The Inquisitr » credit cards

3 companies made $1.4 billion by misleading online shoppers

Steven Hodson — Wed, 18 Nov 2009 21:41:42 +0000

The U.S. Senate has begun hearings to investigate the behavior of three big online companies behind online loyalty programs. The three companies: Vertrue, Webloyalty, and Affinion, have generated more than $1.4 billion through misleading programs that duped consumers into paying monthly fees on their credit cards.

Web retailers that signed deals with these companies to run these loyalty programs earned a total of $792 million. Small companies could see payments of around a million dollars and larger companies earned in the tens of millions of dollars.

Senate investigators launched their six-month inquiry by examining complaints from people who discovered mysterious charges on their credit card bill. For years, Web shoppers have complained that they were signed up to some Web loyalty program without their knowledge and were charged fees until they discovered the problem and complained. Some paid fees for years.

The government says the investigation shows that Webloyalty, Affinion, and Vertrue “trick” consumers into entering their e-mail address just before they complete purchases at sites such as Orbitz, Priceline.com, Buy.com, 1-800 Flowers, Continental Airlines, Fandango, and Classmates.com. A Web ad, which many consumers say appears to be from the retailer, offers them cash back or coupon if they key in their e-mail address.

Source: cnet News

Additionally the government’s report shows that the companies involved know full well that the majority of people signing up for the programs were unaware of the hidden costs to be charged on their credit cards. This is because the programs are designed from the ground up to be misleading.

The government investigation will continue into next year.

International Computer Hacker Pleads Guilty For Attacks On U.S. Retailers

AHN — Mon, 14 Sep 2009 17:30:25 +0000

An international computer hacker pleaded guilty on Friday in a Boston courtroom to multiple charges relating to hacking activity and credit card fraud. More than 40 million credit and debit card numbers were stolen from major U.S. retailers as a result of the hacking activity.

Albert Gonzalez, 28, of Miami, pleaded guilty to 19 counts of conspiracy, computer fraud, wire fraud, access device fraud and aggravated identity theft relating to hacks into numerous major U.S. retailers including TJX Companies, BJ’s Wholesale Club, OfficeMax, Boston Market, Barnes & Noble and Sports Authority. Gonzalez was indicted in August 2008 in the District of Massachusetts on charges related to these hacks.

Gonzalez also pleaded guilty to one count of conspiracy to commit wire fraud relating to hacks into the Dave & Buster’s restaurant chain.

Some of the luxuries Gonzalez accumulated during his tenure as a criminal that he now has to forfeit include $2.7 million dollars, multiple items of real estate and personal property, including a condo in Miami, a 2006 BMW 330i, a Tiffany diamond ring and Rolex watches. Included in the forfeited currency is more than $1 million in cash, which Gonzalez had buried in a container in his backyard.

“Consumers must be able to trust that the credit and debit cards they use everyday in thousands of stores around the world are safe from unlawful access,” says, Assistant Attorney General Lanny A. Breuer of the Criminal Division.

Computer hacking and identity theft pose serious risks to our commercial, personal and financial security. Technology and the global world we live in has forever changed the way we do business, virtually erasing geographic boundaries.

U.S. Secret Service Director Mark Sullivan says, “However, this case demonstrates that even in the cyber world, there is no such thing as anonymity.”

According to the court documents Gonzalez and his co-conspirators broke into retail credit card payment systems through a series of sophisticated techniques, including “wardriving” and installation of sniffer programs to capture credit and debit card numbers used at these retail stores.

Wardriving involves driving around in a car with a laptop computer looking for accessible wireless computer networks of retailers. Using these techniques, Gonzalez and his co-conspirators were able to steal more than 40 million credit and debit card numbers from retailers. Also according to the indictments, Gonzalez and his co-conspirators sold the numbers to others for their fraudulent use and engaged in ATM fraud by encoding the data on the magnetic stripes of blank cards and withdrawing tens of thousands of dollars at a time from ATMs.

Based on the terms of the Boston plea agreement, Gonzalez faces a minimum of 15 years and a maximum of 25 years in prison. Based on a New York plea agreement for crimes there, Gonzalez faces up to 20 years in prison, which the parties have agreed should run concurrently. He also faces numerous fines.

Gonzalez also pleaded guilty to one count of conspiracy to commit wire fraud relating to hacks into the Dave & Buster’s restaurant chain.

U.S. Secret Service Director Mark Sullivan says, “However, this case demonstrates that even in the cyber world, there is no such thing as anonymity.”

Fake ATM at Defcon … not the brightest idea

Steven Hodson — Mon, 03 Aug 2009 00:45:00 +0000

I realize there are stupid criminals out there after all we see them on half hour TV shows all the time I think this one has to rank up there as far as being a dumb idea.

