Patience seen as component in NJ credit card scam

Published on NewsOK Modified: February 10, 2013 at 2:46 pm •  Published: February 10, 2013
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NEWARK, N.J. (AP) — Many scam artists are looking for ways to get rich quick.

Then there are the 18 people authorities said spent years meticulously creating fake credit cards, building up their credit scores and borrowing money they never repaid in what may be one of the nation's largest credit card fraud rings.

The 18 were charged last week in what authorities said was a sprawling international scam in which at least $200 million was stolen using at least 7,000 identities and 25,000 credit cards. The enterprise spanned 28 states and eight countries, authorities said.

The elaborate, widespread fraud involved an outlay of patience and meticulous planning rarely seen in such a large credit card fraud case, authorities and industry analysts said.

"What they did was very painstaking, very sophisticated and took a lot of time," said Paul Fishman, the U.S. attorney in Newark, who announced the arrests Tuesday.

The swindle involved duping credit reporting agencies by falsely inflating credit reports, opening cards under false names, and creating businesses through which the defendants could pay themselves with the cards, authorities alleged.

The con is a tried-and-true way to cheat banks and credit card companies, but rarely is it carried out on such a large scale because it is hard to execute.

"It's been around forever," said Al Pascual, a senior analyst at Javelin Strategy and Research. "You just don't see one group do it with hundreds of thousands of cards. That's what's throwing everyone back a bit, the fact that they were able to do it so often and to such a great extent."

Credit card fraud losses in 2011 totaled $6 billion, Javelin estimated.

The scam started at least as early as 2007, Fishman said. The group created thousands of fake identities, sometimes using real social security numbers. One credit card was opened with the identity of a 6-year-old boy; others used Social Security numbers of people who were willing to leave the United States for a fee, Fishman said.

"You have to pull a lot of stuff together. You have to have a phone service and address where you're paying bills," said Avivah Litan, a vice president and analyst at Gartner Research. "They have to do a lot of background work to look like a real person."

The group then opened credit cards with small credit limits. The users purchased everyday items like groceries and paid off the bills so they could increase their credit score. That way, they were able to give the impression that they were a trusted customer, giving them access to a higher credit limit and cash advance checks.

Litan said one of the most impressive aspects of the scam was that the defendants were able to access so much credit during the financial crisis. They likely had to appear to be sterling customers in order to pump up their credit limits so high.

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