LifeLock Blog

The FTC has busted a huge online payment scam where more than $10 Million in bogus charges were made to more than 1 million customers credit and debit cards. The Federal Trade Commission has halted the scam pending a trial.

More than a million customers here hit with charges of $10 or less, which where then routed through several fake businesses and dummy corporations in the US. The money was then transferred to bank accounts in Eastern Europe and Central Asia.

The defendants started companies with names similar to real businesses using information stolen from identity theft victims. There were more than 100 business accounts opened using the stolen information used to process the online transactions. It is believed the the identity theft victims where chosen by the thieves after a credit checked to ensure they were creditworthy of starting the bogus businesses.

The thieves then gave each of the fake merchants an address similar to a real companies location. They also added phone numbers and website address that pretended to sell products. According to the FTC the thieves then recruited at least 14 people in the US to open 16 dummy corporations, who then opened associated bank accounts to receive the credit card payments. The payments were than transferred over seas to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus, and Kyrgyzstan.

It is still unclear how the defendants got their hands on the stolen identities or consumer credit cards and debit card numbers. None of the identity theft victims would have had direct contact with any of the defendants. Victims mostly likely didn’t notice the charges to their accounts because of the small amounts that were charged. All of the charges were between $10 and .20 cents, but if a consumer was to call about the charge they would simple be hung up on or left with a recording.

This is a pretty good scam in my opinion. I have to say I haven’t heard of anything white like it before, and it seemed to work pretty well. Making large charges would have brought a lot of attention, but small charges which were routed through dummy businesses who then got routed through other fake businesses, who were started by identity theft victims, was very smart indeed. The FTC caught the scam but they still don’t know who the people are behind it. I guess that was the point of the scam to prevent a paper trail from leading to the real master minds of it. The sad thing is if they don’t find the people responsible they could just start all over again with new companies.