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Credit card 'flash attack' steals up to $500,000 a month

Exploits major fraud-detection weakness

Combat fraud and increase customer satisfaction

Credit card fraudsters may have pocketed as much as $500,000 over the past month by pursuing a new type of attack that exploits a major blind spot in payment processors' defenses, an analyst said.

The "flash attacks" recruit hundreds of money mules who go to ATMs throughout the US and almost simultaneously withdraw relatively small sums of money from a single compromised account, according to Avivah Litan, vice president at market research firm Gartner, who follows the credit card industry. They then move on to a new account. At the end of the month, the heists can fetch as much as $500,000.

“The resulting cash transactions fly under the radar of existing fraud detection systems — they are typically small amounts that don't raise any alarms,” Litan blogged on Tuesday.

She has dubbed the method a “flash attack” because as much as $100,000 can be stolen in as little as 10 minutes.

The scam starts with the placement of payment card skimmers at point-of-sale terminals so criminals can capture the data stored on the cards' magnetic stripes. The crooks then create hundreds of thousands of counterfeit payment cards and affix the user's personal identification to each one. At this point, they recruit mules who go to at least 100 ATMs scattered throughout the country to withdraw small amounts of cash.

“The only successful fraud mitigation strategy I've seen that works in practice today, is that once the first round of fraud is discovered, an acquiring processor or a payment network tries to figure out the point-of-compromise for these cards,” Litan wrote. “If that is determined, then all cards that were used at that point of compromise (i.e. breached entity site) are put on a blacklist and are rejected for future use at a point-of-sale or ATM machine.”

Such measures are extremely costly, she warned. The new flash attacks came to light over the past couple weeks during conversations with several banks and payment processors, Litan said. ®

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