Nowadays Ukraine traces through the tendency of increasing the damage caused by crimes in the sphere of bank technologies. According to the statistics for the period of 2000 –2001 77% of the whole damage caused by economic crimes has the direct bearing on commercial banks’ activity. Only in the sphere of credit bank activity the level of swindle in Ukraine exceeds 4-5-fold the average level in the world (most of them fall only on Kiev and account for 80 %). The crimes committed by the use of plastic payment means can be placed among the most dangerous economic crimes, for they make a negative impact not only on a bank’s activity but on the other subjects of economic sphere as well. Such kind of crimes imply the crimes including the corpus delicti stipulated by the Criminal Code of Ukraine in Articles 190, 200, 361 .
Appearing of the plastic payment cards in the system of clearing settlement has produced a new kind of crimes. High-grade market of plastic payment cards in Ukraine has not developed yet, but the situation is definitely to be inclined to it. So it is at least thoughtless to underrate danger of the crimes and abuse in the system of clearing settlement .
The financial and legal security of banks and their customers and its development as well are impossible to be considered out of touch with the methods of illegal operations with plastic payment cards. They single out 9 main types of crime among these operations:
1. Operations with counterfeit cards.
2. Operations with stolen or lost cards.
3. Multiple payment for services and goods .
4. Fraud with post and telephone orders.
5. Multiple withdrawing a bank account.
6. The swindle with counterfeit slips.
7. Fraudulent use of cash dispensers while serving out cash.
8. Connecting up an electronic recording device to a POS-terminal or cash dispensers (“Skimming”).
9. Other kinds of swindle.
Each of the means mentioned above calls for special characteristic.
1.Operations with counterfeit cards. The most part of losses in the payment system falls on this type of swindle. Considering high technical and technological protectability of real payment cards the counterfeit cards have been rarely used recently and they can be determined by means of simplest diagnostics. As a rule, to forge a card they use stolen intermediates of cards where essential elements of a bank and a customer are applied. Having up-to-date equipment criminals can apply some information even to a magnetic stripe of a card or copy it in other words perform counterfeits on a high level.
The mechanism of swindle may be various: a swindler legally receives a usual card at a bank, deposits a minimally required sum on a special card account. Before or after that he procures the information about the owner of a plastic payment card of the very company, but with more considerable sum and inserts new data in his card. To commit this type of swindle the criminal must pick up some information about code numbers, a surname, a name patronymic name, an authorised signature, etc.
There are various ways of fulfilling such kind of swindle:
· changing the information on a magnetic medium;
· changing the information extruded on the outer face;
· using both above mentioned means;
· forging the signature of legal owner of the card.
When forging a signature several variants are used, but it is taken into consideration that the authorised signature is impossible to delete, for on making an attempt to do this the word VOID – “invalid” will appear in the signature field. So it is often painted over white. The signature field happens to be changed into new one using an adhesive stripe of paper .
To apply the obtained information about the owner to a magnetic stripe even earlier was not a big problem from the technical point of view. The data were simply input on the principle of tape recording in an appropriate format. When they began to protect the issuers by means of coding the record, skimming appeared that is thorough and entire coping the whole content of magnetic tracks.
Holograms and emblems produced on the technology of gitter are not effective protection as during a routine process of identification they are usually paid less attention to than signatures and other personal essential elements. The information extruded on the outer face can be changed in different ways.
Letters and figures extruded on the card surface can be cut out by criminals and changed into others by means of glue. Thus absolutely new name and surname appear on the card.
One of the most dangerous means of plastic cards counterfeit is production of entirely false cards. The method of entire coping has been widely-spread in some East-European countries. Such means is often used by organised criminal groups where, as a rule, workers of restaurants or other service offices involved. The latter are used for gaining the information about credit cards which fall into their hands when having restaurant bills or other services paid as it has been mentioned before, when the card falls out of touch with the customer for a while. And when it is returned back, its “twin” card is left at criminals.
There is one more dangerous method – the method of “white plastic card” (WPC) – which can be related to this type. Counterfeit of a plastic card demands an expensive technology, for the amount of outer protection levels of original cards (thin line figures, guilloched layer, holograms, photographs, ultraviolet pictures) are more and more increasing from year to year. WPC imply the use of a piece of clean plastic in the form of a usual card where real data (the number of a real account, the period of validity, a surname, etc.) are applied to.
Then the card is used by an owner of a service office who is also involved in the criminal group. The shop owner fulfils a fictitious turnover, send to the issuer bills to pay, and shares the profit with his accomplices.
