Feds probe mysterious credit card charges

[David Farber <dave () farber net>]

------ Forwarded Message
From: kelley <kelley () rakfoundry com>
Date: Fri, 11 Mar 2005 12:56:46 -0500
To: <dave () farber net>
Subject: Feds probe mysterious credit card charges

Dave,

Something for IPers to beware of. I just disputed an odd charge, too. I
wanted my debit card canceled and they were actually reluctant! I said,
"Look, if someone has my number, isn't it better for everyone involved if
we simply cancel the card?" She said it was 'such a hassle to issue a new
card'. I guess it's another Ford Pinto decision? It was actually a screw up
on the bank's part, they just don't want to admit it? I have no idea, but I
insisted that my card be reissued regardless.


Best,


Kelley

--


Ink Works: Security awareness and privacy training
http://www.inkworkswell.com
Phone:  +1 (727) 942-9255
E-mail: mailto:kelley () inkworkswell com


Feds probe mysterious credit card charges
Complaints mount over bills for phantom DVD purchase
By Bob Sullivan
Technology correspondent
MSNBC
Updated: 6:04 p.m. ET March 10, 2005

Federal authorities have opened an investigation into a rash of mysterious
$30 and $40 charges appearing on consumer credit cards around the country,
MSNBC.com has learned. The charges are for the purchase of DVDs and CDs
from a company named "Pluto Data Ltd." Thousands of complaints about the
charges have appeared on a Web site devoted to the mystery, with consumers
saying they've never heard of the company.

Adding to the mystery -- most consumers report a 1 cent or $1 charge
appearing on their cards first, followed by the larger charge from Pluto
Data or PLUTO D, NICOSIA.

Phone calls to the toll free number listed next to the charge on the credit
card bills provide little additional information.  The firm answering the
calls, Answer Quick Telecommunications Inc., located in Baton Rouge, La.,
says it was an answering service for Pluto Data prior to closing the
account several weeks ago. Answer Quick referred questions to local law
enforcement investigators.

Don Kelly, a spokesman for the Baton Rouge police, said his office has
received 125 complaints about the alleged fraud. "We are working with the
FBI and the Secret Service," he said. He added that Answer Quick was not a
suspect.  "We are keeping track of the complaints and doing what we can to
help them on what's going on."

Officials from the FBI in Louisiana and the Baton Rouge Secret Service
office wouldn't comment on the investigation.

Dave Collett, a spokesman for Mastercard, said an investigation was
ongoing, but he would not provide details. "We are auditing the merchant."
Consumers who find the alleged fraudulent charge on their accounts are not
liable for it, he said.

A February surprise
The mysterious charges began appearing around Valentine's Day. Many
frustrated consumers who searched the Internet for help found each other on
a bulletin board service named BroadBandReports.com. By Thursday, there
were 35 pages of complaints on the site, with hundreds of victims and over
50,000 visits, suggesting the number of victims could be larger than the
125 complaints logged by local police so far.

"I'm just so angry, and so is everybody else on that site," said Connie
Shotkoski, of Columbus, Neb.

Rich Sinclair, a consumer in Salem, Ill., said he just found out about the
alleged scam Wednesday when he tried to buy paint at Wal-Mart and was
declined. His card had been suspended a day earlier by his credit card
company after a suspicious $1 charge and a $40 charge were rung up on it,
he said. He was impressed by his bank's quick action to stop the fraud --
and knows he's not liable for the charges -- but said the experience is
still frustrating.

"I don't like it, not a bit," he said. "I use this card for charging
business expenses, and it'll be 10 days before I get another card."

A proactive defense
Consumers from around the United States -- as well as several from outside
the country, including Australia and Britain -- have complained about the
charges, suggesting the scope may be widespread.

Initially when consumers called Answer Quick, they were told a refund
request would be filed with Pluto Data.  But it's not clear if the firm has
issued refunds, so many consumers elected to dispute the charge directly
with their credit cards. That's a good idea, says credit card fraud expert
Dan Clements of CardCops.com.

"It's better for the consumers to be proactive," Clements said.  "If ...
Pluto has their merchant account go belly up, (then there are) no funds to
credit customers. The consumers will have to dispute to get the charges
taken off."

A two-step fraud
Clements speculated that the charges resulted from a common two-step fraud:
thieves steal a batch of credit cards, then steal or set up a fake merchant
account, and run a series of charges through it.  When the money is
deposited into the merchant's bank account, the criminals withdraw it and
disappear.

The incident is similar to a fraud involving a Web site named
PharmacyCard.com, reported by MSNBC.com a year ago. Eventually,
PharmacyCard officials were sued by the Federal Trade Commission, which
said the site owners gleaned $10 million from 90,000 consumers before the
operation was shut down. The FTC said that a firm in Nicosia, Cyprus was
involved in that incident, and that money taken from consumers was headed
for a bank account there.

Some of the charges in the Pluto Data incident appear as "Pluto D Nicosia
Cy" suggesting a Cyprus connection in this incident, as well.

The longer the operators can keep this kind of credit card scam going, the
better, Clements said. That's why consumers found the 1 cent or $1 charges,
he said -- it created a track record so the merchant account appeared to
have a normal volume of transactions when the higher-priced fraud began.

"Seems the merchant account was 'seasoned', (which) explains why the dollar
volume is high and the charges went through for such a long period," he
said.  The smaller charges also test to see if the cards are valid, he said.

Stolen credit card account numbers come from a variety of sources. Last
year, a merchant group speculated that as many as 100 million credit card
account numbers had been compromised in the prior 12 months.  Recently, a
number of high-profile break-ins have occurred, resulting in the theft of
personal data at ChoicePoint, Bank of America, and Lexis-Nexis. Spurred by
those break-ins, Congressional hearings on privacy issues began Thursday in
the Senate Senate Banking, Housing and Urban Affairs Committee.

Bob Sullivan is author of  Your Evil Twin: Behind the Identity Theft
Epidemic
© 2005 MSNBC Interactive

URL: http://www.msnbc.msn.com/id/7150531/



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