FTC shuts down prepaid debit card vendors with hidden fees

Photo courtesy of Big Dubya at Flickr

We keep getting warned that it's dangerous to give out too much personal information on the Internet. In this instance -- semi-legitimate financial companies, supported by annoying pop-up ads and Internet advertising -- have been caught deducting a $159.95 (hidden fee) out of people's checking accounts that were unfortunate enough to apply for their product.

Fortunately, the FTC has stepped in and shut down the prepaid debit card operations of these so-called legitimate financial services operators.

According to a complaint filed by the FTC, the defendants market bank-issued, Visa- and MasterCard-branded stored-value (prepaid) cards under a variety of names through Web sites and pop-up and e-mail advertisements that direct consumers to Web sites for the individual cards. These include Acclaim Visa, Impact Visa, Sterling Visa, VIP Advantage Visa, Vue Visa, Elite Plus MasterCard, Impact MasterCard, Secure Deposit MasterCard, VIP MasterCard, and Vue MasterCard. The defendants also market unrelated short-term loans on Web sites such as http://www.superautosource.com/, http://www.supercashsource.com/, and http://www.fastcashusa.com/.

The complaint alleges that, through their prepaid card programs, the defendants debited, without authorization, a $159.95 “application and processing” fee from consumers’ bank accounts, including from consumers who either had no contact with the defendants or had applied for an unrelated short-term loan. Consumers who visited the defendants’ prepaid card Web sites were instructed to provide personally identifiable information, including their bank account information, to apply for a card. The defendants allegedly also made deceptive claims on their Web sites, such as “No Annual Fees” and “No Security Deposit,” without disclosing clearly and prominently that they would use the consumers’ personal information to debit the $159.95 fee. Consumers usually discovered the unauthorized debits when they reviewed their bank account statements or when banks notified them of penalty fees or overdraft charges due to insufficient funds.

Let's see a $159.95 upfront fee for a card that you finance yourself. Since it's obvious that the people bilked out of this fee had a bank account, I'm guessing they could get a lot better deal at the bank they do business with, or just about anywhere else!

While credit cards are technically a different animal, there has been a lot of public outcry for them to stop some of their practices in regards to hidden fees. You can learn more about this at the Consumers Union, here.

I did a post on their campaign to make some of these hidden fees more reasonable for both merchants and consumers:

Congress needs to take a hard look at credit practices

FTC release, here.

You can report deceptive practices, or outright fraud to the FTC, here.

Self service stamp machines targeted by credit card thieves

Photo courtesy of Leff at Flickr

New scams are invented daily. Here is one, where self-service stamp machines (the kind that accept payment cards) are being targeted at Post Offices.

David Bowermaster at the Seattle Times is reporting:

In mid-July, three men left their homes near Los Angeles and traveled to Seattle to buy postage stamps.

But these were no ordinary collectors. Armed with at least 27 stolen credit-card numbers, federal prosecutors say, Artem Danilov, Stephan Melkonyan and Karapet Kankanian fraudulently purchased more than 3,200 books of stamps worth nearly $24,000 from Seattle-area post offices in just more than a week. A federal grand jury Thursday charged the men with an assortment of crimes.

Following a pattern that Postal Service investigators have uncovered in at least five Western states, the men made mass purchases of stamps after normal working hours from automated postal machines, which are accessible 24 hours a day in the lobbies of many post offices around the country, prosecutors allege.

While these three were caught (two Russians and an Armenian), it appears this activity has been occurring throughout the Western United States.

The illegal stamp-buying scheme appears to be a novel breed of identity theft, one that blends high-tech thievery, online commerce and the retro currency of the U.S. mail.

James Vach, a spokesman for the U.S. Postal Inspection Service in Seattle, said investigators first encountered a wave of fraudulent stamp buys in the Los Angeles area late last year.

Since then, the Postal Service has uncovered illegal stamp-buying schemes in Washington, Oregon, Arizona and Colorado.

The Postal Inspectors suspect a larger ring is involved and some of the stolen credit card numbers used have been traced to a car wash in Southern California.

According to the article, here is how the suspects were using the stolen credit card numbers:

Danilov, Melkonyan and Kankanian allegedly used a credit-card reader to embed the stolen credit-card numbers onto the magnetic strips of gift cards from a variety of retailers, Brown said, a process that allows the gift cards to function like credit cards.

They then used the adulterated gift cards to repeatedly buy books of stamps from postage machines in one post office after another. Customers used to be able to buy dozens of books of stamps per transaction from the automated postage machines, but the Postal Service has since limited the number to try to fight such fraud.

Although the authorities don't know where all the stamps were being sold, according to a assistant U.S. Attorney, some of them are being fenced on eBay.

