A photo illustration of an online scam; a hand reaching through a monitor and taking a woman's money.
Photo Attribution: CC by Don Hankins/Flickr

An online credit card scam that stole millions of dollars has finally been 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 past four years, more than 1 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.

Victims didn’t even notice

The elaborate online credit card scam went undetected because scammers made very small charges and created 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 nearly 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 noticed. They would usually make 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 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 of how online services used to facilitate business now could be exploited through credit card fraud. As credit cards are being used 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. It was reported by IDG News Service that the scammers found loopholes in credit card processing systems 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 companies. First Data had 110 of the 116 fake merchant accounts. The scammers also set up bogus accounts with Elavon and BBVA Compass.

The source of all the identity theft is very uncertain

The FTC believes the defendants could have run credit checks for the identity theft victims to be sure they were creditworthy. The FTC doesn’t know where the scammers obtained all of the credit card numbers that they charged. However, they could have been purchased from online carder forums, black market websites where criminals buy and sell stolen info.

Credit card scam that is online seems like a textbook case

To produce the virtual infrastructure for the online credit card scam, Webpronews reports the scammers set up fake physical addresses and fake 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 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.

Read more on this topic here:

PC World


IDG News service




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