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 fake companies and identity theft to steal small amounts of money that went undetected by consumers or fraud detectors. Over four years, more than a million people were charged anywhere from 25 cents to $ 9 on their credit cards in a scam that added up to be a lot more than $ 10 million.
Article resource: Online credit card scam stole millions, pennies at a time by Personal Money Store
Most of the scam victims didn't even notice
The elaborate online credit card scam went undetected because 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 the majority 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. They would typically make just one charge per card number to fake business names such as Adele Services or Bartelca LLC. Avivah Litan, who’s an analyst with the Gartner research firm who follows bank fraud, told PC World:
“They know that numerous 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 numerous years.”
A trend with credit card fraud
The online scam is a textbook case about how online services could be used to facilitate business in the 21st century can also 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. As outlined by IDG News Service, the scammers found loopholes within 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. First Data had 110 of the 116 face merchant accounts. The scammers also set up bogus accounts with Elavon and BBVA Compass.
Source of identity theft uncertain
The FTC seems to think that the defendants might 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 might are purchased from any online carder forums, which are black market Web online websites where criminals buy and sell stolen information.
The online credit card scam is textbook worthy
To create the virtual infrastructure for the online credit card scam, Webpronews teaches us the scammers set up some 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 offshore financial service companies. Those people 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.
A lot more info 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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