A Tangled Tale of Gun Parts, Identity Theft and the Ease of Buy Now, Pay Later

Seung Song claimed that his identity was stolen, and that he used it to purchase gun parts worth $5,000 from an online seller using a buy now-pay later service.

Credit...Janie Obsborne, The New York Times

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By Matthew Goldstein

March 5, 2023

In late summer, a delivery service dropped off two packages containing $5,000 in gun parts and accessories at a house in Chino Hills, a community in Southern California.

The packages, containing parts for a Glock handgun, an AR-15-style rifle and other weapons, had been shipped from Primary Arms, a gun seller in Houston. The components were purchased in August using an installment payment plan provided by Credova Financial, a company that specializes in 'buy now, pay later' financing options for firearm purchases.

Seung Song received the deliveries.

Except, Mr. Song said, he never ordered the mix of gun parts, and he never got any delivery. A recently retired engineer, Mr. Song said he had found out about the purchase only when notified in October that a debt for $5,000 had been added to his credit report. When he reviewed the report, he saw that Monterey Financial Services, a debt collector used by Credova, had reported that the debt was overdue.

Mr. Song, 52, said, 'I have never heard of any of those companies.' "I'm not a gun owner."

Mr. Song lives in a condo apartment in Southern California with his spouse. He claimed that he was the victim to identity theft. He claimed that someone had created an account at Credova with his personal information. Then, he purchased the gun parts online through Primary Arms' buy now, pay later program. After accepting delivery to Chino Hills, which is approximately 40 miles east from Los Angeles, with a fake ID, he said he was the victim of identity theft.

Although it was not clear if the events occurred exactly as described, the Los Angeles Police Department's Commercial Crimes Division opened an investigation after Mr. Song filed the complaint. According to an official from law enforcement, the police determined that the gun parts were legally shipped to Chino Hills. They also considered Mr. Song and Credova potential victims.

Mr. Song's ordeal highlights a rising trend of identity theft involving the fast-growing buy now, pay later industry and the added danger that can occur when the items being purchased online are something like gun parts as opposed to shoes or cosmetics.

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It is possible to make purchases with stolen identities in the buy now, and pay later industry. This industry boasts that it can approve online credit applications within minutes. Refinitiv published a study in June that found that 23 percent reported being victims of identity theft. Their information was used to open accounts with a buy-now, pay-later service.

'Buy now, pay later has been a popular target for fraudsters,' said Jordan McKee, a research director for financial technology companies at S&P Global Market Intelligence.

Mr. McKee said that in a bid to gain market share, firms offering a buy now, pay later option 'have been loose with their underwriting process' when approving customer applications.

Credova, a financial technology company that has been in existence for five years in Bozeman (Mont.), stated in a statement that it had a "multilayered fraud detection and identity verification system" to identify potential fraud cases.

The company did not comment on the situation of Mr. Song, citing customer privacy concerns. However, it stated in a statement that it was "actively working with law enforcement and hold any wrongdoers accountable" and that there was 'less than 0.02 percent confirmed fraud rate'.

Customers can choose to pay in monthly installments or buy now and pay later. This allows them to avoid paying most fees if the bill is paid within a specified time frame, usually 90 or 120 days. Despite the industry growing exponentially, Klarna and Afterpay, which are the largest players in the market, do not finance firearm purchases. Credova is one the few companies that offer financing for customers of hunting and gun shops.

Federal law requires that anyone ordering a firearm online must pick it up from a licensed gun dealer following a background check. A licensed gun dealer can legally ship gun parts and ammunition to private homes, as long as they are not considered essential to make a gun functional.

Song challenged the credit charge on his credit report and requested a copy the Credova approved installment loan agreement. It included an itemized purchase order for 28 gun parts purchased from Primary Arms.

Gun enthusiasts often buy parts to enhance their firearms. Gun control advocates argue that large quantities of gun parts can be used to build private firearms. These are sometimes called ghost guns, because it is difficult for law enforcement to track them down.

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Adam Skaggs, chief counsel and policy director for Giffords Law Center, an advocacy group for the prevention of gun violence, who reviewed the Credova contract, said all of the gun parts on the list could be legally shipped to a person's home. Someone with the right knowledge, Mr. Skaggs said, could use those parts to build a functional gun as long the person had access to other critical gun components — such as a nearly finished frame or lower receiver.

Lower receivers and frames are what allow guns to fire. These components are not typically shipped by gun retailers to private homes. A new federal rule mandates that buyers pick up frames and receivers from licensed gun shops.

Marshall Lerner, chief executive at Primary Arms, stated in a statement that his company had followed all regulations. He stated that a person signed for the goods, and that the delivery person also scanned an identification. Both matched the name in the loan application, he said.

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Mr. Song, who has lived in the United States for nearly three decades, said he disputed the charge as soon as he saw it on his credit report. At Credova's request, he provided the company with photographs of his driver's license, social security card and a utility bill. He retained a lawyer after he became frustrated with the slow response from Monterey and Credova.

"I was worried about them coming after me," said Mr. Song.

Mr. Song stated that he had never paid any money under the contract and had never been to Chino Hills. He stated that his wife, all my family members and relatives live in Korea and that none of my friends reside in Chino Hills.

Then in mid-December, Monterey informed him it had closed his account with Credova. Mr. Song thought the matter was over. But last month, in a statement to The Times, Monterey said it would be 'false' to report that the debt collector had concluded that the transaction was fraudulent.

'It makes me frustrated,' Mr. Song said. 'I have already provided them so much of my personal information.'

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Susan C. Beachy was a contributor to this research.

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