The Federal Trade Commission has succeeded in getting a federal court to put a stop to an online scam that used identity theft to place more than $10 million fraudulent charges on consumer credit and debit cards.
More than a million consumers were hit with one-time charges of $10 or less, and their payments were routed through dummy corporations in the U.S. to bank accounts in Eastern Europe and Central Asia.
The defendants had used fake company names, similar to legitimate businesses, along with information taken from identity theft victims all over the country. They used the information to open more than 100 merchant accounts with companies that process charges to consumer credit and debit card accounts, according to the FTC complaint. The FTC complaint states that they believe the defendants ran credit checks on the victims to be sure they were credit-worthy.
The thieves also cloaked each fake merchant with an office address near a real merchant's location, along with a phone number, home phone number for the "owner," a Web site pretending to sell product, a toll-free number for consumer use, and a real company tax number found on the Internet.
The FTC said that with spam e-mail, the defendants recruited at least 14 "money mules" in the U.S., which are people paid to form 16 dummy corporations, open bank accounts to receive the payments, and transfer the money overseas. They used debit cards linked to these accounts to set up telephone service, virtual addresses and Web sites.
None of the affected consumers had any contact with the defendants. Most didn't even notice the charge on their bills or didn't seek restitution because it was such a small amount. Consumers who did call the numbers that appeared on their bills found the numbers to be disconnected or got an answering machine instructing them to leave a message. No calls were returned.
The fake companies included API Trade LLC, ARA Auto Parts Trading LLC, Bend Transfer Services LLC, B-Texas European LLC, CBTC LLC, CMG Global LLC, Confident Incorporation, HDPL Trade LLC, Hometown Homebuyers LLC, IAS Group LLC, IHC Trade LLC, MZ Services LLC, New World Enterprizes LLC, Parts Imports LLC, SMI Imports LLC and SVT Services LLC.
The defendants have been charged with making unauthorized charges to consumer credit cards in violation of Section 5 of the FTC Act. The courts have frozen the defendants' assets and ordered them to cease operations.