Feds Track Source Of Debit CardBreach

LEOMINISTER, Mass. - (03/24/06) -- Authorities discovered what theybelieve are the sources of the broadening breach of debit card databut were still trying to nail down individuals responsible for whathas become the broadest debit card fraud in history. U.S. SecretService agents met this week with representatives of nine areacredit unions and banks that reported fraudulent transactions inrecent weeks on customers' accounts. The institutions, includingWorkers CU, I-C FCU, Leominster FCU, Digital FCU, and MetropolitanCU, as well as credit unions and banks throughout the country, haveshut down and reissued as many as a million debit cards over thepast three months in an effort to stop the fraud. But just thisweek authorities in Los Angeles reported new incidents of fraud onlocal accounts. Leominster Police Officer Scott Wolferseder, who isworking with the Secret Service, said investigators have traced thesource of the transactions to a site in Oakland, California, wherethe availability of funds on individual accounts is apparentlytested, before an account is penetrated. The thieves usually testthe targeted account with a $1 debit to determine whether theaccount is active and has funds, before signaling accomplices, manyof them overseas, who then use so-called white, or blank, debitcards with magnetic stripes preprogrammed with the targeted accountinformation to withdraw cash from ATMs on those accounts. "Hourslater, at various ATMs around the world you see the accounts beingtapped," Wolferseder told The Credit Union Journal. While theinvestigators have apparently located the California site where theaccounts are being 'tested,' they have yet to find a physicallocation for the operation. The fraud has reached many of thebiggest financial institutions, including Citibank, JP MorganChase, Wells Fargo, Bank of America, Wachovia, PNC and FirstNational City Bank, , as well as The Golden 1 CU, State EmployeesCU (North Carolina), and Bethpage FCU, all of which have cancelleddebit cards and reissued them over the past few months.