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Secrets of a Former Credit Card Thief

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We’ve all heard the standard tips about preventing identity theft and credit card fraud. But what would a real identity thief tell you if he had the chance? A recent interview with creditcards.com talks to a thief one on one and reveals the secrets behind credit card theft.

Dan DeFelippi, who is 29 years old,  was convicted of credit card fraud and ID theft in 2004. He tells consumers that: You can never be too careful.

DeFelippi, Learned at an early age how to create fake Id’s and he said it went down hill from there. He mostly made fake credit cards with real credit card information he bought online. He would then make fake Id’s to go with them and purchase big ticket items at Best Buy or Circuit City. He would turn around and sell them on Ebay for cash. DeFelippi says committing credit card fraud is still “ridiculously easy to do,” he says. “Anyone with a computer and $100 could start making money tomorrow.”

CreditCards.com: How did you get started?

Dan DeFilippi: When I was in middle school and high school, I was into what I would call innocent hacking. I wasn’t trying to be malicious or make money. I was just interested to see what I could do. In college, I started selling fake IDs to make a little extra money. I was pretty active in online chat rooms where people would talk about this stuff, and I began to realize there was a whole world of credit card fraud where I could make a lot of money with very little effort. From there, it was just a huge downward spiral.

CreditCards.com: You said you bought credit card data online. Tell me about that.

DeFilippi: Every credit card has magnetic stripe on the back with data on it. There are people out there who hack into computers where that data is being stored. There are also people like waitresses and waiters with handheld skimmers who steal the data that way. Then they sell the data online. I’d pay $10 to $50 for the information from one card. Then I’d use an encoder to put that data on a fake card, go into a store and purchase stuff.

CreditCards.com: Do identity thieves like some credit cards better than others?

DeFilippi: Well, a lot of American Express cards have no set limit, so you’d be able to buy a lot more. However, the downside is that a lot of merchants require more security for American Express than for other cards. They may ask you to enter the four-digit code on the front of the card or your ZIP code. That information usually isn’t in the magnetic stripe information. So if a card is skimmed, if someone has its magnetic stripe information, they would still need the number on the front or your ZIP code to commit fraud.

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John Sileo is the award-winning author of the identity theft prevention book Privacy Means Profit and speaks on information control, identity theft prevention and data breach avoidance. His clients include the Department of Defense, Pfizer and the FDIC. To learn more, contact him directly on 800.258.8076.

Identity Theft Scam Stole Millions – Pennies at a Time

The FTC just busted a long-running internet scam where offshore thieves set up virtual companies and stole millions of dollars from US consumers  one small charge at a time.

“It was a very patient scam,” said Steve Wernikoff, a staff attorney with the FTC who is prosecuting the case. According to him, the scammers found loopholes in the credit card processing system that allowed them to set up fake U.S. companies that then ran more than a million phony credit card transactions through legitimate credit card processing companies.

The fraudsters were able to fly under the radar for so long because they only charged consumers between $ .25 and $9 and set up over 100 fake companies to pull off these transactions. In this specific case they charged over 1.35 million credit cards a total of $9.5 million dollars – those nickles and dimes really add up! Shockingly, 94% of these charges went undetected by the credit card holder because they didn’t notice an unusual charge on their credit card statements and fraud detection agencies rarely detect anything under $10.

With more and more credit cards being accepted for smaller purchases (e.g., soda machines and parking meters) thieves have taken this opportunity to cash in on the frequency of these charges. While 6% of the charges were detected and reported, the huge number that didn’t even realize they had an unauthorized charge shows how lax we are about checking our statements. Here are some simple steps you can take to catch fraud early:

  • Set up automatic account alerts to monitor your daily credit card purchases. That way, anytime money is spent on the card, you receive an email or SMS text to your phone alerting you to the charge. If you didn’t use your credit card, you immediately know it’s a fraud and you can call and shut down your card.
  • A more basic step is to simply monitor your bank accounts and credit card statements closely. Rather than trusting that all charges are accurate you should make sure you know exactly when the charge was made, for what, and by whom.
  • If you aren’t sure about a charge, call the bank and ask them to confirm it is a legitimate charge.
  • Sign up for an identity monitoring service that can help with this. Although these victims only lost a few dollars here and there those small charges can add up – to the scammers it added up to $9.5 million!

Read more about how this scam was able to become so profitable to the thieves.

John Sileo became America’s leading Identity Theft Speaker & Expert after he lost his business and more than $300,000 to identity theft and data breach. His clients include the Department of Defense, Pfizer, the FTC and the FDIC.  To learn more about having him speak at your next meeting or conference, contact him by email or on 800.258.8076.