Identity Theft Scam Stole Millions – Pennies at a Time

The FTC just busted a long-running internet scam where offshore thieves set up virtual companies and stole millions of dollars from US consumers one small charge at a time.

“It was a very patient scam,” said Steve Wernikoff, a staff attorney with the FTC who is prosecuting the case. According to him, the scammers found loopholes in the credit card processing system that allowed them to set up fake U.S. companies that then ran more than a million phony credit card transactions through legitimate credit card processing companies.

The fraudsters were able to fly under the radar for so long because they only charged consumers between $ .25 and $9 and set up over 100 fake companies to pull off these transactions. In this specific case they charged over 1.35 million credit cards a total of $9.5 million dollars – those nickles and dimes really add up! Shockingly, 94% of these charges went undetected by the credit card holder because they didn’t notice an unusual charge on their credit card statements and fraud detection agencies rarely detect anything under $10.

With more and more credit cards being accepted for smaller purchases (e.g., soda machines and parking meters) thieves have taken this opportunity to cash in on the frequency of these charges. While 6% of the charges were detected and reported, the huge number that didn’t even realize they had an unauthorized charge shows how lax we are about checking our statements. Here are some simple steps you can take to catch fraud early:

Set up automatic account alerts to monitor your daily credit card purchases. That way, anytime money is spent on the card, you receive an email or SMS text to your phone alerting you to the charge. If you didn’t use your credit card, you immediately know it’s a fraud and you can call and shut down your card.
A more basic step is to simply monitor your bank accounts and credit card statements closely. Rather than trusting that all charges are accurate you should make sure you know exactly when the charge was made, for what, and by whom.
If you aren’t sure about a charge, call the bank and ask them to confirm it is a legitimate charge.
Sign up for an identity monitoring service that can help with this. Although these victims only lost a few dollars here and there those small charges can add up – to the scammers it added up to $9.5 million!

John Sileo became America’s leading Identity Theft Speaker & Expert after he lost his business and more than $300,000 to identity theft and data breach. His clients include the Department of Defense, Pfizer, the FTC and the FDIC. To learn more about having him speak at your next meeting or conference, contact him by email or on 800.258.8076.

Posted by Identity Theft Speaker John Sileo in Identity Theft Prevention and tagged credit card fraud, credit card scam, Fraud, FTC, Identity Theft Prevention, Identity Theft Speaker, John Sileo, scammers, Theft, thief, Victim.