Fraud, Scams & Crime

Involves the use of a skimmer device to illegally capture and store credit card information from the card's magnetic stripe for later use on counterfeit cards or in fraudulent transactions. The skimmer is usually a small, portable device (the size of a pager) and stores about 1000 card numbers.

False storefronts or e-commerce websites often established by organized criminals for the sole purpose of illegally capturing, reproducing, and distributing valid credit card information. Spoof shops appear legitimate to cardholders, who provide card information for sales or services they will never receive. Spoof shops with merchant accounts will receive payment from their merchant banks and then disappear. Spoof shop criminals also share cardholder's valid information with other criminals. These criminals attack your business by using counterfeit cards and engaging in fraudulent transactions to receive merchandise for quick resale.

Employees with access to customer's credit card information may use it for fraudulent purposes. These employees can create counterfeit cards and use card information online to make fraudulent charges. They can share or sell the card information and attack multiple merchant locations to receive valuable merchandise. Employees who misuse cardholder information can do immense damage to a business in a short period of time.

Employees at Acquiring Banks, Issuing Banks, Processors and third party service providers have access to cardholder and merchant account information. To commit fraudulent transactions, corrupt employees will: aid criminals to gain access to sensitive card information; embezzle credit cards or valid card information; create fictitious cardholder and merchant accounts; and create counterfeit cards.

This type of fraud occurs when the cardholder makes a purchase and later charges back the sale claiming he did not receive the goods or services. Another variation is the cardholder who makes a purchase and then claims his card was lost or stolen. Sometimes a friend, spouse or relative uses a valid card without the cardholder's permission. "Friendly fraud" is particularly vexing when committed online.

Draft laundering occurs when one merchant processes sales through her merchant account for another merchant. This occurs when two or more merchants agree to commit fraud or when one merchant (who may have no merchant account) dupes another into processing his sales. Laundering, whether purposely done or not, violates the merchant agreement and may constitute a severely punishable crime.

This type of fraud uses computer software programs that can be downloaded from the internet. The software programs have names like "Credit Master" and "Credit Wizard". These programs generate valid credit card numbers by using a mathematical formula called "Mod 10 Check-Digit Algorithm". The mod ten check-digit algorithm is used to create (and verify) valid MasterCard and Visa credit card numbers by using an issuing bank's assigned identification number range. The valid card numbers are usually checked for activation at an e-commerce website or gas station card activated terminal (CAT). When thieves get a "live number" they usually attack card-not-present merchants and commit fraudulent transactions.

Thieves commonly steal credit cards from plastic card manufacturing locations, couriers transporting cards to banks, card storage locations, the U.S. Postal Service, the cardholder's mail, and the cardholder's pocket or wallet. The stolen cards are then used for fraudulent transactions at merchant locations.

Are legitimately issued & manufactured cards that criminals then alter to dupe merchants. On a modified card, the fraudster may have changed card security features, the signature, embossed card number or valid dates, and re-encoded the magnetic stripe. An unwary merchant may swipe a modified card through his terminal and receive an authorization number for a card number that does not match the card's embossed number.

Bogus credit cards made to appear like real credit cards. These cards are produced using embossing machines and fraudulently obtained credit card information.

Identity theft is one of the most costly crimes in the card payment industry. In account takeover schemes, identity thieves pretend to be the true cardholders and "takeover" the targeted cardholder's accounts to commit fraud.

Hackers systematically attack merchant and financial institution websites seeking customers' private account information. Visa, MasterCard, state and federal law & regulations make the merchant responsible for protecting personal cardholder information.

Some e-commerce merchants compare card billing addresses against product shipment addresses to make sure they match. In an attempt to avoid detection by these merchants, fraudsters order online by using the same card billing and delivery address. Once the order is approved, the fraudster then contacts the merchant's customer service department or the shipping courier directly and changes the delivery address. The fraudster collects the merchandise at the new delivery address, while the merchant is unaware of the switch.