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The Resource Center Credit Fraud & Credit Monitoring | post

Credit Card Fraud — Identity Theft’s Evil Twin

by Steve Schwartz on

The other day I saw an interesting item. It seems that Supreme Court Chief Justice John Roberts stopped into Starbucks to get his usual morning coffee, and instead of paying with his usual credit card he instead was using cash. Why? It seems his credit card number had been stolen and he had cancelled it and was awaiting a new one.

Then I saw another item. A woman, within a one-hour period, got a call first from a luxury goods store asking if she really wanted her almost thousand dollar purchase sent to a different address than her credit card's billing address. Then she got a call from Home Depot trying to arrange a delivery date for a multi-thousand dollar appliance purchase. She, of course, had made neither purchase and, what's more, the credit card that had been used was sitting in her purse.

Or take the situation that occurred in Wadsworth, Ohio. Within a three-week period, 14 residents reported unauthorized use of their credit cards to local police. The fraudulent transactions mostly occurred in the United Kingdom and France, and were for amounts between $20 and $2,600. One woman said her account was used for a $20 McDonald's charge in France and someone else said a $975 charge appeared on her card from Puerto Rico.

A common thread among these incidents was that the victims were mystified as to how and when their card numbers were stolen.

There are a myriad of ways your credit card or credit card numbers can be stolen. A dishonest restaurant worker or store employee can run it through a reader before it is used to ring up a legitimate purchase. It could be contained in a store's database that is hacked. You can use the card in a machine — perhaps an ATM, which has had an illegal "skimmer" attached to it to record all the information contained on the card's magnetic strip.

Police speculate that is what might have happened to the Ohio case since all the victims banked at the same local credit union and all had used the ATM there to get cash.

People have their credit card numbers stolen in some sophisticated ways. Consider, if you will that Hudson County (NJ) authorities recently arrested 30 individuals accused of being part of a multimillion dollar, multi-state identity theft and credit card fraud ring. Police had received numerous complaints from victims as far away as California claiming that credit cards in their name made fraudulent retail purchases in Hudson County. The investigation has identified nearly 1,000 victims across the country, and millions of dollars in phony transactions.

The gang purchased the identities of victims from online brokers, who got the information from computer hackers. Then the electronic account information from the cards' magnetic strips would be transferred onto counterfeit cards, in a process known as "punching," and members of the gang would go out and make purchases in Hudson County and elsewhere on the East Coast.

Or the theft can be done the old-fashioned way. A local gang is believed to be setting up in the parking lots outside of exercise clubs and watching women leave their purses in their cars as they go in. Then using the old-fashioned way of a hammer to a window, make off with the purse. By the time the woman emerges to find her car has been broken into, her credit cards have already been used to make fraudulent purchases.

The bottom line is that your credit card numbers might be stolen in ways you can't even imagine and through no fault of your own. About all you can do is review all your monthly statements from credit card companies line for line to make sure all purchases are legitimate. If not, report it immediately to the credit card company.

In 2012, the Federal Trade Commission fielded 28,332 consumer complaints about credit card fraud. If it can happen to the Chief Justice, it can happen to you.