Socially Engineered Shipping Scheme Hits Jewelry Industry

New York--A group of perpetrators are calling jewelry companies and faking their identities in order to trick them into shipping out high-end items, the Jewelers Security Alliance said in a special alert issued late last week.

JSA President John J. Kennedy said that while the exact number of perpetrators is unknown, the shipping scam is the work one of one fairly large singular group believed to be operating in the United States and targeting jewelry firms in the Northeast and Southeast.

He said that both suppliers and retailers are potential victims, with the perpetrators using what’s called social engineering to try to fool their victims into shipping out high-end merchandise.

Social engineering is defined as the use of deception to manipulate individuals to divulge confidential or personal information that may be used for fraudulent purposes. In May of this year, the FBI released a public service announcement about social engineering being used in business email compromise attacks, which cost businesses globally more than $5 billion between October 2013 and December 2016.

But, electronic contact is not part of the current scam that’s impacting jewelers and suppliers, Kennedy said.

Instead, the perpetrators are using the phone, calling suppliers pretending to be jewelers, or targeting multi-store retail chains posing as a store manager or employee of another branch.

They will contact the retail store or supplier with a great deal of knowledge about the company, like names of employees, shipping procedures, inventory in stock and SKU numbers.

While some of the information is obtained via phone calls made prior, much is mined from the internet, including the store’s website and the social media profiles of the business owner and his or her employees.

Then the perpetrator will ask for the supplier or store to ship certain high-end items--Kennedy said mainly large diamonds and high-value watches--overnight, with the goal of diverting the package en route by changing the shipping address to an address of their choice.

Sometimes when the fraud is being committed at a multi-store retail chain, the perpetrator will give an address that he or she claims belongs to a customer or salesperson and asks for the item to be sent there instead of the store.

Kennedy said while he has seen this type of fraud before, he has never seen it happening at the level it is right now.

There have been about a dozen attempts in the last two weeks