Operators identify telltale signs of potential credit card, cellular phone scams
He was a dream client—or so he seemed. Officials of a Lear jet leasing company who called Biff Durocher of Allstar Limousines in St. Petersburg, FL, said this VIP client would be flying into the area.
Additionally, Durocher was told to supply this person with one night’s limousine rental at the Lear jet company’s expense.
Suddenly, dollar signs flashed in Durocher’s eyes. He felt lucky He was relatively new to the business and suddenly getting such a great client.
“We supplied this man with limousines for about a week. After the first night, he was using a credit card to pay for the service. We had been getting approvals on the card, but not an imprint,” explains Durocher “He flew my wife, one of my drivers, and myself to Miami. He put us up in an expensive hotel and wined and dined us.”
As the pessimists in life say, “If it seems too good to be true, it probably is.” In this case, they were right. After the “dream client” disappeared, there was an unpaid Lear jet bill, another livery company in Miami that had been bilked out of $15,000, and Durocher’s company which was $5,000 poorer. The man was arrested and while out on probation, left town. “I think every operator gets scammed once. You learn after that,” Durocher adds.
This is just one of the ways operators across the country are cheated out of money. According to statistics collected by L&C, livery operators lose approximately $4 million to fraud every year. Some of the most common types of fraud include using fake or stolen credit card numbers or using a random company’s corporate account. New to the fraud scene is cellular phone cloning whereby thousands of dollars worth of unauthorized cellular calls are billed to unsuspecting phone owners.
GET YOUR APPROVALS
One of the most common types of fraud is that involving credit cards. According to Gregory Holms, spokesman for VISA U.S.A., the credit card industry loses more than $100 million to fraud each year. While this amount isn’t lost solely in the livery industry, a portion of it certainly is.
Cathy Cummings, director of public affairs for American Express, says the most common type of credit card fraud is from altered cards. “Operators should look for signs of alteration when accepting a card. Thieves are using heat to shrink the numbers down and change them. You should carefully examine the card and look for signs of ‘waffling’ or a distortion halo. The back of the card has a sticker with the account number on it. Check to see that it matches the number on the front of the card. If you have any doubts, call immediately,” she says.
According to Holms, “If you get an approval code and do everything properly, you will be covered. The losses relating to fraud are borne solely by the banks.” He also warns that a transaction is much riskier if you don’t actually see the card.
“VISA offers address verification as an added stop-gap measure. If you have any doubts about the individual presenting you with a credit card, you can call a 900 phone number and request a match with the credit card number and the card holder’s address. In the vast majority of cases, if it is a fraudulent card, the person won’t know the correct address. Also, I encourage operators to read the fine print on their contract and talk to banking personnel to make sure they fully understand the authorization policies,” he adds.
Cummings also suggests operators be alert for the following signs: “All American Express cards will have printed on them how long the card holder has been a member. For instance, if you have a very young person presenting you with a card that shows them as being a 20-year member, you should probably be suspicious. Also, if the person is going on an extravagant shopping spree, that is another sign. If a chauffeur picks up a passenger who is not in physical possession of the credit card, the company becomes liable in the event of a chargeback.”
One of the latest trends in credit card fraud is for swindlers to steal credit cards from the mail before the card holder receives it. This way, the person doesn’t report the card stolen because he doesn’t realize it has been. According to an article in Security Management, one representative from a credit card issuing company claims it is not uncommon for his company to have 1.4 million cards in the U.S. mail on any given day.
“A major factor influencing the opportunity for credit fraud is the sheer volume of cards in circulation. Worldwide, 1.5 billion credit cards generated more than seven billion transactions in 1991, of which three billion were transacted in the United States,” according to the article.
Further, statistical patterns monitored by the U.S. Postal Inspector’s Office show that “during the 1980s, the highest incidence of fraud was associated with counterfeiting and lost or stolen cards. Changes in these patterns indicate that non- receipt fraud is rapidly moving to the forefront as the fraud of preference. Between 1990 and 1991, nonreceipt thefts increased 800 percent,” states the article.
SET UP POLICIES
Durocher has learned his lesson where credit cards are concerned and has since instituted strict policies for his own company. He makes sure that any member of his staff who takes a reservation always gets a proper billing address. “We will now only take a credit card order over the phone if the person faxes us a copy of the front and back of both the credit card and his driver’s license. He must also fax us a letter, with his signature, authorizing the charge. The credit card company can still fight us, but this is the next best thing to an imprint—you can’t deny an imprint,” he explains.
Johnny Johnson of Carey/Huntington Limousine in Los Angeles, CA, is another operator who learned from experience. “Look for common names,” he suggests. “I was once scammed right after the Olympics were in Los Angeles by a woman claiming to be ‘Dr. Ueberroth.’ Also, a guy claiming his last name was ‘Castro’ scammed me. Thieves aren’t very original.”
Another telltale sign of a possible scammer, according to Johnson, is when someone calls for a pick up at a hotel or restaurant. If the person turns out to be a fraud, you have no way of tracing him.
