Feeds

FTC kills ingenious micro-payment scam

Steal little from lots of people

Using blade systems to cut costs and sharpen efficiencies

US consumer watchdogs have closed down a lucrative credit card scam that ran undetected for up to four years.

The con involves a series of low-value payments from compromised credit cards made in favour of a large number of dummy firms set up by fraudsters, the Federal Trade Commission alleges. The cybercrooks charge only $0.25 to $9 per transaction and escape detection largely because consumers took the loss rather than going through the hassle of disputing purchases with their credit card firm.

The crooks charged a total of $9.5m against 1.35 million compromised cards, but only 78,724 of these fraudulent charges were ever contested, according to the FTC. The consumer watchdog obtained court orders freezing the US assets of suspect firms and went after 14 suspected "money mules" - US residents duped into channelling money between the bogus firms - and the crooks masterminding the con, who used banks in Bulgaria, Cyprus, and Estonia.

The scam worked so well because the fraudsters were careful to establish fake businesses that had nearly identical names to legitimate business and were supposedly located near these genuine firms. The ploy - backed by the use of real federal tax ID numbers - allowed them to trick credit card processors into granting merchant accounts to bogus concerns. Of the 116 fake merchant accounts identified by the FTC, 110 were established with First Data. Legitimate mail forwarding and telecom service firms were abused to maintain the illusion that the bogus firms were real.

The crims exploited the increased use of credit cards to make micro payments for low-value items ranging from parking meters to vending machines. "It was a very patient scam," Steve Wernikoff, a lawyer at the FTC prosecuting the case, told IDG. "The people who are behind this are very meticulous." ®

Boost IT visibility and business value

More from The Register

next story
14 antivirus apps found to have security problems
Vendors just don't care, says researcher, after finding basic boo-boos in security software
Secure microkernel that uses maths to be 'bug free' goes open source
Hacker-repelling, drone-protecting code will soon be yours to tweak as you see fit
Only '3% of web servers in top corps' fully fixed after Heartbleed snafu
Just slapping a patched OpenSSL on a machine ain't going to cut it, we're told
How long is too long to wait for a security fix?
Synology finally patches OpenSSL bugs in Trevor's NAS
Israel's Iron Dome missile tech stolen by Chinese hackers
Corporate raiders Comment Crew fingered for attacks
Roll out the welcome mat to hackers and crackers
Security chap pens guide to bug bounty programs that won't fail like Yahoo!'s
HIDDEN packet sniffer spy tech in MILLIONS of iPhones, iPads – expert
Don't panic though – Apple's backdoor is not wide open to all, guru tells us
Researcher sat on critical IE bugs for THREE YEARS
VUPEN waited for Pwn2Own cash while IE's sandbox leaked
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.