The U.S. Federal Trade Commission busted a long time scam where offshore thieves stole millions of dollars from consumers over a period of four years until they were stopped in 2010.
This scam was thievery at its best. The scammers were patient and discreet, making small charges at a time, typically between $0.25 to $9.00 a card and avoiding charging one card multiple times.
Over the course of the four years these carefully added charges equated to millions of dollars, these fraudsters were in no hurry to cash in, and their setup proved to be lucrative having netted $9.5 million dollars before getting caught.
Since fraud detection preventatives typically don’t draw a red flag at such low charges, this escaped that radar and it turns out even most consumers didn’t contest it. PC Magazine stated about 94% of the charges made went uncontested by victims. Of 1.35 million credit cards, only 78,724 apparently noticed.
The credit card scammers were able to delay detection for the four years because they set up over 100 fake companies to process the transactions using names such as Adele Services or Bartelca, LLC (PC Magazine via Yahoo! News).
Now that the fraud has been detected, the FTC is prosecuting the case. At this time the agency has not named those who are being charged, but has filed a civil suit in a U.S. District Court in Illinois. PC Magazine reported ” This has frozen the gang’s U.S. assets and also allowed the FTC to shut down merchant accounts and 14 “money mules” – U.S. residents recruited by the criminals to move money offshore to countries such as Bulgaria, Cyprus, and Estonia”.
The FTC’s goal is to identify the masterminds behind the massive fraud scheme; the thieves are believed to be residing outside of the U.S. Another thing the FTC is trying to get to the bottom of is figuring out exactly how the scammers managed to capture so many credit card numbers. There are several possibilities and a chance the thieves even purchased this information on the black market.
What’s interesting is the intricate, yet in some ways, simple procedure these scammers followed in order to set up such a vast scheme. More can be read on PC Magazine’s article which further describes in detail how the scammers used real companies and set up virtual businesses in order to establish a foundation for the million dollar credit card scam.
One of the problems seems to be a lack of consumer awareness. In a world where credit cards are used from everything from major household purchases to cups of coffee, as evidenced by the overwhelmingly lack of complaints for wrongful charges, albeit small ones, many small charges are overlooked by consumers. Yet due to this fact, the scammers managed to score a load of cash.
There is a lesson to be learned here. Always check your credit card and question any charges, no matter how small, you never know, these pennies could be making a thief a millionaire.