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 a lot of fake companies to steal small amounts of money that went undetected by consumers or fraud detectors. Over the last four years, more than a million people were charged from 25 cents to $ 9 on their credit cards in an online scam that added up to a lot more than $ 10 million.
Most scam victims didn’t notice
The elaborate online credit card scam operated undetected because all of the scammers made very small charges and set up a lot more than 100 bogus companies to process the transactions. According to PC World, 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. Typically they made just one charge per card number to one of the fake business names like Adele Services or Bartelca LLC. Avivah Litan, 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.”
A trend in credit card fraud
The online scam is 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 being used a lot more and more for inexpensive purchases–they’re now accepted by soda machines and parking meters–credit card fraud criminals have cashed in on the trend. According to IDG News Service, 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 preferred scammers. Of the 116 fake merchant accounts the FTC uncovered, 110 were with First Data. They also set up bogus accounts with Elavon.
Source of identity theft seems uncertain
The FTC believes the defendants could have run credit checks on the identity theft victims to be certain that 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 websites where criminals purchase and sell stolen data.
A textbook credit card scam online
To create the virtual infrastructure for the online credit card scam, it was reported by Webpronews 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 spam e-mail pretending to recruit American finance managers for some of the 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.
Discover a lot more about this topic here:
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
