An international micro-payment scam conning
consumers out of more than $10 million has been halted by the
Federal Trade Commission (FTC).
The FTC said more than a million consumers
were hit with one-time charges of $10 or less on their credit and
debit cards. The payments were then routed through 16 dummy
corporations in the US to bank accounts throughout Eastern Europe
and Central Asia.
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According to the FTC complaint, the fraudsters
used phony company names resembling real companies, and information
taken from identity theft victims in the US to open more than 100
merchant accounts with companies that process charges to consumers’
credit and debit card accounts.
The dummy corporations recruited at least 14
‘money mules’ who were responsible for opening associated bank
accounts in order to receive the card payments, and transfer the
money overseas. Consumers’ payments were sent to bank accounts in
Lithuania, Estonia, Latvia, Bulgaria, Cyprus, and Kyrgyzstan.
The defendants may have run credit checks on
the identity theft victims first in order to be sure they were
creditworthy, according to the FTC. The defendants also cloaked
each fake merchant with a virtual office address near a real
merchant’s location, a phone number, a home phone number for the
‘owner’, a web site pretending to sell products, a toll-free number
consumers could call, and a real company’s tax number found on the
Internet.
Most consumers either didn’t notice the
charges on their bills or didn’t seek chargebacks because of the
small amounts, which ranged from 20 cents to $10. Consumers who
called the toll-free numbers that appeared on their bills either
found them disconnected or heard recorded messages instructing them
to leave a message, but no calls were returned.
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By GlobalDataThe 16 sham companies have now been charged
with making unauthorised charges to consumer’s credit cards which
is in violation of Section 5 of the FTC Act. The FTC advised the
court froze the defendants’ assets and ordered them to stop
operating, pending final resolution of the case.
