Apell-Link Credit Card Blog

Sabur Ali Brown spent a lot of money with credit cards.

The problem was, the credit cards weren’t his.

Helping the 21-year-old Cheektowaga man gain access to the credit cards was a small network of crooked restaurant cashiers and store clerks.

Brown, who also was involved with drugs and illegal weapons, is one of the first — if not the first — local person to be convicted of using a small electronic device called a skimmer to steal credit card information.

He is scheduled to be sentenced Jan. 22 by U. S. District Judge William M. Skretny.

Skimmer fraud is a growing international problem, according to police, and it all starts with a process that is so routine that it happens millions of times every single day at businesses all over the world.

A customer walks into a store or restaurant, makes a purchase and hands a credit card to a cashier. The cashier then swipes the card through an electronic device that reads the information on the card.

Usually the purchase is approved, but sometimes a dishonest cashier also swipes the card through a small, illegal, hand-held device called a skimmer.

This device — no bigger than a pager — steals information from the card and activates a form of identity theft that causes headaches for consumers and, in recent years, has cost credit card companies billions of dollars.

One such case involved Brown. The U. S. attorney’s office said Brown had cashiers in several local restaurants and at least one local department store helping him steal credit card information.

“After the persons assisting Brown had skimmed the cards of numerous customers, they would return the skimmer to Brown, who then would download the copied account information onto his personal computer,” Assistant U. S. Attorney Paul J. Campana said. “The cards of about 200 persons were skimmed, with losses up to $70,000.”

Campana said that, to his knowledge, Brown is the first person caught locally running a credit card skimming scheme.

Fraud experts say these scams occur every day — often on a much bigger scale — in businesses all over the world. Some of the skimming operations are run by organized crime.

“Credit card scams and shady waiters can easily turn customers into identity theft victims,” said Dawn Handschuh of CreditFYI.com, an online educational forum on personal finance issues.

“Credit card skimming occurs when someone swipes the magnetic strip on a customer’s credit card to get the account number with a device small enough to hide in a pocket or hand. It takes about two seconds.”

In Brown’s case, authorities say, he hired cashiers at local businesses to take skimming devices to work with them. When the cashiers handled a credit card purchase, they ran the credit card through the business’ legitimate scanning device and then, a second time, through the skimmer.

After the skimmer was returned to Brown, he used the information from the credit cards to activate gift cards obtained from local businesses. He then used the gift cards to buy iPods, clothing and other items, which he then sold on the black market.

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IT MAY NOT strike you as an appropriate subject for recognition at the moment, given the blame it’s getting as a contributor to our current economic unpleasantness.

But what the heck, it’s the season of celebration, so let’s light the candles on a birthday cake for … the credit card.

A couple of birthday cakes, actually, since the credit card industry is marking at least two of the round-number anniversaries that are so beloved in the news business. Since we’re running out of 2008 we’d better get moving on the party if we don’t want to wait another five or 10 years for the appropriate moment.

In 1958, Bank of America launched its all-purpose credit card (called, appropriately enough, the BankAmericard) with a mass mailing in Fresno, Calif.

And in 1968, a meeting of BankAmericard franchisee institutions, who were trying to straighten out snarls and problems in the system, led to the creation of what we know today as Visa.

There’s a local component in the latter development. The man most credited with pulling together the disjointed and disorganized BankAmericard universe into a near-seamless payment system for businesses and consumers, as well as a powerful and internationally recognized brand, was Dee Ward Hock, a former executive of Seattle-based National Bank of Commerce (later known as Rainier Bank), who ran Visa from its formation to 1984.

Hock went on to a career as an advocate of a new model of management organization he christened “chaordic” — a melding of chaos and order — inspired, he said, by the original design of Visa as a cooperative of companies who were also competitors.

Much of this history is detailed in Joseph Nocera’s terrific book, “A Piece of the Action,” which explains how the credit card, the mutual fund and the money-market account allowed, as the book’s subtitle puts it, the middle class to join the money class.

The BankAmericard wasn’t the first credit card, or even the first all-purpose credit card. But the world created by the growth of Visa, MasterCard (the former MasterCharge) and the like is far different from the world of limited-acceptance, proprietary oil-company cards (”let’s see, I have an Esso card, but I also need a Gulf card and a Sunoco card and a Texaco card and a …”) and department-store charge plates.

