An online credit card scam that stole millions of dollars was halted by the U.S. Federal Trade Commission. The online credit card scam used fake companies and identity theft to steal small amounts of money that went undetected by consumers or fraud detectors. Over the last four years, a lot more than a million individuals 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.
Victims didn’t even notice
The elaborate online credit card scam operated undetected because scammers made very small charges and set up a lot more than 100 bogus companies to process the transactions. PC World reports 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. FTC reports 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 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.”
A trend with credit card fraud
The online scam is a textbook case about how online services used to facilitate business in the 21st century could be exploited for credit card fraud. As credit cards are increasingly being used for inexpensive purchases–they’re now accepted by soda machines and parking meters–credit card fraud criminals have cashed in on the trend. As outlined by 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. One of the largest payment processors in the U.S., First Data, was a preferred of the scammers. First Data had 110 of the 116 face merchant accounts. They set up bogus accounts with BBVA Compass as well.
Uncertain is the real source of all the identity theft
The FTC believes the defendants might 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, but they could have been purchased from online carder forums, black market Web sites where criminals purchase and sell stolen information.
A textbook online credit card scam
To create the virtual infrastructure for the online credit card scam, Webpronews reports the scammers set up fake physical addresses and fake web 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 individuals who were 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.
Find a lot more details 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
