Posted: Apr 2, 2018
Comments: 0
Author: Lou Grilli

Card-cracking, also called card-popping, is one of the fastest growing forms of card fraud that no one’s heard of, and its hitting credit unions. Card cracking takes on many forms, but the most common is college students allowing a fraudster to have their debit card number and login information in exchange for some payment, and then deposit bad checks or run up charges, and have the student claim the card was lost or stolen. It’s a form of friendly fraud that’s not very friendly, and the temptation cost 9 Florida Gators their football careers.


Background: Card-cracking: Not so innocent victims


Card-cracking is a national problem, one that’s growing. Fraudsters take advantage of naïve, usually college-aged debit cardholders, who are led to believe that there’s nothing wrong with the proposed activity, since the cardholder is protected from fraudulent charges under Reg E. Fraudsters target their prey over social media, or paper ads posted in college dorms and student centers. Fake accounts on snapchat, with screen captures of large deposits in bank accounts, saying this is a legitimate way to earn extra money, are not uncommon. The victims usually don’t possess the financial savvy to see the illegality of their actions, and instead see a path to some quick money, with nothing to lose. Often the victim has very little money in their account and falsely believes that they don’t have much to lose. The fraudster approaches the prey, offering a payment, or a “cut” of checks to be laundered through the debit account. The account holder provides access to their account as well as the physical card. Once the card-cracker has access to the account, they deposit multiple bad checks – usually remotely – and then make quick ATM withdrawals. The goal is to get the cash in hand before the bank figures out the checks are phony. The account holder is also at risk of having their own money stolen from their accounts and having unauthorized purchases made with their debit cards.


The account holder is then instructed to report the card as stolen or lost, thereby limiting their liability. It is very difficult for the credit unions to prove that the account holder was complicit in the activity, and the burden falls on the credit union to reimburse “stolen” funds and open a new account.


“Complicit Victim”


Many of the “victims” do not understand or are too naïve to believe that they are facilitating a crime. At the beginning of the 2017-2018 football season, 9 members of the University of Florida football team were accused of various forms of card fraud, some involving card-cracking tactics. In addition to being suspended from the team, they also face charges filed by the Gainesville police.

In a much bigger case, the New York District Attorney reported an elaborate ring of card-crackers, who deposited over $2.5 million in fraudulent checks across 650 bank accounts in 7 banks, netting $1 million before being stopped. 39 people were charged, but the implication is that the account holders of those 650 bank accounts were complicit in the activity. At peak, the scammers, as a group, were netting $30,000 - $40,000 per week.


Best Practices


Credit unions need to be vigilant in recognizing patterns which point to fraud in which the victim is an accomplice and educate the fraud staff to this nearly invisible type of fraud. Credit unions must also make their members aware of:

  • Offers on Facebook, Instagram and Snapchat that provide quick money in exchange for access to your savings or share draft account and really are too good to be true.

  • Fraud via social media. Never provide your account number or debit card over in Facebook messenger. Your credit union will never ask you for account information via social media.

  • The fact that participating in any such activity is a crime, and in so doing, the member becomes a conspirator to credit card fraud, punishable by up to 30 years in prison. 

  • Ads related to card cracking on social media. If the member sees an ad, they must report it immediately to the social media site.

To learn more about card fraud, attend the immersion18 conference, and sit in on the fraud track on May 9, where Visa will provide an industry update on card fraud, and Pennsylvania State Employees Credit Union will provide first-hand lessons and best practices on dealing with this and other types of fraud.

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Lou Grilli

Lou GrilliLou Grilli

Lou is the AVP of Product Development & Thought Leadership at Trellance. In this role, he is responsible for managing the organization’s product portfolio, as well as providing leadership on industry trends related to data analytics and payments.

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