It’s a world transformed by what Nocera called “the most ubiquitous financial instrument since the check.” The credit card made the traveler’s check virtually obsolete and threatens to do the same to the check itself. Even those who remember the world before plastic money would now find it hard to imagine financial life without it.

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While consumers are being urged to spend this holiday season to help bolster the economy, those who do may face big credit card bills in January.

ByDesign Financial Solutions, a nonprofit organization offering personal finance counseling and education, is urging consumers to make “getting out of debt” their New Year’s resolution.

“In tough economic times such as these, we expect even more people to resolve to work on lowering their debt in 2009,” said Martha Lucey, ByDesign’s president. ByDesign offers free and low-cost counseling, and it has offices in Modesto, Merced and Stockton.

Lucey cited statistics showing that 61 percent of Americans carry revolving credit card debt, with an average $10,678 balance. Atop that, she said, the average consumer expected to spend $832.36 on holiday merchandise.

“That cost, along with previously racked up debt, and an unstable economy creates the incentive to take active steps to address the problem as soon as possible,” Lucey warned.

Here is what ByDesign’s credit counselors encourage consumers in debt to do:

STOP CHARGING — Adding to your existing debt will only make the problem worse and counteract any other steps you take to pay down your balance.

TRANSFER BALANCES — Call your credit card issuers and try to transfer all of your balances to the card with the lowest interest rate.

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For those holiday shoppers who were leery of the dreaded madness of Black Friday or are still trying to recuperate after all that turkey on Thanksgiving and decided to hold off on holiday shopping for one more day, there are plenty of holiday shopping tips from the Better Business Bureau (BBB) and the Federal Trade Commission (FTC) on all kinds of shopping and buying.

According to The Wall Street Journal’s Market Watch, mall traffic was up 1.7 percent from last year on Black Friday and the weekend following. This rise was most likely due to the turbulent economy and people rushing in to take advantage of Black Friday bargains to be scrupulous with their money.

According to the BBB Web site, http://us.bbb.org, “With major declines across many sectors of the economy, overall household wealth in the U.S. is down nearly $8 trillion in 2008.”

“Given the daily roller-coaster effect taking place in the U.S. stock market, and with credit card companies lowering maximum credit lines and raising interest rates, the economic future for many households is uncertain heading into the holidays,” Steve Cox, BBB spokesperson said. “With the sobering effect of the economy looming over this holiday season, consumers are going to have to be creative with their dollar and be more conscious of their spending in order to avoid a holiday hangover.”

But if there are shoppers out there who happened to miss out on Black Friday and even Cyber Monday, they still have ways to save money on their holiday shopping.

According to the BBB, creating a list and sticking to it is a good way to keep up with holiday expenses. This budget should include everything a family plans to eat and do over the holidays. Frugal people can even set a price limit for each person on their shopping list.

The BBB also suggests sizing up the gift list. People can give smaller, less expensive gifts to everyone on their list or limit gift giving to the immediate family only.

Arts and crafts are also fun gifts to give to people. The BBB suggests do-it-yourself projects because it is a way to get the family together working on one or several gifts at the same time.

The BBB also recommends not spending as much or foregoing the little things that add up on the credit card bill. That includes decorations and wrapping paper. They suggest using last year’s decorations and using alternative wrapping, such as newspaper or using shopping bags.

Areawide Media, based in Salem, sells end rolls of newspaper reels to support the Fulton County Relay for Life. These end rolls are useful for wrapping presents and for craft projects. They are sold at Areawide Media’s offices in Highland, Salem and Thayer, Mo., for $1 per roll or for a donation.

Being a smart shopper is also helpful. During the holiday shopping season, many retailers will be competing for sales and the consumer will be stuck in the middle. Savvy consumers should try finding deals at both stores and online. The BBB advises all shoppers to check the record of each store and Web site with them at www.bbb.org.

