandise is actually defective, or if the returned box actually has an item in it. If you ask to see the merchandise that triggered a chargeback, be prepared to shell out for freight, and wait weeks for your shipment to arrive. When it does arrive, and you find out that the merchandise is perfectly functional, or the customer kept the merchandise and sent back an empty box, good luck trying to find an Amazon rep who can adjust your account balance in a timely manner.
The return system on Amazon for consumers seems designed to encourage bad behavior. If you’re returning an item, and select your reason for return as “I didn’t like it”, you’ll be charged the cost of return shipping. If you claim that the listing was “inaccurate” or that there was a vague “quality problem”, Amazon will immediately let you download a prepaid shipping label. Better yet, you can test the different options for yourself, since Amazon doesn’t prevent users who selected one reason and have seen the return shipping cost from selecting another that has no return shipping cost.
All this is to say, I deeply empathize with the original comment and the child comment. If you’re selling low-volume, high-value goods, a bad string of chargebacks can easily threaten your business. If I’m selling 100 $50 dollar items a month on Amazon, and I suddenly get 3 chargebacks, that money is immediately deducted from my balance. To contest the chargebacks, you’ll have to go through the whole rigmarole I described before. Stripe’s underwriters are doing what makes financial sense for them, but that’s small consolation to the entrepreneur.
It’s awfully easy to say that any business with more than 1% chargebacks is doing something wrong, but if you’re a low volume seller trying to grow your business organically, a bad month or two (“variance”) can seriously crimp your cash flow and the threaten the survival of your business.
It used to be that your storefront getting robbed—because that’s essentially what this is—was a temporary setback. As long as you had also made enough profit to afford to restock, and had taken appropriate precautions to deposit your revenue in the bank regularly, such losses cold be considered just a cost of “doing business in a bad neighbourhood.”
Nowadays, though, a business that might regularly get robbed—digitally—is untenable, because even if you want to restock and continue on, and even if your business is profitable enough to always be able to afford to eat such losses, your payment processors will still “fire” you as a customer. (Or see the “neighbourhood” you’re in and never take you on as a customer at all.)
However, I am not able to trust you as a buyer on Ebay or Amazon. No matter what I do to cover my bases, there is a risk that Amazon and Ebay will reverse the transaction, and I will lose my money, time, and even my item.
Conversely, when you send me cash or a cash equivalent by mail, I am now 100% fulfilled, and any failure to deliver on my end should become public knowledge quite quickly. However, caveat emptor.
This is one of the reasons I'm a big fan of cryptocurrency. Your service would not have been shut down by the payment processor if you were able to handle the money yourself without relying on a third party.
The world probably hasn't reached the point where going cryptocurrency-only would be viable for your service, but onerous anti-money laundering regulation is just pushing more people towards cryptocurrency, at the margin.
People dealing in significant amounts of cryptocurrency will eventually have to be regulated in some way, also.
The part I'm protesting (in this thread, at least) is the part where the regulations on banks and payment processors are so onerous that they refuse to work with legitimate businesses.
> This is one of the reasons I'm a big fan of cryptocurrency.
> Your service would not have been shut down by the payment
> processor if you were able to handle the money yourself
> without relying on a third party.
Yeah but this is also the ethical problem of cryptocurrency. Most people agree that money by itself has something bad attached to it, at some level it encourages people to do evil stuff. If you now look at cryptocurrencies, this is even worse! We complain that most major banks partake in speculation with food. But we completely ignore that with these currencies far worse stuff is possible without going through the process of money laundering, the state is completely not involved.
This is a crazy double-standard if you consider that many hackers consider themselves having a much higher ethics than any other business person.
The equivalent would be to complain about specific uses of cryptocurrencies, or in the other direction, about the very existence of banks and commodity markets.
¹ (just taking your example, not necessarily my opinion)
What?! This is not true. Money is not inherently evil. Money is a tool, just like a hammer. I can build things with it or do harm with it.
If your cryptocurrency-based store wouldn't comply by the same regulations that third party was required to comply with, though, then you, as a merchant, would be breaking the law. Which takes you back to square one, cryptocurrency or not.
It's just that with cryptocurrency you get to decide to break the law and continue accepting payments, instead of being based to Stripe.
One is just accepting payments, the other is processing them for vast amounts of third parties.
Because money laundering can happen at any level, and specific regulations apply, you don't need to be a card payment processor processing "payments for vast amounts of third parties".
As long as you accept payments, even for a lemonade stand in the corner, you need to comply with these.
In fact you probably misunderstood what Stripe demanded on the parent's situation: they didn't demanded the parent's store comply with the same regulations Stripe does as a card payment processor. They demanded they comply with the regulations a store should comply with.
You are correct that the law is still there, but it's the difference between innocent until proven guilty and guilty until proven innocent.
But without payment processor you need to handle a lot of that yourself (security, refunds, fraud, recurring payments, taxes, EU VATs, etc.). All the complicated stuff that caused us to outsource payment services in the first place.
It’s not about preventing 100%, it’s about making it difficult to the point that it’s not a way to efficiently move that much money.
I mean, technically Apple could be used to launder money.
And frankly, any service that looks to offer some marketplace should be aware of money laundering potential, and how you are going to limit it. And don’t get me started on other issues like fraud.
Average joe has to adhere to the letter of law and what ever corporations throw at them.
The money isn't even clean if they're using the wrong SSN.
