Credit Card Fraud: A Few Cents Here, a Few Dollars There

"FTC says scammers stole millions, using virtual companies"
Computerworld (June 27, 2010)

"The U.S. Federal Trade Commission has disrupted a long-running online scam that allowed offshore fraudsters to steal millions of dollars from U.S. consumers -- often by taking just pennies at a time.

"The scam, which had been run for about four years years, according to the FTC, provides a case lesson in how many of the online services used to lubricate business in the 21st century can equally be misused for fraud.

" 'It was a very patient scam,' said Steve Wernikoff, a staff attorney with the FTC who is prosecuting the case. 'The people who are behind this are very meticulous.'..."

That "just pennies at a time" is accurate, but a little misleading:

"...The scammers stayed under the radar by charging very small amounts -- typically between $0.25 and $9 per card -- and by setting up more than 100 bogus companies to process the transactions...."

It's still "small change," by American standards, which may explain the next paragraph:

"...U.S. consumers footed most of the bill for the scam because, amazingly, about 94 percent of all charges went uncontested by the victims...."

The Lemming is nitpicking with this micro-review, but "amazingly" is in the eye of the beholder. With most of the transactions being under $10, I'm not all that surprised that the transactions weren't challenged.

I might have noticed charges to the family's account - but this household isn't exactly a 'typical' bunch of Americans. We routinely check the monthly bills we get - including the one from our credit card service. If there's something odd - we start asking questions. We're not suspicious - but we can't afford to throw money away, either.

Then there was the company whose service I didn't use. Their representative seemed surprised, and perhaps a bit offended at the idea that I expected regular bills, invoices - something - besides a periodic charge on my credit card account to show that I was paying for the service.

The Lemming is getting off-topic.

The criminal activity went undetected so long, we're told, because most outfits don't pay attention to charges under about $10 - they just let them go through - and most people don't raise a fuss over small charges to their accounts.

Each fraudulent charge was small - but they added up. To about $9,500,000, according to the article.

There's a fair amount of detail in the Computerworld account - more than I saw in other news articles.

It's good to know that fraudsters get caught. The trick now will be for credit card services and the folks who use them to work out ways to keep from being nickled and dimed out of dollars again.