Card Cracking, which is also called Card Popping, is one of the fastest growing forms of debit card fraud that no one has heard of, and it’s hitting banks and credit unions. Card Cracking can take on many forms, but the most common is college students that are allowing a fraudster to have their debit card number and login information in exchange for some type of payment. And then they will deposit bad checks or run up charges, and then they have the student claim the card was either lost or stolen. It’s a form of friendly fraud that is actually not very friendly. And this temptation actually cost nine Florida Gator football players their college athletic careers.
Background: Card Cracking And Not So Innocent Victims
Card Cracking is a national problem, and it is one that is growing. Fraudsters will take advantage of naïve and usually college-aged debit cardholders. They are falsely led to believe that there is nothing wrong with the proposed activity; since the cardholder will be protected from any fraudulent charges under Regulation E. Fraudsters will target their prey over social media, or paper ads that are posted in college dorms and/or student centers. It is not uncommon to find fake accounts on Snapchat with screen shots of large deposits in bank accounts which are saying this is a legitimate way to earn some extra money.
These victims usually don’t have the financial knowledge to see the illegality of their actions. Instead, they see a path to some quick money, with nothing to lose. Very often the victim will have very little money in their account and they falsely believe that they don’t have much to lose. The fraudster will approach the target offering a payment or a “cut” of checks that will be laundered through the debit account. The account holder will provide access to their account, as well as the physical card. Once the card-cracker has access to the account, they will deposit multiple bad checks, usually done remotely, and then they will make quick ATM withdrawals. The goal is to get the cash in their hands before the bank has the opportunity to figure out that the checks are phony. The account holder is also potentially at risk of having their own money stolen from their accounts and then having unauthorized purchases made with their debit cards.
Then, the account holder is instructed to report the card as stolen or lost, which limits their personal liability. It can be very difficult for the credit unions to prove that the account holder was involved in the illegal activity. And the burden will fall on the credit union to reimburse “stolen” funds and then open a new account.
Many of the so-called “victims” really don’t understand or they are too naïve to believe that they are aiding in a crime. At the beginning of the 2017-2018 football season, nine members of the University of Florida football team were accused of a variety of forms of card fraud. Some of the activity involved card-cracking tactics. In addition to being suspended from the football team, they were also facing charges filed by the Gainesville police.
And in a much bigger case, the New York District Attorney reported a sophisticated ring of card-crackers. They were able to deposit over $2.5 million in fraudulent checks utilizing 650 bank accounts in 7 different banks. They netted $1 million before being stopped. 39 people were charged, however the implication is that the account holders of those 650 bank accounts were also involved in the activity. At its peak, as a group, the scammers were netting from $30,000 to $40,000 per week.
Credit unions and banks will need to be watchful and wary in recognizing patterns which point to fraud in which the victim is also an accomplice. Additionally, they need educate their fraud staff to this almost invisible type of fraud. Credit unions and banks also must make sure that their members are aware of:
- Offers on Facebook, Instagram and Snapchat that offer to provide quick money in trade for
access to your savings or share draft account. Like all typical scams, it is really too good to be true.
- Fraud by way of social media. Don’t ever provide your account number or debit card through Facebook messenger. Also, your credit union will never request your account information via social media.
- The fact is that by participating in any such a scheme is a crime. And in so doing, the member will become a conspirator to credit card fraud, which is punishable by up to 30 years in prison.
- Advertisements that are related to card cracking are easily found on social media. If the member sees an ad, they must always immediately report it to the social media website.
How To Report Financial Fraud
If you need to report financial fraud, contact the FBI at (202) 324-3000 or online at https://tips.fbi.gov. You may want to contact the United States Attorney’s Office to report the fraud. Visit the Offices of the United States Attorneys for a list of the 93 United States Attorney’s Offices and links to their websites at https://www.justice.gov/usao/find-your-united-states-attorney . In addition, you can file a complaint with the Federal Trade Commission’s Bureau of Consumer protection at https://www.ftc.gov/about-ftc/bureaus-offices/bureau-consumer-protection .
Thanks for taking the time to read my post on What You Need To Know About Card Cracking. I hope it has been informative and of some assistance to the reader. If you have Comments or Questions, please leave them below. Also, if you know of other scams, please leave the information below and I will be glad to investigate. Take care.