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Credit card fraud – a case study

In May 2003 a complaint was received by the Western Australia Police from a credit card scheme that a number of their cardholders had had fraudulent transactions conducted on their accounts. Closer analysis of the transactions showed that the only commonality between them was that legitimate purchases were made by the cardholders at the same Perth restaurant.

Approximately 50 cards were skimmed at the restaurant between September 2002 and April 2003. When the cardholders presented their cards to pay at the restaurant, the data on the credit cards was captured, without the knowledge of the cardholder, on a card skimmer or card reader.

Once the data had been illegally extracted from the credit cards, it was encoded onto other cards and used to purchase expensive electrical equipment, personal items and household goods - involving some 140 transactions.

Eventually, two suspects were identified by police, one of whom had previously committed offences associated with skimmed credit cards. Suspect A received credit cards stolen from house burglaries and supplied them to Suspect B. Suspect B kept the majority of the cards and returned several cards, that were loaded with skimmed data, to Suspect A as payment.

Suspect A was charged with 2 counts of utter forged records, 8 counts of receiving, 5 counts of attempted fraud and 55 counts of fraud involving property valued at $96,000.00.  He pleaded guilty and received 3 and half years imprisonment. 

As a result of surveillance, search warrants were executed and a large amount of property including motorbikes, computer equipment, clothing and house hold electrical goods was seized at addresses associated with Suspect B. Skimmed cards and false proof of identity documents, card readers, and card encoders were also found. The equipment enabled Suspect B to load skimmed card data onto stolen credit cards. Suspect B had imported two encoding machines at about $5000 each.

The proprietor of the restaurant is now banned from being issued again with a merchant facility from any financial institution.

Source: Major Fraud Squad, Western Australia Police

While it may never be possible to stop identity theft entirely, being aware of the signs, which could signal your identity has been stolen, and understanding how your personal information can be compromised can provide some safeguards.

     

IMPORTANT NOTE

This website gives information of a general nature and is not intended to be relied on by readers as advice in any particular matter. We suggest that you consult your financial planner on how this information may apply to your own circumstances.