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Major payment card cloning and fraud ring broken in New York

21 November 2011

A major card cloning cybercriminal ring has reportedly been broken in New York, with 28 people arrested and charged with various offenses.

The ring is notable because it took a cradle-to-grave approach to the fraud, recruiting waiters in high-end restaurants to steal the card details of relatively well-heeled diners and then creating cloned cards, which it then distributed amongst its team to buy high-value items as quickly and efficiently as possible.

According to the Associated Press, the group had seven waiters on its payroll, who used skimming devices to log card credential data in a matter of seconds and then, after creating cloned cards, used them to “buy big-ticket items, including Rolex and Patek Phillippe watches, Hermes and Chanel handbags, Jimmy Choo shoes, vintage wine and even a Roy Lichtenstein lithograph of Marilyn Monroe, making purchases from Boston to Los Angeles to Palm Beach, Fla.”

The fraudsters knew what they were doing, Infosecurity notes, as the seven waiters were reportedly instructed to skim only those cards that were obviously owner by high rollers, including American Express US Gold and Black Centurion cards.

The ringleader of the gang was also shrew, as the AP newswire says he didn’t allow his fraudster team to make more than $35,000 on a single card, and would ditch the cards after three days usage.

The card skimming units – which some sources suggest originated from Eastern Europe – were just three inches long and half-and-inch wide, allowing the waiters to conceal them in their palm whilst holding the customer’s card.

The AP newswire quotes Jonathan Mintz, New York’s consumer affairs commissioner, as saying that wireless payment card terminals – which can be brought to diner’s tables - can help to reduce these types of frauds.

Infosecurity notes that since few US cards use the Chip-and-PIN system, and therefore require a signature, makes this task complicated, as adding a paper-based signature system to the terminals adds to the weight and battery usage.

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