Having picked up a PIN-code , “white cards” may be used to commit misappropriations by drawing out cash through dispensers which don’t compare and don’t check a signature, a photo and other attributes of a card.
Credit card information used to make plastic counterfeit cards may be collected in different countries. Information from the USA, European countries and from the Asian region as well are used more often. Criminal groups working in different regions exchange such information.
2.Operations with stolen or lost cards. Swindle use of stolen cards is still the most widely-spread crime. The methods of counteraction to thefts and swindle use of plastic payment cards have been perfected for years but at present companies prefer to produce cheap cards to cut down possible losses caused by their illegal use. When the sums of losses abruptly increase, companies undertake urgent measures to introduce new safeguards.
To cause large damage on a stolen card is possible in case the swindler knows PIN-code of a customer. Then it is possible to pay out a large sum from the customer’s account through the net of electronic cash dispensers before the bank-issuer of a stolen card manages to insert it into the electronic stop-list ( the list of invalid cards).
The given method is characterised by capturing the plastic payment card as a result of a its theft from an owner by means of burglary, theft in the transport or other places, and also as a result of owner's losing s card after he has acquired and signed it at a bank .
The peculiarity of swindle in case a card is stolen when being sent by post is that the owner does not know about the loss of the card, he does not suspect that he has his card stolen. It quite difficult to prevent theft in this case. Such means has not spread in Ukraine yet. The matter is that in the USA, for example, when changing a residence the owner of a credit card can turn to the company-issuer with the letter of inquiry to get the copy of his card to a new address.
A malefactor fabricates a letter of advice about the credit card owner's changing a residence, and send the card to him by post. The stolen card in this way may be used by the thief himself or he can sell it to another malefactor. It is one more means of penetrating the stolen credit cards into a country.
Letter-boxes in apartment houses are favourite objects for credit card hunters. Criminals are often informed about the time of new credit card delivery. Following the post-man the theft waits for the former to drop the correspondence into the mail-box and leave, then he takes out the content. Investigators call this type of theft “ a slow passer-by”.
Many organisations producing cards use registered letters for delivery because of considerable losses caused by post theft. A preliminary letter of advice about forthcoming of a card delivery may be used as an additional preventive measure. Sometimes such preliminary letter of advice may combine with the system of so-called “double dating”. In this case the card becomes valid a month later after the delivery date. In case the card is not received this period of time is sufficient to inform about its loss and enter the card in the stop-list. Some organisations producing cards demand the receiver to necessarily inform them about his having the card delivered.
If the member of a criminal group has the chance to introduce himself into the post office, he gets unique opportunities to steal the cards sent by post, which he then delivers to his accomplices. Thus, perfecting the ways of correspondence delivery combined with higher measures of mail protection contributes to decreasing the plastic card thefts.
According to international experts’ estimations the most powerful mafia specializing in plastic business include natives of Nigeria. According to the information of Interpall there are at least five large centres on training the professional swindlers. Having learned the ways of swindle the “graduates” of these schools are sent to European countries. They are met here, taken on the staff, as a rule, for a job of a cleaner in big companies. The task is quite definite that is to collect information about a certain person owning a considerable fortune.
Companies producing cards usually have non-stop service to be informed about the loss of cards. When receiving the message the customer’s account is blockaded and any further use of the card will cause carrying out the investigation. Sometimes the unusual number of transactions may result in stirring up the computer system signalling before it is known about the theft of a card. We have carried out the research and come to the conclusion that messages about card loss may be received by the company even 3-4 days after its disappearing, and in case of using the counterfeit card the swindle may be revealed even 30-40 days later .
Companies regularly publish bulletins listing the card numbers to be withdrawn and send so-called stop-lists to the sellers. Some shops have special machines (point of sale) - computer terminals enabling to check the state of a client’s account before concluding a bargain. However, the possibility of fulfilling the method under consideration is connected with the fact that law-enforcement agencies and shops are still badly equipped and there is no single card index of stolen credit cards. Stop-lists are not always received by trade organisations in proper time.
The most difficult case for investigation is the agreement among salesmen or between a salesman and a customer. For instance, two salesmen can cooperate, exchange the lost or stolen cards to carry out the fictitious transactions. The salesman may also register the sale of an article to a swindler, but for all that it is left at the salesman, and the sum paid by the financial establishment is shared between them in agreement. The cashier is usually offered 10-20% by cash from each operation.
Sometimes the cashiers come into criminal agreement with swindlers because of seeming impunity of the criminal transaction. Still the only financial document confirming the operation with the plastic payment card is a slip where essential elements of a plastic card are left after a usual rolling.
