The Federal Trade Commission on June 28 asked a federal court to halt an international identity-fraud scheme that it says generated more than $10 million in fraudulent micropayment charges on U.S. consumers’ credit and debit cards.
More than 1 million consumers in recent months received bogus charges ranging from 20 cents to $10 on their credit and debit cards. Fraudsters participating in the scheme routed the charges through more than 100 merchant accounts set up for 16 phony U.S. corporations, according to the FTC complaint.
The defendants used fake company names resembling real companies and information taken from identity-theft victims in the U.S. to establish the merchant accounts. Each fake merchant had a virtual office address, near a real merchant’s location, with a headquarters phone number, a website purporting to sell real products, a toll-free number customers could call and a real company’s tax identification number, found on the Internet, the agency said.
Some 14 U.S.-based “money mules,” recruited via spam e-mail, followed instructions to create the phony corporations and opened associated bank accounts to receive the card payments and transfer the funds overseas. The agency said debit cards linked to these bank accounts funded the telephone and website services that helped to deceive the card processors.
Most of the consumers defrauded in the scam took no action. Those that called toll-free numbers associated with the transaction on their bank statements received no answer.
The alleged crooks routed funds from the scam to bank accounts in Lithuania, Estonia, Latvia, Bulgaria, Cyprus and Kyrgyzstan. The FTC said the defendants so far are the 16 bogus corporations and “one or more persons” the agency has not yet identified. So far, the FTC has not determined how the defendants obtained the stolen-identity information and consumers’ credit and debit card numbers.
Representatives from the FTC were not immediately available for comment.