An online credit card scam that stole millions of dollars, 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 four years, a lot more than a million individuals were charged anywhere from 25 cents to $ 9 on their credit cards in a scam that added up to be more than $ 10 million.
Source of article: Online credit card scam stole millions, pennies at a time by Personal Money Store
Victims didn't even notice
The elaborate online credit card scam went undetected because 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 most of the scam because about 94 percent of all charges went uncontested by the victims of identity theft. As reported by 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. Typically they made just one charge per card number to fake business names such as Adele Services or Bartelca LLC. Avivah Litan, an analyst with the Gartner research firm who tries very hard to follow bank fraud, told PC World:
“They know that many 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.”
A trend in credit card fraud
The online scam is certainly going to be a textbook case about how online services used to facilitate business within the 21st century could be exploited for credit card fraud. As credit cards are increasingly getting used for inexpensive purchases–they’re now accepted by soda machines and parking meters–credit card fraud criminals have cashed in on the trend. IDG News Service reports the scammers found loopholes in the credit card processing system that allowed them to set up fake U.S. companies that then ran more than 1 million fake credit card transactions through legitimate credit card processing companies. First Data was one of the favored scammers. 110 of the 116 fake merchant accounts the FTC uncovered were with First Data. They set up bogus accounts with BBVA Compass as well.
Source of identity theft uncertain
The FTC believes the defendants may have run credit checks on the identity theft victims to be certain they were creditworthy. The FTC doesn’t know where the scammers obtained all of the credit card numbers that they charged, however they could are purchased from online carder forums, black market Web sites where criminals buy and sell stolen data.
A textbook credit card scam online
To create the virtual infrastructure for the online credit card scam, Webpronews reports the scammers set up fake physical addresses and fake web online websites pretending to sell products, along with a real company’s tax number found online. Scammers then sent out quite a few spam e-mail pretending to recruit American finance managers for offshore financial service companies. Those selected by the scammers were told that they needed 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.
A lot more information accessible at these sites:
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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