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Credit Card Fraud Examples

Credit Card Fraud

Credit cards have become more commonly and frequently utilized than paper dollar bills in most places. As you might expect, with the rise of credit cards as the primary medium of exchange has come an enormous increase in the amount and instances of credit card fraud. Five particular cases in particular stand out as the top examples of credit card security failing on an epic scale.


Number 1 Fraud Case – TJX Clothing Retailer

In 2007, the clothes retailer TJX famously announced that a wily hacker had cracked their security and breached their customer database to make off with vital financial records of credit card, check, and debit card store transactions. Over forty-five million customers were negatively impacted by the security failure, leading this to be the single largest case of credit card fraud in history. Although the FBI and police wanted the leak kept quiet while they investigated, rumors reached the press within months. Eleven men were brought to court and charged, and only one pleaded guilty. The online theft occurred as a result of weakness in the clothing store’s wireless system. Almost five years later, these security issues have not been adequately addressed and fixed.


Number 2 Fraud Case – Card Systems Solutions Credit Card Network

The number two instance of credit card fraud impacted forty million different credit cards and their owners in the year 2005. The Card Systems Solutions, headquartered in Arizona, was found guilty in the following investigation of not encrypting its sensitive customer financial data nor adequately protecting its network security system. As a result of the grave debacle, Visa and American Express cut all of their ties to the stricken company, and not surprisingly, it never recovered. Card Systems Solutions was subsequently bought out by Pay By Touch, then shut down later when this new parent company failed to turn their fortunes around as well.


Number 3 Fraud Case – Best Western Hotels

The one time largest hotel chain in the world had the third top case of credit card fraud back in August of 2008. A sneaky hacker cracked the security systems of the Best Western Group’s Internet database and obtained a full year’s worth of hotel guest information. This data included not only visitors’ employers, home addresses, and phone numbers, but also their credit card information that they used to guarantee or to pay for their stays. This data was subsequently sold by the Russian Mafia, reportedly for five million dollars. Eight million people had their identity and credit card information compromised by the fraud.


Number 4 Fraud Case – Charter Pacific Bank

Over two years time, literally millions of credit card holders suffered credit card fraudulent billing when they were invoiced on their credit cards for pornography sites that they never joined or even remotely knew about. Charter Pacific Bank of California sold the credit card numbers to Kenneth Tayes. The bills ran up to a whopping forty-five million dollars. The shocking part of the story is that federal laws of the day did not make it illegal for this bank to sell its customers’ credit card numbers to the highest bidder. Some of these credit cards were company cards too.


Number 5 Fraud Case – 7 Eleven Convenience Store ATM’s

The same perpetrator of the TJX credit card fraud in the first example above managed to successfully practice yet another famous instance of devious credit card fraud. Albert Gonzalez, broke into the 7 Eleven network with the assistance of two Russian hackers who stole the numbers of credit cards and then sent them to the ATM’s of the various stores. With these credit card numbers, they gathered their accompanying PIN’s from the ATM’s, and then they were able to make faked credit cards, using a magstripe writer that banks routinely employed to reprogram credit and debit cards. Though the incidents happened in 2007, the investigators continued to come up with additional examples of this fraud through 2009.

The following was a guest post from the folks at “Compare the Market“.



5 Responses to Credit Card Fraud Examples

  1. I have been lucky to never have had any money lost from fraud, but my number has been stolen before. I once got a call from Chase that my card was used at Walmart in Puerto Rico. As much as I would have wanted to be in San Juan, I was at home in Denver.

  2. I’ve been a victim of fraud where someone spent a nice $1000 almost 1/2 way across the country in KY at a Walmart. Unfortunately, it was my debit card, so it was a bit taxing to get the issue resolved. That situation, and stories like these, makes me so leery about being dependent on plastic for everything.

  3. Nice examples. As your examples illustrate, mass data breaches occur more frequently and effect an increasing number of consumers. Another scary development is the widespread availability of credit card readers that allow identity theifs to bump into someone (or come in very close proximity) and scan someone’s wallets to “read” the numbers. As legitimate businesses become increasingly dependent upon the availability of inexpensive technologies, the scammers are not far behind.