LEOMINISTER, Mass. (03/24/06) -- Authorities discovered what they believe are the sources of the broadening breach of debit card data but were still trying to nail down individuals responsible for what has become the broadest debit card fraud in history. U.S. Secret Service agents met this week with representatives of nine area credit unions and banks that reported fraudulent transactions in recent weeks on customers' accounts.
The institutions, including Workers CU, I-C FCU, Leominster FCU, Digital FCU, and Metropolitan CU, as well as credit unions and banks throughout the country, have shut down and reissued as many as a million debit cards over the past three months in an effort to stop the fraud. But just this week authorities in Los Angeles reported new incidents of fraud on local accounts. Leominster Police Officer Scott Wolferseder, who is working with the Secret Service, said investigators have traced the source of the transactions to a site in Oakland, California, where the availability of funds on individual accounts is apparently tested, before an account is penetrated.
The thieves usually test the targeted account with a $1 debit to determine whether the account is active and has funds, before signaling accomplices, many of them overseas, who then use so-called white, or blank, debit cards with magnetic stripes preprogrammed with the targeted account information to withdraw cash from ATMs on those accounts. "Hours later, at various ATMs around the world you see the accounts being tapped," Wolferseder told The Credit Union Journal.
While the investigators have apparently located the California site where the accounts are being 'tested,' they have yet to find a physical location for the operation. The fraud has reached many of the biggest financial institutions, including Citibank, JP Morgan Chase, Wells Fargo, Bank of America, Wachovia, PNC and First National City Bank, , as well as The Golden 1 CU, State Employees CU (North Carolina), and Bethpage FCU, all of which have cancelled debit cards and reissued them over the past few months.
