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Susan Tompor: Are you susceptible to a 'cracking card' scam

McClatchy-Tribune Information Services

May 25, 2015


Chicago street gangs, rap videos and guys who are skilled at "making paper" are all on the front edge of a scam that’s already cost banks millions of dollars.

It’s called "cracking cards."

What’s weird about this scam is that con artists don’t target and trick the elderly. Instead, millennials naively hand over PIN numbers for their ATM cards and make it easier for con artists to cash fake checks. The young consumer might get a small amount of the cut but eventually could run into major trouble.

The con artists are recruiting college students, single parents and even in some cases, reportedly, newly-enlisted military, too.

The American Bankers Association warned this week that criminals are using Instagram, Twitter and Facebook to solicit young adults for a so-called fast cash scheme.

Michigan State University Federal Credit Union is planning to launch a public service campaign this summer because the fraud has become so serious and in some cases, dangerous.

"What’s really heartbreaking is mostly they are preying on people who truly need funds — which is why they fall for it," said April Clobes, president and CEO of the MSU credit union.

Last fall, she said, one student thought she was going to be eligible for some sort of scholarship money. But as part of that deal, the con artists convinced her to drive with them to Chicago and give up her ATM card. She was abandoned in Chicago and left without her debit card, Clobes said.

"It’s very serious," Clobes said.

No surprise, in some cases, the fraudsters are draining large amounts out of bank accounts once they have that precious PIN.

The bankers group isn’t the first out of the gate to discuss this scam. It’s all over some rap music. Artist Chief Keef has lyrics in a "drill" rap that glorifies the bank fraud.

"I be countin’ them stacks; crackin’ cards, get back; I gets me a big check; And everything designer but it’s mismatch."

It’s not a typical ID theft. The young person isn’t getting a call from a gang member’s girlfriend who pretends to be someone from the bank and needs to verify some information.

Instead, the young consumer ends up willingly handing over bank account information. Some could even think there’s no harm in taking a big bank for $300 or more here and there, bankers say.

"There’s a little bit of what I would call ‘willful blindness,’" said Doug Johnson, senior vice president of payments and cyber security for the American Bankers Association.

Here’s how it goes down: The college student or other consumer hands over his or her debit card information and PIN number. The idea is that they will get something, maybe a cut of the money. Maybe 10 percent or so; or maybe up to half of the money deposited.

Once legitimate bank account information is in hand, the fraudster then deposits counterfeit checks that were created by the con artist who "made the paper." The deposits could be made via smartphones or other mobile devices.

Quickly after that, a con artist, who remember has your PIN number, then withdraws the money from an ATM or possibly a point-of-sale terminal at a local retail store.

In some cases, the alleged "victim" or consumer later calls the bank to report a stolen debit card or compromised credentials. The consumer might never mention that he or she handed over the bank information from the start.

In some cases, it is possible, of course, that people can be true victims.

The MSU credit union, for example, said in the past some young looking con artists might go to residence halls and say they lost a debit card and need to cash a check. They’d offer the other student $20 or so to help them use their account.

But MSU credit union CEO Clobes said the scheme has become far more serious in the past two years or so where social media is used to spread the word. Sometimes, social media is used to promote fake scholarship programs that involve handing over PIN numbers and ATM card information.

The average theft out of accounts has been about $2,500 lately, she said.

Bankers note that some legitimate victims could keep a PIN number in the home in view or even in a wallet with an ATM card. And then a friend or family member gets access to the information, the ATM card and takes money from an account without the bank customer’s knowledge.

Authorities also have warned college students to be careful about providing any banking account information in relation to a job prospect, maybe under the guise of running a credit check.

The "cracking cards" scheme has reportedly cost banks nationwide about $11.6 million in stolen money, according to an American Bankers Association survey.

In the fall of 2014, the U.S. Attorney’s Office in the Northern District of Illinois said 29 defendants from Illinois and Indiana faced federal charges in a "cracking cards" scheme that had its roots on Chicago’s south side and was spreading to other cities through rap music and social media.

The schemes involved many participants, with some con artists taking part in recruiting bank customers at "parties, schools, or on the street," according to the U.S. Attorney’s office.

Sounds cool from the start. Or maybe it sounds like a good way to get more money for college. But bankers warn that young consumers risk losing an account, loss of their own money, damaged credit and possible jail time.

The best rule, of course, is to be highly skeptical of quick-cash ‘opportunities.’

"Nothing in life is free," Clobes said.