Assault with a plastic weapon - credit card fraud

Nation's Business, May, 1984 by Mary-Margaret Wantuck

Criminals obtain legitimate account numbers in several ways:

* Searching a merchant's trash for discarded carbon sheets from credit card transaction slips that bear the name of the cardholder, the account number and the expiration date.

* Buying stolen cards.

* Getting temporary jobs as mail- or telephone-order clerks.

* Working for a bank or having a confederate who does.

* Duping cardholders into revealing account numbers over the phone by, for example, impersonating a card company representative.

* Looking over the shoulder of someone making a legitimate purchase.

Once in possession of the account number, a crook can alter a card by shaving off the old number and pasting on a new one. Other techniques include removing the old number with heat, or even with a hammer, and embossing the card with a new number.

THERE IS ALSO the "white plastic" scheme. Authentic plastic blanks, probably stolen from a card manufacturer, are embossed with the name, number and expiration date from a legitimate card. This new card carries no issuer or card company logo.

The scheme depends on the cooperation of a dishonest merchant willing--for a split with the crook--to imprint the card data on a charge slip and pass it on to his bank as a valid transaction for payment.

Finally, some sophisticated counterfeiters manufacture their own cards. Card counterfeiting has even donned academic garb. A New Jersey "school" was discovered to be offering classes in counterfeiting and related fraud. In lieu of a diploma, students were sold cards to use. "Placement" consisted of providing graduates with a contact who would buy stolen merchandise.

Another major area of credit card fraud involves criminals posing as legitimate merchants.

"A so-called merchant sets up a store operation that has little or no inventory or is at a nonexistent location," explains Robert J. Bienkowski, manager of a Chase Manhattan Bank program to crack credit card fraud. "The merchant signs up to accept VISA and MasterCard and, after claiming a lot of transactions, cashes in his slips, gets his money and bugs out within a month or two."

Thomas J. Kelleher, vice president of security and fraud control for MasterCard International, points out there is also the "passive" merchant "who will take an executive-type card from a scruffy kid who runs into the store out of breath and orders an $800 camera. He knows that kid doesn't own the card, but since he has called in for the required authorization and gotten it because the card has not yet been reported lost or stolen, he goes ahead and makes the sale."

Both VISA's and MasterCard's answer to counterfeiting has been to redesign their cards using fine-line printing, ultraviolet inks and holograms, which are highly visible three-dimensional images on a metallic surface that change hue as the cards are tilted.

The two bank card issuers have also formed a joint venture company with Malco Plastics, a leading credit card manufacturer, to market electronic "Watermark" tape to approved card producers worldwide. The tape is used for the magnetic stripe on the back of a credit card. According to Malco President Larry Linden, "a permanent, unalterable code consisting of various arithmetic sequences is structured into the wet magnetic strip material, protecting it against alteration."