Credit Card Fraud Skyrockets!

CASH ADVANCE ABUSE AT AN ALL TIME HIGH!
Financial institutions are anticipating record earnings this year from their credit card operations.

Credit card companies are expanding their markets world wide-especially in Eastern Europe and Asia.

In their search for new markets, they are even becoming actively involved in the small ticket market-such as supermarkets and fast food outlets.

At the same time, credit card companies are losing record amounts on a variety of fronts: telemarketers, application fraud, stolen and lost cards, counterfeit and altered cards, merchant fraud, con games and scams-not to mention the bankruptcies, non-payers and decedent losses.

Credit card losses to the financial industry in dollars climbed 23% in 1989, and are expected to exceed $4 billion in 1990. When you compare this figure to the less than $1 billion loss just ten years ago, you begin to appreciate the enormity of the problem.

The financial industry is trying to alert customers and cardholders to credit card scams through statement stuffers. They are also undertaking an effective employee education program.

You may have already seen one of the new video programs that has been developed for in-house awareness training of credit card fraud.

NEW SCAMS & CON GAMES
Just trying to stay ahead of the scams already being used by crooks is a full time endeavor. And new con games are always being developed.

For instance an investigator on the east coast recently reported what he termed a "return fraud" on a cardholder's account.

It seems the cardholder was an excellent shoplifter!

She went into a store carrying an empty bag from that store from a prior purchase. (She used mostly chains with multiple locations.) She also had a pair of scissors with her.

She picked up expensive merchandise, removed the tags, put it in the bag, and then took it to the "Return" counter with the story that it was a gift and she didn't want it.

Of course she didn't have a receipt, but she had a credit card, and would accept credit to her card account instead of a cash refund.

After repeating this procedure several times, she waited until the credits went through to her credit card account. She then went to a financial institution and made a cash advance on the credit balance.

UNTAXED INCOME!
She was 'making' about $5,000 a month with this scam-until she was finally arrested for shoplifting by an alert store detective. An investigation followed because of the number of credit vouchers in her pocketbook.

Every time we think we have identified all the "trick-of-the-trade" scams, a new one appears! We will describe more of them that have been reported to us in future issues of the newsletter in an effort to keep you up to date.

Meanwhile, watch those cash advances?

Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 7, 7/90