Participants in a large international credit card-skimming ring allegedly stole credit card data from thousands of U.S. and European consumers over a 16-month period, resulting in at least $13 million in losses, the Queens, N.Y. district attorney’s office announced.
The attorney’s office in conjunction with the New York Police Dept. has charged 111 individuals, including bank employees, store and restaurant workers, in connection with the crimes, which began last year. The defendants face charges of enterprise corruption and burglary.
Between May 2010 and September 2011, the defendants allegedly systematically defrauded a broad range of cardholders and financial institutions using cards carrying the brands of all major networks, according to a press release.
Conspiring with insiders at businesses where cards were used for payment, the defendants allegedly used devices to skim credit card data from the magnetic stripes on customers’ cards, then used the data to manufacture fraudulent cards. The group separately produced fake identification as part of their crimes, the release states.
The group is accused of using the stolen cards to purchase goods such as designer handbags, computers, game consoles and jewelry, which they typically resold via the Internet. The defendants allegedly also used the stolen cards to travel to five-star hotels and to rent private villas, luxury cars and jets in exotic locations around the world.
Certain store owners, employees and bank personnel were allegedly involved in the scam, according to the district attorney’s office.
The scope of the scam underscores the urgency for the U.S. to adopt chip-based card technology such as EMV cards used in most major countries, Randy Vanderhoof, executive director of the Princeton Junction, N.J.-based Smart Card Alliance, tells PaymentsSource.
“This type of card fraud typically migrates to countries that are still relying on magnetic-stripe card technology, and it’s clear that the U.S. is going to continue to be a target for this type of thing as long as we have not adopted EMV technology,” Vanderhoof says. He notes that EMV chip technology has been “very effective” in other countries in blocking card fraud based on skimming magnetic-stripe card data.
Vanderhoof notes that Visa’s Aug. 9 announcement of incentives to help accelerate U.S. EMV adoption might eventually help blunt such card-skimming activity.
“We are hopeful that as more U.S. card issuers adopt EMV card technology, we may begin to see less of this type of crime, but meanwhile it is going to be very costly and difficult for law enforcement to track it,” Vanderhoof says.
