Counterfeit Card Scheme Costs Retailers $2 Million

It is gratifying when criminals seeking to rip off retailers and consumers are caught and brought to justice. That is exactly what happened last week (December 11), when the U.S. Secret Service and the U.S. Attorney for the Southern District of New York charged 23 individuals with participating in a large-scale counterfeit credit card scheme. Officials say the criminals obtained more than 1,000 stolen credit and debit card numbers and created counterfeit credit and debit cards with the stolen account information. The group then utilized teams of “shoppers” to make more than $2 million of unauthorized purchases at retail stores located throughout the U.S. In a coordinated operation, Secret Service and Drug Enforcement Administration agents arrested 19 defendants in Flushing, Queens, and one defendant in Los Angeles who were involved in the scheme. Agents also executed six search warrants and recovered counterfeit credit card manufacturing equipment and supplies. As alleged, the defendants used classic cyber-crime techniques of computer intrusions and accessing carding websites to obtain account numbers and then rake in millions of dollars through shopping sprees funded by counterfeit credit cards created with the stolen personal account numbers,” Manhattan U.S. Attorney Preet Bharara said in a statement from the U.S. Attorney for the Southern District of New York. Here’s how the group of 23 pulled off the retail fraud heist: from at least June through December 2013, they obtained stolen credit/debit card information via “computer intrusions” and “carding” websites, Internet-based forums where users sell and exchange stolen credit and debit card information. Using the stolen account information, they manufactured counterfeit credit and debit cards that were encoded with the stolen account information and embossed with the names of “shoppers,” the coconspirators responsible for making unauthorized purchases with the fake cards. Other members of the conspiracy acted as “drivers,” who coordinated teams of shoppers and transported them to retail stores located throughout the country, including Texas, North Carolina, Virginia, Pennsylvania, and New Jersey. The shoppers used the fake cards to buy gift cards, electronics, cosmetics, clothing, and other merchandise worth thousands of dollars. To convert these items to cash, the defendants then transported the goods to New York and California, where they were sold to co-conspirators who, in turn, sold the items or had others exchange them for refunds. We are not sure how officials were tipped off to the scheme, but the Secret Service has stepped up its investigative techniques to combat cybercrime, U.S. Secret Service Special Agent-in-Charge Steven G. Hughes said in the statement. “The U.S. Secret Service will continue to cooperate with partners from the Drug Enforcement Administration, Homeland Security Investigations, and the U.S. Attorney’s Office in the Southern District of New York in order to prevent further online, criminal activity,” he said. We hope that the recently-increased enforcement activity by U.S. officials helps curb the rash of counterfeit card fraud, gift card fraud, and return fraud across the country. Hopefully, the judge in this case will give the New York thieves the maximum sentence of seven-and-a-half years for one of the charges, and another two years in prison for the other charge.