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An online credit card scam that stole millions of dollars was halted by the U.S. Federal Trade Commission. The online credit card scam used fake companies and identity theft to steal small amounts of money that went undetected by consumers or fraud detectors. Over four years, more than a million people were charged anywhere from 25 cents to $ 9 on their credit cards in a scam that added up to be a lot more than $ 10 million.

Source of article: Online credit card scam stole millions, pennies at a time

 Those who were victims didn’t even notice

The elaborate online credit card scam went undetected because scammers made very small charges and set up more than 100 bogus companies to process the transactions. According to PC World, U.S. credit card holders financed the majority of the scam because about 94 percent of all charges went uncontested by the victims of identity theft. According to the FTC, the scammers charged 1.35 million credit cards a total of $ 9.5 million, but only 78,724 of these fake charges were ever noticed. Typically they made just one charge per card number to one of the fake business names such as Adele Services or Bartelca LLC. Avivah Litan, an analyst with the Gartner research firm who tries very hard to follow bank fraud, told PC World:

"They know that most of the fraud detection systems won't detect anything under $ 10 and they know that consumers won't complain about a 20 cent fee. What's different here is the scale, and that they got away with it for so many years."

 Trends to watch for with credit card fraud

The online scam is a textbook case about how online services used to facilitate business within the 21st century can be exploited for credit card fraud. As credit cards are getting used more and more for inexpensive purchases--they're now accepted by soda machines and parking meters--credit card fraud criminals have cashed in on the trend. IDG News Service reports that the scammers found loopholes in the credit card processing system that allowed them to set up fake U.S. companies that then ran more than 1 million fake credit card transactions through legitimate credit card processing companies. One of the largest payment processors within the U.S., First Data, was a favorite of the scammers. First Data had 110 of the 116 face merchant accounts. They also set up bogus accounts with Elavon.

Uncertain is the source of identity theft

The FTC seems to think that the defendants might have run credit checks on the identity theft victims to be certain they were creditworthy. The FTC doesn't know where the scammers obtained the credit card numbers they charged, however they could have been purchased from online carder forums, black market Web sites where criminals buy and sell stolen data.

Credit card scam that is online seems like a textbook case

To create the virtual infrastructure for the online credit card scam, Webpronews teaches us the scammers set up some fake physical addresses and fake web online websites pretending to sell products, along with a real company's tax number found online. Scammers then sent out quite a few spam e-mail pretending to recruit American finance managers for offshore financial service companies. Those people who were selected by the scammers were persuaded to set up dummy corporations to receive the credit card payments and send the money to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus and Kyrgyzstan.

Discover a lot more information:

PC World

pcworld.com/businesscenter/article/199952/ftc_says_scammers_stole_millions_using_virtual_companies.html

IDG News service

computerworld.com/s/article/9178560/FTC_says_scammers_stole_millions_using_virtual_companies?taxonomyId=17</p>

Webpronews

webpronews.com/topnews/2010/06/28/ftc-cracks-down-on-online-payment-scam