Are You Prepared to Fight Back Against Credit Card Fraud?

Every small-business owner should be aware of counterfeit credit card fraud.

This is a growing crime, and there are individuals and organized rings victimizing large and small businesses around the country.

For example, the U.S. Justice Department announced on July 22 that two Chinese nationals were arrested on federal charges due to their role in a retail theft ring that used counterfeit credit cards to buy high-end electronics from Wal-Mart stores throughout the Los Angeles area. 

Renjie Huang, 51, of Alhambra, and Yong Xu, 25, of Monterey Park Calif., were named in a 10-count indictment returned by a federal grand jury on July 1 that charged them with conspiring to use and traffic in counterfeit devices and using counterfeit access devices. If convicted, they would face a statutory maximum sentence of 15 years in prison. 

The arrests were the result of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the U.S. Postal Inspection Service, and the U.S. Secret Service.

The Justice Department noted that earlier this year, federal agents arrested a third defendant in the case, 28-year-old Gong Xu, of Alhambra, Calif. (who is not related to Yong Xu). He pleaded guilty in April to unauthorized use of an access device and faces a maximum penalty of 10 years in federal prison.

The investigation revealed that the defendants used counterfeit credits cards produced in China, along with stolen credit card information, to purchase expensive electronic items from Wal-Mart stores throughout Southern California. The items included iPods, laptop computers, cameras, and Nintendo Gameboys. 

“We believe this theft ring is responsible for close to a half million dollars in financial losses,” said Claude Arnold, the special agent in charge for ICE HSI in Los Angeles. “These kinds of scams cause incalculable harm to both retailers and consumers. We need to send a message to those who perpetrate such rip offs that they will likewise pay a price.”

B. Bernard Ferguson, the inspector in charge for the Los Angeles Division of the U.S. Postal Inspection Service, stated: “Individuals who use the U.S. Mail to perpetuate their criminal enterprises, including victimization of the American retail and banking sectors, will be aggressively pursued by postal inspectors. We are committed to working with our law enforcement partners in these investigations.”

What can a small business do to prevent counterfeit credit card fraud?

Law enforcement and security professionals offer the below basic tips:

Always ask for other identification, like a driver’s license.

• If the signature on the credit card is smeared, there is a possibility that the signature was changed.
• When taking an order over the telephone, always ask for the card’s expiration date. If the caller does not have the expiration date, or offers an invalid one, that’s a clear sign the card is not legitimate.
• Be suspicious of a first-time shopper that orders large orders of items that must be shipped overnight.
• Be suspicious of a shopper who is acting odd or nervous.
• Call for authorization of the credit card, and note your suspicions to the call-center representative.