I think you could, however, use a very similar method to actually launder money. The SSN/account would need to be accurate; the taxes would need to be paid; and the contents/price would need to be a plausible if low-quality example of the typical self-published book. You'd pay people dirty cash to buy copies of the book, and/or use single-use debit cards bought with dirty cash.
And why is there 'bad' money? I think we have to take a detailed examination of what constitutes 'bad money'. I think they are mostly all underserved markets that are being served by the worst of society.
I think most things can be fixed with more sensible approaches. Decriminalizing drugs is a good place to start. Especially considering our own CIA and pharma industry created a lot of addicts that then get fed into the prisons, bureaucrats profiting at every step. They helped create the drug kingpin monsters.
This seems like just another problem created by government where the citizens have to pay the price. No shortage of those these days.
But they exist, and they're huge. Obviously merchants love them for the float and captive customer spending more than the gift card balance. Businesses might love them to give out to employees since it's not taxed income, and similarly, money launderers would like them.
I guess I could see some niche use, like wanting to give a child funds for a movie ticket, but to avoid them using it for other purposes you restrict it by giving a movie gift card. But I don't see that supporting a large market.
Giftcards are seen as a way around that (although they’re not really better). They also show that you thought about the gifted (what would this person like), but respect that they might not like the specific gift you’d pick.
e.g. if you know someone is a LEGO collector, you gift them a LEGO gift card, instead of buying a specific collectors model that they might already have.
The article is not about money laundering, but using stolen credit cards. It makes little sense to use Amazon for laundering.
However, in general yes - a 30% haircut on laundered money isn't too bad at all. Consider the classic money laundering scheme: you own a legitimate bar, but supplement the real sales with ghost sales, paid for by the dirty cash. The alcohol supposedly sold in the ghost sales is poured down the drain, so your suppliers invoices match up with your sales (this works because it's typical for customers at bars to pay in cash, and the margin on alcohol sold as individual drinks is pretty high).
But this, if it does include money laundering, may attract regulators with teeth.
Also, Amazon wouldn't be able to get away with this nonsense if they were compliant with EU data protection laws:
> Reames says Amazon has told him that it can send him a letter “acknowledging than I’m disputing ever having received the funds, because they said they couldn’t prove I didn’t receive the funds” and won’t share the details of the payee.
Sometimes it seems like they are actively helping them. I wrote a review pointing out that an author[1] is a fake person[2] and they didn't respond to me and deleted the review. Meanwhile, the obviously fake reviews on "her" work still stay up.
It used to be that I could go on Amazon and judge by reviews and know I'd get something good, but these days searching Amazon means wading through a lot of crap and fakes and I don't get the impression that the company sees it as a problem.
[1] https://www.amazon.com/Tina-B.Baker/e/B0716Q2Y4Z/ref=sr_tc_2...
[2] https://www.canstockphoto.co.uk/portrait-of-senior-woman-in-...
Can you tell me how you can laundering, say $100K in cash via Amazon? If you already have it on a credit card, you've already laundered it.
If you already have a credit card, you're indeed almost certainly already good to go.
This way, you don't risk / burn an account without getting your payoff.
Criminal B runs the cards through a donation engine to validate them, and sells to criminal C for more per card.
Criminal C buys one validated card to make an order for aquarium equipment.
How would someone do it with crypto? Know your customer(KYC) laws would require legitimate bitcoin sellers to verify you identity. I assume this even true for bitcoin ATMs. Trying to launder $100k this way would a generate suspicious activity(SAR) report to the government.
He can justify the amount by "smart" trading. With the current volatility in the market, making 10x profits is not unheard of.
Crypto-currency exchanges are not exceptions to money laundering regulations. You have to identify yourself and you may need to explain the source of money if you withdraw too much.
I have no idea whether or not this is cost effective given current mining difficulties and cloud hosting rates... but I'm sure someone somewhere is doing this.
There is no need to money launder money you have mined yourself.
If you can already spend it on miners and utilities, why go through the pain of cryptocurrency? Just buy jet skis and restaurants or whatever it is you actually want.
Two things. First: if there was an inactive area of the brain that did not contribute to your behavior, it is very likely evolution would have entirely disabled it. The brain is the single most energy expensive organ in the body. Second, and more importantly: your consciousness does not control your behavior anyways - the only thing that is reasonably known to be in its power is the ability to stop yourself from doing things. Consciousness sees an after-action report of the decisions that the rest of your brain makes, and hence concludes that "it" is responsible for them. (This can be seen by your brain deciding on a course of action seconds before you become consciously aware of it.) As such, the experience of an inert consciousness would probably not be all that different from your active one. Maybe it would have to justify a few more impulsive actions in hindsight.
You may be modelling this as a separate being who is confused and terrified, but that's a category mistake - sensations and feelings happen to your consciousness, not in your consciousness.
[0] But I wouldn't say the article describes money laundering. The proceeds from the scheme are not (and don't try to look) "clean" at all.
Look, I'm not a criminal mastermind so I have not run the numbers to decide whether or not this is a good use of your resources. I'm just saying that cryptocurrencies might be appealing to people wanting to steal money and that KYC isn't going to save you.
Then take payments in cryptocurrencies. Directly without going through BitPay or something. Pay with Monero which cannot be traced on the blockchain and deliver the games to emails.
Now you have a company with seemingly legit profits. All you need to do is convert your dirty money to cryptocurrencies at the start.
Is it really this simple?