Online shopping

Traversing a Web site for good bargains is very different from going from store to store in a mall to find a good deal on a particular gift. Many would say shopping for gifts online is much easier to do. Others, however, are intimidated by buying online. The truth is that even those who are comfortable shopping online are sometimes disgruntled with some of the hassles that might arise.

Cyber Monday, the kickoff for online holiday shopping, started off with a bang Dec. 1 as people got back to work and back to their high-speed Internet connections on their work computers to go shopping. According to Integra Telecom Inc., a large Internet supplier, Internet traffic rocketed up by 30 percent on Dec. 1 compared to the weeks before that date.

Buyers beware, the wolves of the Internet world, scammers, are out there and they are hungry. Scammers are everywhere throughout the Web, and according to the BBB, “With more shoppers expected to head to the Internet this season, scammers know they can take advantage of consumers who are looking for bargains.”

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Christmas is an expensive time of year. In addition to the regular bills that have to be paid, there are presents to buy and extra food to be purchased. It is natural then, that many people turn to their credit cards to ease the financial pressure. Indeed, figures for last year’s Christmas spending suggest that consumers put an estimated £32.3 billion on their credit cards.

Whilst they can be a great to way spread the extra costs, it is important to ensure that yours is giving you the best deal. For example, if you’ve had your card for a while, you could be open to high interest rates on the purchases you make.

It can therefore be wise to spend a bit of time considering a new credit card that is more suitable for both you, and your personal needs. In doing so, you could save a lot of money in interest repayments, as well as open yourself up to some great offers.

For instance, it is worth comparing the different credit card packages available, to see if you can transfer your existing balance. As such, there are credit card deals which offer consumers such things as 0% interest on balance transfers, or cash back on any purchases made.

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“Black Friday” marks the beginning of the busy holiday shopping season, and District Attorney Lynne Abraham and Deputy Commissioner Kevin Bethel remind everyone that it’s a busy time of year for criminals as well as holiday shoppers.”There is always somebody looking to separate you from your money,” said District Attorney Lynne Abraham.”The best course of action is prevention.”

“Many thieves choose their victims because the thieves see an opportunity,” said Deputy Commissioner Kevin Bethel. “If you take away the opportunity, chances are you won’t become a victim.” Going Out of Business Sales-Many companies are going out of business or are in bankruptcy protection. Be sure to check on the company’s policies.

Many purchases are final sales, no returns or exchanges. Also check to see if they are honoring coupons and/or previously-purchased gift cards and for how long.

Gift Cards-As always, check for expiration dates and progressive fees. Many cards expire if not used by a certain date. Many cards add fees if not used by a certain date. The best gift cards never expire and do not charge fees of any kind. Online: 1. Use a designated credit card rather than a debit card for online shopping. Most credit cards cap your liability at $50, whereas there may not be a cap with a debit card, which is an open invitation to your entire bank account.

2. Dedicate one credit card for online shopping only. It will be easy to keep track of purchases-and unauthorized purchases.

3. Your social security number is the key to your identity. DO NOT give out your social security number while shopping online.

4. Online shoppers must be vigilant in avoiding scams and protecting their personal information

Holiday Scams

• Name a Star - Very romantic, and very popular, companies say they will send you a certificate denoting the name and location of ‘your star’ and promising to enter it into a star registry. However, only the International Astronomical Union names stars, and they are not for sale.

The International Astronomical Union is not going to enter ‘your star’ into the official IAU catalog.

• Fake Charities - Reputable charities DO NOT solicit online.

• Unsolicited Bulk email solicitations-It is not worth the risk of opening yourself up to possible scam artists.

• Instant credit offers

• Free travel vacations

• Also beware of high pressure sales and online auctions. They may be legal, but you may over-pay.

Other Popular Scams

• Mortgage Aid Scams-Scammers ask people to send them money directly, which may even result in victims losing their homes.

• Nigerian Bank Scam-Promises money if the victim will process a check, which of course is fraudulent, through the victim’s account. Very popular to the tune of millions of dollars.

• Lost Pet Scam-Scammers find lost pet ads in the paper, contact the grieving pet owner and say that the pet was taken to Mexico.

Owners call a bogus long-distance phone number to the tune of hundreds in phone calls, which goes straight to the scammer. The pet, of course, is never found.

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