'50-Cent Scam' Pilfers Payment Cards

Banking Institutions, Customers Victimized by Latest Fraud Scheme A Long Island, NY production company is the pawn in a new fraud scheme that has victimized consumers and their banking institutions.

JHD Productions is the apparent target of a new account scam in which fraudsters have A) Opened a fake account in the company's name, and B) Sent out bogus bills to scores of unwitting customers, assessing minor fees - 40 cents to $1 - to their credit and debit cards.

As a result, consumers and their institutions are being defrauded, and JHD owner Hugh Daly is forced to take measures to protect his business and reputation.

"This scam is not taking my money, but it is stealing my good name, which I can't get back, and that took me 30 years to establish," says Daly. "My phone lines have been flooded with hundreds of calls from people protesting the charges, while I explain that I too am a victim of this fraud, it is of little consolation and is ruining my company's good name ..."

Daly says he discovered the scam earlier this month when he received a notice from a credit card company because someone opened a credit card under his company's name. The name used was John Rambow. Daly says he ordered the account closed.

Still, the bogus bills had already been sent out, and now Daly says he's received calls from hundreds of people asking "Why is JHD Productions charging me 50 cents?" Daly has posted a notice on his web site, saying his company is not the one charging consumers, but says someone is using the name of his business and charging people's credit and debit card.

Daly says he has contacted local, state, and federal authorities, but says he's worried that more people will be scammed. The Suffolk county police say they are investigating the matter.

Boston-based identity theft and security expert Robert Siciliano says it appears that Daly is a victim of new account fraud. "It also appears [the fraudsters] were able to open a merchant account under the company's name," Siciliano says. The merchant account was how the criminal was able to make the credit and debit card transactions.

Consumers who may have been exposed to this type of scam must be vigilant, check their account statements and contest any suspicious charges with their institution, Siciliano says. Otherwise, the criminal pockets the small amount and then begins charging higher amounts or withdrawals on the card.

Siciliano says financial institutions and their customers should be aware of new account fraud and this "50 cent scam" because oftentimes a customer overlooks the minor charge and then gets hit with later charges that turn out to be fraudulent. In the end, the bank usually ends up having to absorb the loss. New account fraud was the top scam listed in Javelin's Identity Fraud Survey for 2010.

The application process is the entry point for fraudsters, as accounts often are not fully vetted, Siciliano says. "Everything done by phone, fax, email and 'snail mail' makes for a ripe situation," he says. "In other countries they require a bank account to be open at the branch first, and the applicant is vetted. Here in the U.S. we sacrifice security for convenience."


About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.




Around the Network

Our website uses cookies. Cookies enable us to provide the best experience possible and help us understand how visitors use our website. By browsing bankinfosecurity.asia, you agree to our use of cookies.