Finance Globe

U.S. financial and economic topics from several finance writers.
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How Do ID Thieves Amass $10 Million? A Tiny Amount Many Times

It has become second-nature for consumers to diligently safe-guard their personal information to prevent identity theft and credit card fraud.

We shred our sensitive financial documents before throwing them out, we're learning to not be duped by calls or emails claiming to be an organization that needs our social security number or other important imformation, and we know to pick up our mail in a timely manner to prevent theives from stealing credit card and bank statements from the mailbox.

With every thing we do to fight fraud, it hasn't thwarted crooks who are on a mission to get rich with somebody else's money. It just means they're attempting to be more careful to go undetected.

For example, let's take a look at an organization that allegedly amassed more than $10 million by stealing such small amounts that the thefts essentially went unnoticed by many of the victims. More than a million consumers were hit with small one-time charges on their credit or debit cards, according to charges by the Federal Trade Commission.

Most of the consumers weren't even aware that the unauthorized charges were bogus, because on credit card or bank statements the charges looked like they went to authentic companies.

I remember the first time I saw a charge that was listed as a company I didn't recognize, it was a limited liability company (LLC) with a name I never heard of. After getting on the phone with my credit card issuer, I realized that it was a legitimate charge to a company that I bought something from. But they were doing business as (DBA) another name and the credit charges showed up under their company's legal name.

Many other concerned consumers have gone through the same thing, I'm sure. Got all worked up over a charge that turned out to be valid. So now, when we see charges we don't recognize - especially when the charges are minimal, we might figure it must have been a forgotten-about stop at a convenience store that's DBA another name.

But making an assumption is never a smart thing to do, especially when it comes to our money and our credit. The FTC reported that most victims of the fraudulent charge scam either didn’t notice the charges on their bills or didn’t seek chargebacks because of the small amounts, which ranged from 20 cents to $10.

Good thing that the few consumers who called the toll-free numbers appearing on their bills either found them disconnected or heard recorded messages instructing them to leave a message and never got a return call. Otherwise, this alleged scam may have never come to light.

The international group of alleged theives is accused of setting up 16 sham companies in Delaware, California, Florida, Louisiana, Nevada, New Jersey, New York, Pennsylvania, and Texas; and having the stolen funds sent to banks in Eastern Europe and Central Asia.

The FTC believes the defendants may have run credit checks on the identity theft victims first, to be sure they were creditworthy. The defendants also cloaked each fake merchant with a virtual office address near a real merchant’s location, a phone number, a home phone number for the “owner,” a Web site pretending to sell products, a toll-free number consumers could call, and a real company’s tax number found on the Internet.

Here's a list of the "companies" being charged by the FTC for making unauthorized charges to credit cards and debit accounts, in violation of Section 5 of the FTC Act: API Trade LLC, ARA Auto Parts Trading LLC, Bend Transfer Services LLC, B-Texas European LLC, CBTC LLC, CMG Global LLC, Confident Incorporation, HDPL Trade LLC, Hometown Homebuyers LLC, IAS Group LLC, IHC Trade LLC, MZ Services LLC, New World Enterprizes LLC, Parts Imports LLC, SMI Imports LLC, SVT Services LLC. There is also at least one defendant that is a John Doe unknown to the FTC at this time.

So consumers, on our never-ending fight against crooks who want to steal our money, we need to be on top of those credit card and bank statements. Don't just skim the big charges and look at the account balances. But carefully look at each and every transaction, large or small.

Even better, keep all your receipts and compare them to your statement each month. Or, if that adds too much paperwork to your already hectic schedule, at least check up on your accounts online a few times a month to keep a running tab on new transactions - you are less likely to forget what you've used your account for if you review it periodically.

If you see a charge to a company you don't recognize, call the phone number provided on the credit card or bank statement. Your memory may be jogged after speaking to a company representative and they reveal they are simply DBA another name. That actually happens quite often, especially with companies that have multiple avenues of business, or small companies that don't have a true store-front, such as a home-based business or internet-based business.

But if you find that the number doesn't work, or there is no phone number provided, call your credit card company right away. Explain to them that you don't recognize the merchant and want to know what the charge is. Even if it's a ridiculously small charge, take the time to dispute it if it's not legitimate - we can't feed these crooks a single morsel, or they'll be coming back for more.

If unauthorized charges have been made to your bank or credit card account, it means an unsavory character has your account number. Get your account number changed, and consider placing a fraud alert on your account. Also check out the FTC's Complaint Assistant. While they don't resolve individual issues, getting a lot of complaints about a particular company or individual will get their attention and they may be able to eventually put a stop to crooks who are reported.

Source:Federal Trade Commission
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Tuesday, 18 May 2021

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