However, it is practically impossible to find out “by eye” whether they have been accounted from the real plastic card or simply from a piece of plastic with extruded data. This is the matter swindler use.
There is one more kind of swindle which implies the presence of a dishonourable salesman or some other person having the telephone number at his disposal to check the card. The bell allows to find out whether the card is on the list of stolen cards or not. If not the dishonourable salesman may carry out the fictitious transaction on a large sum through his company. If the card is inlisted stolen, he can make several transactions within the settled limit.
Criminals dispose numerous ways of using stolen cards. Organised criminal groups pay 100-500 dollars per a stolen card depending on some factors: availability of a signature, how long ago it was stolen, if it is in the list of stolen cards, the period of its use by a legal owner, whether the limit is used up, if there are any extra documents identifying a person.
In most criminal organisations a thief sells a stolen card to the “supplier” who has a sufficient number of accomplices to use it. The members of the group do shoppings by means of a stolen card according to the list settled by “a supplier”, seeing to that the price of the purchase will not exceed the limits settled by the salesman. The purchased things are sent then to the stolen goods dealer for sale.
The person having a direct bearing on a swindle operation with the card usually gets 40% of the profit, or he is allowed to use this card to do his own shopping before he gives it back to the “supplier”.
3. Multiple payment for services and goods on the sums not exceeding "floor limit " and demanding to fulfil no authorisation. To make the calculation the criminal needs only to forge a client’s signature. However, cash money as the most attractive object of abuse becomes inaccessible at the given schema. Crimes with cards stolen while being sent by the bank issuer to its clients by post may be attributed to this category.
Committing the misappropriation by counterfeit on the credit cards of the banks settled a considerable limit of a marginal sum of the operation being fulfilled without authorisation. The swindlers repeatedly use a marginal limit of the sum during a day in different service offices and shops. For example, some respectable London banks fix a marginal limit in 200 pounds and reiterated use of such sum will bring the considerable sum to the swindler.
To determine the unused part of the credit on the criminals resort to a simple method. They ring up to the registration centre of the company and ask to authorise a transactions, for example, on 3000 US dollars. When refused they reduce the sum up to that limit till they are allowed to. In a while they ring again and ask to cancel a transactions. Due to all these they have the sum on the given card which has been beforehand already allowed to be paid. It is of no difficulty to obtain the numbers of valid cards. For this purpose they use the items of information picked up by means of hotels or restaurant staff, with the help of accounts carelessly thrown out, car release agencies etc.
One more method to commit swindle related to the given method is the use of a plastic card with the criminal purposes by the card owner himself who having done large operations on a card (more often with cash dispenser) can declare that the card was stolen. In such cases accomplices happen to be involved in order to avoid a possibility of authentication.
4. Fraud with the mail / telephone orders. This kind of crimes has appeared as a result of progressing the service of goods and service delivery by mail or telephone order of a customer. Knowing number of a his “victim’s “ credit card the criminal can indicate it in the order form and escape having received an offer on the address of a temporary residence. This method is applied to obtain expensive goods such as computer and electronic equipment etc. This kind of fraud in the field of telemarketing is usually called "inbound". The cards numbers can be found out by means of the shop and restaurant staff , from the computer reports etc.
Swindle use of credit cards numbers contains a wide set of methods such as fraud through a system of telemarketing and telecommunication. The number of swindle methods is numerous and has been increasing from day to day because it is not required to present a card to make an order by mail or by telephone, it is enough to notify its number. The abuse in the sphere of telemarketing implies the non-authorised bargains committed by telemarketers-swindlers and also criminals dealing with real telemarketers and companies taking orders by mail.
The swindlers-telemarketers participate in undertaking frauds in the field of telemarketing such as "outbound" kind. By different methods these criminals find out original numbers of cards and use them when invoicing the counterfeit accounts for orders the payment on which is daily entered in a bank account of a telemarketer. As the majority of banks have fixed the same procedure for the order accounts as for cash, the telemarketer has a possibility to transfer money to another account immediately or daily withdraw money from the account. When the crime is disclosed, the telemarketer-swindler usually escapes together with the money.
New variety of such kind of fraud is the use of Internet for an electronic system of orders on different goods. However, today there are about 30 kinds of illegal operations with plastic cards through Internet:
· payment by non-existent cards;
· creating the false virtual shops;
· "electronic" theft;
· false payments in gambling establishments etc.