Much like a robber trying to rob a bar where off-duty cops like to hang, the idea of someone putting a fake ATM machine meant to steal people’s information at this hotel where this year’s Defcon conference was held doesn’t show much in the way of smarts. That didn’t deter someone though as the conference goers found out when they noticed the machine that some said just didn’t look right.

As the conference was kicking off a few days ago, attendees noticed that at ATM placed in the Riviera Hotel, which plays host to the annual event, didn’t quite look right, according to a senior conference organizer who identified himself only as Priest. "They looked at the screen where there would normally be a camera," he said. "It was a little bit too dark, so someone shined a flashlight in there and there was a PC."

The ATM looked like a working system, but when people would put their cards in the machine, it would scan their card information and record the PIN numbers they entered. He didn’t know how long the ATM had been at the Riviera.

Conference organizers notified local law enforcement who hauled away the machine on "Thursday or Friday," said Priest, who said he works as a "civil servant" in his day job.

Source: Computer World :: Fake ATM doesn’t last long at hacker meet

The idiots may not have realized they were putting the machine into a hotel that would soon be the temporary home to 8,000 security professionals but given this is Las Vegas one would hope that it would have been found out in short notice.

Think twice about using credit cards at thrift or club stores

Steven Hodson — Wed, 01 Jul 2009 01:45:00 +0000

People like to think that only on the Internet does one need to worry about companies watching everything you do and using that information in some way against you. Well I hate to be the one to break the bad news to you but this isn’t the case as credit cards companies have more data on you than anything found on the web. They can track your purchases, types of things being purchased, when you made the purchases and where you made them all within seconds of you buying something.

Most people don’t get overly concerned about this type of data collection when it comes to credit cards, debit cards, air miles cards or store cards. The problem is that during times of financial hardship that data is possibly being used to make decisions about your credit card worthiness. The idea behind this kind of profiling is that when you buy used clothing at thrift stores or do your shopping at those club superstores the credit card companies see this as a possible indicator of financial distress. Distress that could lead to missed payments or defaults.

These indicators are used by the credit card companies to decide whether to decrease your your credit limit as well as whether to increase your interest rates. American Express has already admitted to doing this kind of profiling but says that it has stopped the practice. This kind of thing has led to a new credit card reform law that has a provision requiring federal regulators to investigate if credit card companies are using the collected data in this type of profiling, leading to increased rates or decreased limits.

Stephens says the database’s purchasing information can provide a pretty clear picture of credit card users. "What do they know about you? Depending on how extensively you use your credit card, they conceivably have a very clear, distinct picture of an individual. It’s not only your retail purchases, but your online purchases. It can really paint a very complete picture. The stores that you shop at can paint a picture. You also may use it at a doctor’s office if you pay for care with a credit card. Some people pay for their utilities with credit cards."

Source: Connie Prater – WalletPop :: What You Buy Affects Your Credit

As they say in the post – cash is really the only privacy protector when it comes to your buying or bill paying habits.

Credit card fraud factory on video

Steven Hodson — Mon, 05 Jan 2009 23:23:51 +0000

Ever wondered just how all those fraudulent credit cards are created and used? Well Detective Bob Watts of the Newport Beach Police Department will take you on a guided tour through the process. This is the operation that was run by Chris Aragon who was an associate of uber hacker Max Bulter who was profiled in this month’s Wired.

[hat tip to Threat Level]

4 Reasons why online shopping sucks

Steven Hodson — Mon, 01 Dec 2008 01:12:57 +0000

The end of the month is coming and I’ll have a little bit of money sitting in my PayPal account but it leaves me in a little bit of a quandary. Like, do I transfer some; or all of it, to my bank account so I can get that Christmas shopping down. If I leave some of it in my PayPal account then I am stuck dealing with the sometimes depressing online shopping experience.

It’s not always depressing; as buying digital goods is fairly simple and painless – at least it isn’t affected by one or more of my following suckage reasons. No – the real pain and agony comes when you head out to shop for non-digital type goodies. You know – those things like hardware, household stuff for the wife or those gaming consoles for the kids. The type of things that need to be paid for and then shipped.

In the spirit of online shopping and the holiday spirit here’s a list of the reasons why I think the whole experience really sucks sometimes.

1. Payment methods

This has to be the biggest bitch point I have with online shopping; but before you get your panties in a bunch let’s make a couple of things clear. Not everyone wants to buy digital goods. Not everyone in the world has a credit card. Not everyone in the world has a VISA debit card. Not everyone lives in the United States. So don’t even bother trying to get me going by bringing those points up in a comment.

There is nothing worse than finding just the right item that you want to buy only to find out that they only accept three major credit cards. What makes it even more maddening though is that you don’t find out until page 5 of their stupid ass payment form. Gee couldn’t you let me know that before you made me enter in all my personal information – guess not.

