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Blogs by Peter Egan
The De Facto Legalization of Credit Card Fraud
3/23/2012 10:57:22 AM
Most everyone in America who owns or has ever owned a credit card is aware of the growing risk of theft and fraud that can literally leave a person in total financial ruin. What the vast majority of credit card holders are completely oblivious to is the fact that the act of stealing someone else's credit card and using it to ring up thousands of dollars in fraudulent charges is at worst legal, and at best a crime no one seems to be interested in putting a stop to.
We've all seen the commercials. For just $50 a year, this company or that company will protect you from identity theft and credit card fraud. As insurance policies go, that's probably not a half-bad deal.
Most everyone with a credit card is aware of the risks involved with owning a piece of plastic that can be used to spend thousands of dollars one may or may not actually have the money to pay for. In the wrong hands, a stolen credit card can mean financial ruin for most middle-class Americans.
While this post is not at all meant to promote the services claiming to protect against this type of fraud, the fact is that Americans routinely pay a whole lot more for other forms of insurance for which the odds of ever having to file a claim pale in comparison to the likelihood of a credit card being stolen and used to make fraudulent purchases.
While most everyone with an interest in preventing credit card fraud is aware of the inherent risks associated with owning a credit card, considerably fewer people understand just why crimes of this nature have risen in popularity to the point of constituting a legitimate crisis in American society.
In fact, in order to really understand the reason why thieves and fraudsters have had so much success enriching themselves by preying on unsuspecting consumers, stealing their life savings by using their credit cards (or at least the number, expiration date, etc.) to purchase thousands of dollars worth of goods for resale on the black market, one must have had some experience investigating such crimes and/or trying to stop them.
The reason why credit card fraud in America has become an outright epidemic is because in America, credit card fraud is legal.
What do I mean by that? Okay, so there is no law explicitly stating that it is not a crime to steal someone's credit card or a card-holder's information and then use the stolen credit card to make bulk purchases of goods that are later resold on the black market.
However, while there may be no law or provision explicitly stating the legality of the practice, neither are there any consequences for those who engage in it. You read that correctly. Stealing a credit card, charging thousands of dollars to it and ruining another person (who earned that money) in the process carries no penalty whatsoever. In fact, nobody even bothers to investigate such incidents, much less make an arrest or prosecute.
I learned this the hard way. In January of 2011 I opened a retail medical equipment company. The business offers customers both a brick-and-mortar storefront where local customers can check out the products hands-on and in-person, and also features an online storefront where customers across the United States and in select countries outside the U.S. can shop our selection 24/7.
When my company was very new to the e-commerce game, we were hit with a number of orders placed using stolen credit cards. Over the past 16 months, we've become quite adept at identifying fraudulently placed orders, and now we no longer ship any orders exceeding a certain dollar-amount without prior verification from the credit card company that the order was in fact legit.
The first several times this happened, I attempted to perform my civic duty and notify law enforcement in hopes that either local or federal authorities would work together with me to catch the criminals. This unfortunately proved to be an exercise in futility.
The first several times we received fraudulent orders they were for bulk purchases of over-the-door style cervical traction sets, fingertip pulse oximeters and a nutritional supplement known as Stem Cell Support.
We contacted police departments, sheriff's offices, state police, the FBI, Crimestoppers and one or two other federal agencies that were were led to believe may have had possible jurisdiction over such crimes. No matter which law enforcement agency we contacted, local, state or federal, and regardless of which city or state the criminals were hoping to have the items shipped to, the response from law enforcement was always the same: "It's not our problem".
Over the past decade or so, the problem of credit card theft and and fraud has become one of the fastest-growing white collar crimes in America. Companies have formed (and become wildly successful) specializing in protecting consumers from identity theft and credit card fraud. While most Americans are aware of the risk of financial ruin stemming from a stolen credit card, most haven't a clue as to the reason crimes of this nature have become so prevalent.
That's right. Each and every time I attempted to contact law enforcement to coordinate a sting effort in which I would ship a box of the approximate weight of 10 pulse oximeters or 20 bottles of Stem Cell Support, and the cops would stake out the shipping address and arrest whomever went to sign for the package, I was blown off and told that catching these crooks was somebody else' responsibility.
Law enforcement passed the buck --- over and over again --- rerouting me from one agency to another until they grew frustrated with the frequency of my calls.
The sad reality is that until some law enforcement agency is willing to actually investigate the crimes, arrest the criminals and build a case so that a prosecutor can convict them, credit card fraud in America is only going to increase in prevalence and severity.
Until regular folks who've had their cards stolen or who would like to avoid such a scenario stand up and demand that law enforcement do something about it, the best bet for most people would be to just pay the $50 or $100 to the private sector company that can at least prevent it and mitigate the damages in the event their customers are victimized by this de facto legal crime.
More Blogs by Peter Egan
The De Facto Legalization of Credit Card Fraud - Friday, March 23, 2012