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11-06-2003, 07:41 PM
commercialappeal.com - Memphis, TN
Fraud ring slams dozens of local debit card users
By Chris Conley
Contact
November 6, 2003
Memphis police and bank officials said Wednesday an international fraud ring is using stolen debit card numbers to buy thousands of dollars in goods in Mexico. More than 100 Shelby County residents have been victimized since the first thefts were reported three months ago.
Memphis banks are scrambling to staunch the flow of account-busting purchases, and warning customers to monitor account activity. And Memphis police, after looking into about 25 such cases, have turned the investigation over to the U.S. Secret Service.
Customers like debit cards, which look like credit cards but are used to withdraw money from savings or checking accounts. Banks market the plastic cards as more convenient than writing checks and safer than carrying large amounts of cash.
But in this case, investigators said, account numbers and other information contained in the magnetic strip on debit cards is being stolen - possibly at companies that process such transactions for retailers - and transmitted electronically to confederates in Mexico.
Local victims have reported losing thousands of dollars from their bank accounts.
Memphian Robert Riley Jr. was looking at his bank account on the Internet when he discovered he was about $4,000 short. He quickly told his bank about the unauthorized purchases made in Mexico, many in the Yucatan, a popular vacation destination.
"My balance had diminished drastically," Riley said Wednesday.
By law, customers are not liable for the fraudulent transactions. Banks will reimburse the account holder, but it can take time.
Because Riley caught the fraud early and contacted his bank, National Bank of Commerce, he was able to get the money restored to his account fairly quickly.
At the time, he was trying to qualify for a house purchase. Bounced checks could have ruined his credit rating, Riley said.
But most victims of this particular debit card scam haven't suspected anything until their monthly bank statement arrived, police and bank officials said. They thought everything was fine because their cards were still safe in their wallets.
Maj. Michael Smith, head of the Economic Crimes Bureau, said many victims, seeing charges from Mexico on their bank statements, assumed - wrongly - the information was swiped at local Mexican restaurants. Some victims have confronted restaurant owners, police said.
"We have emphasized to them to not do that," Smith said.
The information probably is being taken at out-of-state companies that process transactions for large-volume businesses, possibly gas stations, Smith said.
He said a similar investigation in North Carolina has found more than 100 victims and there are likely numerous cases in other states.
Rick Harlow, assistant Secret Service agent in charge of the Memphis office, said he could not comment on the investigation.
However, Harlow said such thefts cost everyone.
In such frauds, where money is taken electronically from a bank account, it's up to the customer to report it to the bank, he said. Even though banks reimburse individual victims, they pass on the losses to consumers in the form of higher rates and fees.
"One way or another, the general public pays," Harlow said.
Thefts across state lines and national borders are hard to investigate, he added.
"Criminals know that law enforcement is set up by jurisdiction," he said.
Area banks are now screening debit card purchases coming from Mexico in hopes of cutting them off after one or two instances and before any money is actually taken from customer accounts.
Eileen Sarro, head of corporate communications for National Bank of Commerce, said federal agents have told bank officials not to discuss the ongoing investigation.
"But a number of banks are affected," she said.
The cases are still coming in, although they have slowed in the past two or three weeks, said Greg Post, vice president of consumer loss prevention at First Tennessee Bank.
First Tennessee, which has suffered about 100 such thefts, is "looking for activity particularly out of Mexico," he said. With heightened awareness, the accounts can be shut down after two or three fraudulent uses, instead of 10 or 12.
"There still is a loss to the bank," he said.
- Chris Conley: 529-2595
Copyright 2003, commercialappeal.com - Memphis, TN. All Rights Reserved.
Fraud ring slams dozens of local debit card users
By Chris Conley
Contact
November 6, 2003
Memphis police and bank officials said Wednesday an international fraud ring is using stolen debit card numbers to buy thousands of dollars in goods in Mexico. More than 100 Shelby County residents have been victimized since the first thefts were reported three months ago.
Memphis banks are scrambling to staunch the flow of account-busting purchases, and warning customers to monitor account activity. And Memphis police, after looking into about 25 such cases, have turned the investigation over to the U.S. Secret Service.
Customers like debit cards, which look like credit cards but are used to withdraw money from savings or checking accounts. Banks market the plastic cards as more convenient than writing checks and safer than carrying large amounts of cash.
But in this case, investigators said, account numbers and other information contained in the magnetic strip on debit cards is being stolen - possibly at companies that process such transactions for retailers - and transmitted electronically to confederates in Mexico.
Local victims have reported losing thousands of dollars from their bank accounts.
Memphian Robert Riley Jr. was looking at his bank account on the Internet when he discovered he was about $4,000 short. He quickly told his bank about the unauthorized purchases made in Mexico, many in the Yucatan, a popular vacation destination.
"My balance had diminished drastically," Riley said Wednesday.
By law, customers are not liable for the fraudulent transactions. Banks will reimburse the account holder, but it can take time.
Because Riley caught the fraud early and contacted his bank, National Bank of Commerce, he was able to get the money restored to his account fairly quickly.
At the time, he was trying to qualify for a house purchase. Bounced checks could have ruined his credit rating, Riley said.
But most victims of this particular debit card scam haven't suspected anything until their monthly bank statement arrived, police and bank officials said. They thought everything was fine because their cards were still safe in their wallets.
Maj. Michael Smith, head of the Economic Crimes Bureau, said many victims, seeing charges from Mexico on their bank statements, assumed - wrongly - the information was swiped at local Mexican restaurants. Some victims have confronted restaurant owners, police said.
"We have emphasized to them to not do that," Smith said.
The information probably is being taken at out-of-state companies that process transactions for large-volume businesses, possibly gas stations, Smith said.
He said a similar investigation in North Carolina has found more than 100 victims and there are likely numerous cases in other states.
Rick Harlow, assistant Secret Service agent in charge of the Memphis office, said he could not comment on the investigation.
However, Harlow said such thefts cost everyone.
In such frauds, where money is taken electronically from a bank account, it's up to the customer to report it to the bank, he said. Even though banks reimburse individual victims, they pass on the losses to consumers in the form of higher rates and fees.
"One way or another, the general public pays," Harlow said.
Thefts across state lines and national borders are hard to investigate, he added.
"Criminals know that law enforcement is set up by jurisdiction," he said.
Area banks are now screening debit card purchases coming from Mexico in hopes of cutting them off after one or two instances and before any money is actually taken from customer accounts.
Eileen Sarro, head of corporate communications for National Bank of Commerce, said federal agents have told bank officials not to discuss the ongoing investigation.
"But a number of banks are affected," she said.
The cases are still coming in, although they have slowed in the past two or three weeks, said Greg Post, vice president of consumer loss prevention at First Tennessee Bank.
First Tennessee, which has suffered about 100 such thefts, is "looking for activity particularly out of Mexico," he said. With heightened awareness, the accounts can be shut down after two or three fraudulent uses, instead of 10 or 12.
"There still is a loss to the bank," he said.
- Chris Conley: 529-2595
Copyright 2003, commercialappeal.com - Memphis, TN. All Rights Reserved.