A lot of stolen merchandise is fenced on eBay and other auction sites. A lot of this stolen merchandise is purchased with fraudulent credit/debit card information.

Out of curiousity, I decided to see if new stamps (the kind used for postage) could be found on eBay. Amazingly enough, I found what I consider a large selection with offers of free shipping and discounted prices. What I found can be seen, here.

Of course, at a glance, it can be hard to tell what is legitimate and what is not on an auction site.

A lot of stolen gift cards (used in this instance to clone the cards used) are also fenced on auction sites. I wonder if the value on them had already been used, or if our suspects lifted them at a retailer before a dollar value was loaded on them at a point-of-sale (register)?

Seattle Times story, here.

If you spot this type of activity during a visit to the Post Office, you can report it to the Postal Inspectors, here.

Although two of the suspects apprehended were Russian, the U.S. resident was an Armenian from Southern California. Recently, Armenians (from Southern California) have been tied into similar type activity. The previous posts, I've done on these stories can be seen, here.

Are illegal immigrants from Islamic nations slipping across our Southern border?

Not all the illegal immigrants slipping across our Southern border were born in Mexico. For years, a substantial amount of them hail from Central America and now there is evidence that Islamic drug traffickers are using the route, also.

Although many of the people making this crossing are looking for jobs, which will enable them to make a better life for themselves, the entire process is controlled by organized criminals.

While many of us have sympathy (empathy) for people trying to make a better life for themselves, it is often hard to distinguish between innocent workers and hardened criminals, or worse.

Sara Carter of the Washington Times is reporting some of our leaders, who are alarmed by this are calling for an investigation to study how bad the problem could be.

In Sara's own words:

Rep. Ed Royce, ranking Republican on the House Foreign Affairs terrorism and nonproliferation subcommittee, said the Drug Enforcement Administration (DEA) document — first reported yesterday by The Washington Times — highlights how vulnerable the nation is when fighting the war on terrorism.

"I'll be asking the terrorism subcommittee to hold a hearing on the DEA report's disturbing findings," said Mr. Royce of California. "A flood of name changes from Arabic to Hispanic and the reported linking of drug cartels on the Texas border with Middle East terrorism needs to be thoroughly investigated."

According to the DEA report, the people of interest in the report are versatile in their linguistic abilities:

These "persons of interest" speak Arabic, Spanish and Hebrew fluently, according to the document.

The report includes photographs of known Middle Easterners who "appear to be Hispanic; they are in fact, all Spanish-speaking Arabic drug traffickers supporting Middle East terrorism from their base of operations" in the southwestern United States, according to the DEA.

Birds of a feather tend to flock together and it is no secret that a lot of terrorist activity has been funded by a booming poppy trade in Afghanistan for over twenty years now.

Another Congressional leader, Congressman John Culberson (R) supports taking a deeper look at this, also.

According to the Department of Justice's National Drug Threat Assessment (2006), heroin production has declined in most source countries, with the exception of Afghanistan.

The report stipulates that no large increase of heroin has been noted in the United States, but it did speculate:

Any significant substitution of Southwest Asian heroin for South American heroin most likely would take several years to occur because Colombian and Dominican criminal groups control most white heroin drug markets, and as such, there are relatively few established Southwest Asian heroin transportation and distribution networks in the United States. Moreover, Colombian and Dominican criminal groups quite likely would strive to maintain control over domestic heroin distribution by purchasing Southwest Asian heroin from sources in Asia or Europe and distributing it in eastern drug markets.

Perhaps, the new report cited in the Times means that this process is already occurring and the groups involved in this deadly trade are creating an unholy alliance.

Terrorists need money to fund their causes, and one of the ways they make it is through illegal means, including drug trafficking.

Sara Carter also has written about Suad Leija, who is helping the federal authorities deal what will probably prove to be a major blow to a major counterfeit document cartel operating throughout the United States. Suad is the stepdaughter of one of the major players in the organization.

I first became interested in Suad's story after reading Sara's article.

Suad has been featured by Lou Dobbs, Fox News, Paula Zahn and several other news organizations.

One of the reasons, Saud decided to assist the authorities in going after her family was a chilling remark her grandfather made when she asked him if the "family" would sell documents to terrorists. His reply was "terrorism is an American problem not Mexican."

Suad is now writing a book about her experiences and is offering a personally autographed copy to anyone, who drops her an e-mail before the release date and then purchases the book directly from her Paper Weapons site.

The e-mail address can be had by clicking on the contact link on the left side of the main page. The book will help support the sacrifices, she has made assisting the authorities in identifying a threat to the citizens of the United States.

