Largest Credit Card Fraud Scheme Uncovered by U.S. Justice Department

A fourth defendant plead guilty in early August to his participation in an identity fraud scam where over 7,000 false identities were created being used to obtain credit cards and lines of credit and ultimately causing $200 million dollars in fraud losses. Lack of proper identity authentication checks allowed the fraudsters to reuse addresses and other information in creating fake profiles and false identity information to obtain credit cards and perpetrate their elaborate, large-scale scam.


Charges were filed against eighteen individuals in February 2013 accusing the fraud ring members of obtaining tens of thousands of credit cards with the false identities they created. The more than 7,000 false identities shared about 1,800 mailing addresses amongst them, scattered across the United States. The credit cards they obtained were used fraudulently, but the identities were also used to establish credit and then take out loans. Credit was established through various means including posting ads on Craigslist to have the false identities being added as authorized users on legitimate credit card accounts and through a jewelry store that falsified loans and payments for the fake identities reporting the paid lines of credit to the credit bureaus.


This egregious scam started in 2003 and before being unraveled obtained over 25,000 fraudulent credit cards. Authorities identified $60 million in proceeds that passed through the many bank accounts and sham companies run by the fraudsters. While this was a sophisticated fraud scheme involving falsified identity documents to obtain credit cards and credit histories for the fake identities, it seems like there is more the card issuing banks could have done to recognize and prevent much of this fraud. Had more thorough authentication been performed on the associated addresses there could have been some suspicious evidence found considering over 7,000 identities used some 1,800 addresses. Additionally, there would’ve likely been sharing of phone numbers and information had this information been collected and utilized for authentication. The fact that over 7,000 identities were created and used to obtain 25,000 credit cards over a ten-year period while sharing and reusing much of the identity information suggests that more identity authentication and verification checks should have been utilized.


For more information:


U.S. Attorney’s Office – Four Plead Guilty in $200 Million International Credit Card Fraud Conspiracy


18 charged in $200M credit card fraud scam that created 7,000 new identities

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