Then we have the famous VISA style bank debit cards or the virtual credit cards. Whoop-frikken-ee! First with the bank VISA debit cards – chances are if you don’t qualify for a VISA card you won’t for a VISA debit card. You might have a bank debit card but that won’t work. Then there is the fact that even if they accept a straight ordinary bank debit card it had better be one from the U.S. because I have yet to see anyone that accepts a Canadian bank debit card.

Then we have PayPal – but that is another whole separate point.

2. The Big Boys and wanting to pay with PayPal

The short of it is if you want to buy stuff from places like Amazon, the new Microsoft store (for that Xbox deal) or any of the really non-eBay retailers you are screwed unless you have a major credit card. Forget even thinking about paying with PayPal. It ain’t gonna happen.

That is one of the reasons that Amazon will never be an endpoint of online shopping for a lot of people. The other big reason comes later. I can understand to a point why considering that PayPal is owned by eBay that online retailers don’t accept it as a payment option; but it wasn’t always like that. Even before eBay PayPal has never been an option at Amazon and I’m sorry but that is just down right stupid. I can’t count the number of times that I have wanted to buy a book or other goods at Amazon but couldn’t because of this nonsense.

To me this is being exceptionally shortsighted and stupid

3. Geotarding what I can buy

Nothing pisses me off more than finding just the right item and entering all my payment information only to see – No shipping to outside of the U.S.

Screw you. I’m already going to get raped by any shipping costs as it is. If I’m willing to bend over a little further and pay outrageous shipping costs then damn well be willing to take my money and buy those goods.

I see this on Amazon all the time at any point you step beyond the bounds of book buying. If you want to buy that nice little trinket for the wife or maybe a a nice DVD player on sale – forget it if you live anywhere else but in the great United States.

In the Amazon example you can always head to your local geographical version (if there is one) but if that local Amazon site is anything like the Canadian one the pickings are pretty dismal. Where most people seem to make Amazon and other big names a regular stopping point I’m lucky if I remember Amazon even exists outside of any news that shows up about it.

4. Shipping outside of the U.S. – or how FedEx and UPS laugh all the way to the bank

I know everyone touts Amazon’s free shipping horn but here’s a hint. Not everyone buys from Amazon and not everyone lives in the U.S.

The moment there is a border to cross I can just visualize some FedEx or UPS executive eyeing up that new BMW or Mercedes purchase. In-country charges are bad enough but if I get something from the US I pray to all that is holy that it is getting shipped with GIFT splashed across the package. If it doesn’t then I suddenly am having to pay Custom Tariff Fees and then our lovely government gets in the act wanting their share and I have to pay taxes on what they think the item is worth. Suddenly that good deal just cost me an arm and a leg.

Even worse though in some ways is in-country shipping – especially when you are in the same time zone, the same province as where you are buying the goods from. Recently I bought a new mouse from TigerDirect in Canada – great service and I’m very happy with them – but when it came to figuring out how much I had to pay via PayPal I was suddenly faced with a $10.00 shipping fee. For a mouse .. a package that probably didn’t even weight a pound.

Then another time I priced out some RAM memory and again it was a great deal – except for the shipping. Again I was faced with a $10.00 shipping fee for something that fits inside an envelope. Please tell me how this makes sense.

That I think pretty well covers some of the ways that I think online shopping sucks. The things is that it doesn’t have to be this way. Retailers could stop being so myopic about how we can pay for those goods. Retailers like Amazon could easily support us paying by PayPal. In this day and age of the global village and global economy mentality we shouldn’t have to deal with geotarded products. As well we shouldn’t shafted the way we are for the shipping of goods that we buy; after all the more we buy the more that will need to be shipped (DUH!)

Do I think any of the above will change?

Not bloody likely.

Better BillShrink, an easy idea for a startup

Duncan Riley — Thu, 18 Sep 2008 22:53:17 +0000

New financial management site BillShrink has launched, promising to help users find better ways of managing their credit cards, backed with $1 million from Bessemer Venture Partners.

While the aesthetics are pleasing, Leslie Poston at Mashable isn’t hot on the service, and you can read her review here, but we thought we’d suggest another startup idea.

Introducing Better BillShrink.

(feel free to copy the idea, although if you turn it in to a startup, we want some equity ).

Here’s how it works

ZOMG I’ve got credit card debt. What do you recommended?

But the interwebs, how am I suppose to buy things online?

But I can’t afford to pay off my existing cards!

What about that shiny new gadget I want now but can’t afford?

Disclosure: this post does not equate to formal financial advice, nor am I licensed to give it. Consult with a financial specialist, psychiatrist, or Poker professional for better advice.

BillShrink