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FTC Cracks Down On Online Payment Scam
Category : General 29 Jun 2010 01:44 AM | Industry News
The U.S. Federal Trade Commission busted a long time scam where offshore thieves stole millions of dollars from consumers over a period of four years until they were stopped in 2010.
This scam was thievery at its best. The scammers were patient and discreet, making small charges at a time, typically between $0.25 to $9.00 a card and avoiding charging one card multiple times.
The masterminds of the scam, whose identities remain unknown, stole up to $10 million over a four-year period, according to court documents the FTC filed in federal court in Illinois.
As many as 1.3 million consumers bore most of the losses through unauthorized charges that many never noticed.
The FTC alleged that with spam e-mail, the defendants recruited at least 14 "money mules" - people in the United States they paid to form 16 dummy corporations, open associated bank accounts to receive the card payments, and transfer the money overseas. The defendants used debit cards linked to these bank accounts to set up telephone service, virtual addresses, and Web sites that helped deceive the card processors, according to the complaint.
The "money mules" responded to spam e-mail pretending to seek a U.S. finance manager for an international financial services company. The FTC has not determined how the defendants obtained the stolen identities or consumers' credit and debit account numbers. Consumers' payments were sent to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus, and Kyrgyzstan.
None of the consumers affected by the scam had contact with any of the defendants. Most consumers either didn't notice the charges on their bills or didn't seek chargebacks because of the small amounts - charges ranged from 20 cents to $10. Consumers who called the toll-free numbers that appeared on their bills either found them disconnected or heard recorded messages instructing them to leave a message, but no calls were returned.
The FTC charged them with making unauthorized charges to consumers' credit cards in violation of Section 5 of the FTC Act. The court froze the defendants' assets and ordered them to stop operating, pending final resolution of the case.