Washington Times story, here.

Department of Justice's 2006 National Drug Threat Assessment, here.

If you would like to write Congressman Ed Royce to show support, or make a comment on his call for an investigation, his website is here.

Another person supporting this investigation, Congressman John Culberson's site can be reached by linking, here.

Bizzare site asks viewers for money to keep a bunny from being butchered!

I was reading the Sunbelt blog, written by Alex Eckelberry and came across a post he did on a bizzare and pretty sick website.

In Alex's own words:

save-me-please(dot)com is a site dedicated to saving a bunny.

We have no idea what this is odd thing is: A joke, a hoax. Or a scam.

The whole intent of the site is to get a person to pay to save the bunny.



You can view the Sunbelt blog's entire presentation, here.

Paying to save the bunny isn't recommended and as Alex aptly states, one of the videos depicting a rabbit being skinned is "enough to make you a vegetarian."

This blog, according to a study Jonathan Edwards at Yankee Group has "mojo."

I can see why it does, besides providing a lot of great information, it tends to keep the interest of the people, who read it!

The Sunbelt blog is also an excellent place to keep up on, or learn about computer (information) security issues.

Will Social Security number verification slow down illegal immigration?

Employers will soon have to take action against employees, who have a Social Security number that doesn't exist, or doesn't match the name associated with it. In the past, they were able to ignore the fact that these types of discrepancies existed.

With statistics showing that employee fraud and abuse cost corporations billions of dollars, it's amazing that employers would ignore that the person they have working for them might not be, who they claim they are.

DHS (Department of Homeland Security) has already provided a SSN validator for employers to use, which shows, whether or not the number was ever issued. The problem is that it doesn't show who the number belongs to.

As I blogged in a earlier post, this has led to more and more cases of illegal immigrants stealing real people's numbers to maintain their employment. The posts also explains how employers could already be doing more to verify, who their employees really are.

Over the weekend, the issue hit the news again.

Suzanne Gamboa and Anabelle Garay of the AP report:

WASHINGTON (AP) -- Employers across the country may have to fire workers with questionable Social Security numbers to avoid getting snagged in a Bush administration crackdown on illegal immigrants.

The Department of Homeland Security is expected to make public soon new rules for employers notified when a worker's name or Social Security number is flagged by the Social Security Administration.

The rule as drafted requires employers to fire people who can't be verified as a legal worker and can't resolve within 60 days why the name or Social Security number on their W-2 doesn't match the government's database.

Employers who don't comply could face fines of $250 to $10,000 per illegal worker and incident.

AP story, here.

We've already seen an increase in stories -- where someone goes to file their taxes, or find another job only to discover their Social Security number has been being used -- sometimes by more than one person.

Recently, the story of a financial crimes detective, Adrian Flores, who had his identity stolen was covered in the LA Times. It appears that more than one person used Detective Flores' number. Before he cleared his name, he went through a lot of grief from various private and government agencies, including the IRS.

What scared me the most about Detective Flores' story was that he is obviously of Hispanic descent. Does that mean that citizens with Hispanic surnames are going to be victimized because their names will be more considered more desirable?

This is a whole new take on the sometimes sensitive issue of "profiling."

Bob Sullivan (MSNBC) blogged about this issue extensively at the Red Tape Chronicles, here.

During the aftermath of the controversy surrounding the immigration bill -- Lou Dobbs interviewed Suad Leija, the stepdaughter of one of the main players in a organized crime family producing counterfeit documents -- who is assisting federal authorities in identifying members of the cartel. Suad aptly pointed out to Lou that if the bill passed, the counterfeit cartel's business would have exploded because dates could be fixed to reflect whatever date qualified a person for amnesty.

Could the same groups be preparing to provide their own version of Real ID to the millions of people illegally living in this country?

According to Suad, the fake documents are as "good as anything you have in your pocket."

If you go to Suad's Paper Weapons


Suad's interview with Lou, here.

Exactly, how the rules will change remains to be seen. What worries me is the organized crime machine behind providing the documents and identities always seem to stay one step ahead of the authorities.

Getting stolen identities shouldn't present too much of a challenge to the groups counterfeiting documents. There already is an underground market selling this information, also.

This could translate into more people having their identities abused than ever before.

As long as the consequences for stealing identities are viewed as a not very serious crime, the problem will continue.

There are no easy answers to this problem -- but perhaps if there were harsher consequences for counterfeiting, the use of counterfeit documents and stealing identities -- the problem would be easier to deal with.

As long as employers are taking advantage of cheap labor, which is the reason most of these people are coming here, the solution isn't going to be an easy one.

We have to ask ourselves at what cost will this be allowed to continue?