5. Multiple withdrawing a bank account. As a rule, the mentioned crimes are undertaken by workers of shops and service offices taking payments from the customers for goods and services on credit cards and by means of registration committed some payment cheques at one stroke. According to the cheques presented the company has been accounted bigger sum of money than the price of the goods sold or the service done. However, on concluding several bargains the crime is made to close out or abandon the company.
The indicated method is characterised by the staff of restaurants, cafe, bars, motels being involved in swindle operations. Workers of such companies making use of the customer’s carelessness or deliberately diverting his attention make some additional slips of plastic cards which are used then to misappropriate material values and money.
The key moment in this method is that unlike a shop where a card calculation is accomplished in the owner’s presence, in restaurant the waiters take it away for a while and then return it with the bill. At that the card owner does not suspect that the slip (reprint from a card) presented to him as a bill or the slip together with a bill is only one of several slips skilfully-made by cashier or waiter. The absence of a date is the only thing that distinguishes it from other slips.
Within following several days the cashier can misappropriate cash money obtained from other customers having shared with the waiter, meanwhile he can safely attach the accounts with the essential elements of the card owner to the reporting and send them to the office of issue (a bank or a payment system) for paying. But for all that for repayment Thus the governing body of the company can remain in ignorance of the fact. To avoid such operations owners of payment cards are recommended to be more careful about the documents even when signing them to make a deal with inconsiderable sums.
6. The swindle with counterfeit slips. The given way has considerably spread under complicity of shop cashiers. The essentials of the method can be reduced to the use of deliberately counterfeit slips made by means of applying false cliché or type-setting printing forms using the information from the original plastic cards. In this case the card is mostly used without its legal owner’s knowledge who does not admit the fixed expenses after the stated fact.
Accomplices of the crime give the cashier a beforehand-made slip containing the information about the card number, the owner’s name and the period of validity, which the cashier is to arrange fixing the data about the service office where the slip is registered. After having cash money for some goods paid to the cashier, the sum received in cash money is indicated on the false slip. The slip is attached to the account, the money is seized and misappropriate by the criminals.
7. Fraudulent use of cash dispensers while serving out cash. Let us consider the use of cards while having cash money being paid out from the Automated Teller Machines (ATMs).
Canada has more than 2,000 money access machines in operation and their quantity is more and more increasing. Some financial companies produce special cards to be used in automated teller machines, meanwhile some machines can use only coded bank cards like Visa and Master-Card. At any rate the card is used with the personal identifying number (PIN-code) to access ATM.
The PIN-code is known only to the owner of the card who is recommended to remember his number and he must write it down on the card by no means. Otherwise when stealing the card the criminal obtains the personal code as well, that considerably relieves committing the crime.
The main advantage of introducing automated teller machines is their great reliability and productivity compared with an alive cashier, that makes it more convenient and safer for widespread rendering services to the population. Despite it criminals successfully descend on automated teller machines using force methods (burglary, complete destruction, etc.) as well as swindle actions. In most cases they use an original card and a real personal code obtained by criminals as a result of theft from a legal owner or from the financial company in a deceitful way. Swindlers are known to call the person who has lost his card, and introduce themselves as bank inspectors. As if to check the registration of the card they ask to tell them the personal identifying code, that makes the account easy to access for theft by the use of an automated teller machine. It often happens that this method involves the swindle means dealing with the use of bank officers’ service to get from them the information about cash deposits, about owners of credit cards with large deposits for bribe.
Till recently getting money through the cash dispensers has been one of the most reliable and secure ways of using the plastic payment cards, for availability of PIN-code known only to the user guarantees identification of the card owner and confidentiality of the customer’s access to the account. However, international practice has already fixed the cases of large swindle through cash dispensers.
8. Connecting up an electronic recording device to a POS-terminal or cash dispensers (“Skimming”). This type of swindle showed up not long ago and it has been fixed only in Hungary in view of considerable technical complexity. The given kind of swindle is characterised by complete copying the whole content of a magnetic stripe from the plastic payment card.
Restriction for a sum of money (some hundreds of dollars) which can be paid out by a cash dispensers during a day seems to be the main factor to cut down losses.
One more preventive measure is a special computer programmes controlling the automatic pay machine. All the information the automatic pay machine exchanges with the central computer with is coded to prevent the opportunity of connecting up or intercepting the information . Suspiciously frequent paying out money during a short period of time or wrong named personal code can bring to “pocketing” the card by the automatic pay machine.
9.Other kinds of swindle. Other kinds of swindle can be related to various combinations of swindle methods mentioned above, newly appearing or those swindle methods which has not been studied yet.