An online credit card scam that stole millions, with just pennies at a time, was halted by the U.S. Federal Trade Commission. The online credit card scam used identity theft to steal small amounts of money that went undetected by consumers or fraud detectors. Over the last four years, more than a million individuals were charged from 25 cents to $ 9 on their credit cards in an online scam that added up to more than $ 10 million.
Article source: Online credit card scam stole millions, pennies at a time by Personal Money Store
Those who were victims didn't even notice
The elaborate online credit card scam operated undetected because all of the scammers made very small charges and set up more than 100 bogus companies to process the transactions. It was reported by PC World that U.S. credit card holders financed many of the scam because about 94 percent of all charges went uncontested by the victims of identity theft. According to the FTC, the scammers charged 1.35 million credit cards a total of $ 9.5 million, but only 78,724 of these fake charges were ever noticed. They would typically make just one charge per card number to fake business names such as Adele Services or Bartelca LLC. Avivah Litan, who is an analyst with the Gartner research firm who follows bank fraud, told PC World:
“They know that most of the fraud detection systems won’t detect anything under $ 10 and they know that consumers won’t complain about a 20 cent fee. What’s different here is the scale, and that they got away with it for so many years.”
Credit card fraud and the trends
The online scam is definitely going to be a textbook case about how online services used to facilitate business in the 21st century can be exploited for credit card fraud. As credit cards are increasingly getting used for inexpensive purchases–they’re now accepted by things like soda machines and parking meters–credit card fraud criminals have cashed in on the trend. IDG News Service reports that the scammers found loopholes within the credit card processing system that allowed them to set up fake U.S. companies that then ran a lot more than 1 million fake credit card transactions through legitimate credit card processing companies. First Data was one of the favored scammers. Of the 116 fake merchant accounts the FTC uncovered, 110 were with First Data. They set up bogus accounts with BBVA Compass as well.
Uncertain is the source of identity theft
The FTC seems to think the defendants may have run credit checks on the identity theft victims to be sure they were creditworthy. The FTC doesn’t know where the scammers obtained the credit card numbers they charged, but they could are purchased from online carder forums, black market Web online websites where criminals purchase and sell stolen data.
Credit card scam that is online seems like a textbook case
To create the virtual infrastructure for the online credit card scam, it was reported by Webpronews that the scammers set up fake physical addresses and fake web sites pretending to sell products, along with a real company’s tax number found online. Scammers then sent out spam e-mail pretending to recruit American finance managers for some of the offshore financial service companies. Those selected by the scammers were persuaded to set up dummy corporations to receive the credit card payments and send the money to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus and Kyrgyzstan.
More details about this topic at these websites:
PC World
pcworld.com/businesscenter/article/199952/ftc_says_scammers_stole_millions_using_virtual_companies.html
IDG News service
computerworld.com/s/article/9178560/FTC_says_scammers_stole_millions_using_virtual_companies?taxonomyId=17
Webpronews
webpronews.com/topnews/2010/06/28/ftc-cracks-down-on-online-payment-scam
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