Johnson suggests that if you get one of these calls, phone the hotel or restaurant to see if the person is either registered or has a reservation. “The man claiming to be Mr. Castro was picked up at a hotel. It turns out he had parked in the hotel lot and came out of the lobby, so it looked like he was staying there,” he says.
BE WARY OF NEW ACCOUNTS
Many smaller operators and those new to the industry are so excited when someone calls to set up a corporate account that they don’t do a background check. Often all they ask for is a credit card number taken over the phone. Since the livery industry is a service industry, many operators hesitate to ask probing financial questions in fear of offending the potential client.
All of this leads the industry into becoming easy prey to unscrupulous con artists. But small operators aren’t the only ones being taken advantage of. Carey International in Washington, DC, and some of its affiliates were recently ensnared in the web of one of these individuals. Carey affiliates Detroit, Chicago, Atlanta, and Los Angeles were cheated out of fares from a female impersonator claiming to be an actress on the soap opera “All My Children.” The man, Marc Hendley, reportedly called livery companies claiming to be anyone from a movie studio executive to a producer’s assistant or a secretary. “Hendley called Carey International posing as Wes Mayfield who was making reservations for Tricia Tucker, who he claimed was a big star (but was really Hendley). He wanted nothing but the best for her. The call was made during a weekend,” says Clarence Braasch of Carey of Chicago.
“‘Tricia’ was chauffeured to a club downtown where she became friends with the club’s female manager. The manager took ‘Tricia’ to her home and arranged hair styling and make up appointments for ‘her.’ When the manager became suspicious, she gave us a call asking about ‘Tricia.’ I looked into it and it turned out she was a phony I contacted Carey International and, after a little detective work, we found she had been in Detroit where her scam was cut short when a driver asked to see her credit card,” he continues.
Carey officials worked together with law enforcement to track down Hendley, who was finally arrested. “On his last trip here, Hendley chartered a jet from Las Vegas for $8,500. When he called Carey of Chicago, he was caught. When he was brought to court, the judge decided the biggest case—based on the amount of money lost— was in Las Vegas, so he sent Hendley back there. After posting $3,000 in bail, Hendley never showed up for his court appearance. Later, he was arrested in Detroit while on the way to an airport in a rented limousine. Where he is now, I don’t know,” adds Braasch.
This case exhibited many signs common to con jobs. The first was when the reservations were booked on a weekend. Another was when Carey reservationists were told to give ‘Tricia’ nothing but the best. Says Braasch, “You should be suspicious of any reservation that is made after hours, over the weekend, or on holidays—especially if it’s a situation where you are supposed to directly bill someone. After hours, you can’t verify the information. In this type of situation, it is important to get a phone number and call the person back. Once when I did this, the number happened to be to a phone booth.
“Another sign of a possible scam is when the person is very interested in going first class with a stretch limousine, champagne, the works. It’s your money they are spending so why not? Also, these types of people are very good at intimidating others. We are in a service industry and our people respond to demands for service.”
Don Dailey, president of Carey International, reiterates Braasch’s advice. “You should be most suspicious of people who call on weekends or after hours. Always check the credit card and double check the identity of the person. Have your chauffeur check the card in person at the pick up,” he says. Carey also has the client fax an authorization if someone is billing any international work.
Carey affiliates have the advantage of being alerted to multi-city crooks by the network’s “Scam Alert.” “If any one of our affiliates has a problem, it can call the central office and we will disseminate that information. The Scam Alerts go out every night with all of our other office communications. The affiliates can also call for information if they have a question,” adds Dailey
Because not all operators have the advantage of being hooked into a national alert system, Dailey offers the following advice: “Keep your ears open to the type of person who is calling. Some of the things you should be alert to are the time of day the person calls and the type of request. For instance, look out for people who request that a limousine pick them up in a high crime area or on a corner or those who claim to be an employee of a corporation and don’t have authorization to charge on that account.”
Dailey adds that Carey will never open a corporate account on off hours or without a thorough background check. “If someone must go right away, they need to use a valid credit card. Because of these safeguards, Carey experiences minimal loss to fraud,” he explains.
CLONING BECOMING A PROBLEM
While credit card fraud and scam artists have long plagued the livery industry, cellular phone crime is new to the scene. According to Mike Houghton, director of public affairs and communication for the Cellular Telecommunications Industry Association (CTIA), the cellular industry loses anywhere from $100 million to $300 million each year to fraud.
The majority of cellular phone fraud comes from access crimes. The two main types of access fraud are “tumbling ESN” and “cloning.” “Tumbling ESN crimes started appearing in the second half of 1990 and cloning started in 1991,” Houghton explains. What makes these crimes possible is that every time someone makes a cellular call, the phone automatically transmits the electronic serial number (ESN) of that phone and its corresponding phone number—and thieves have been able to use this to their advantage.
In tumbling ESN crimes, the perpetrator randomly or sequentially changes the ESN after every call. This constant alteration, or “tumbling,” confuses a cellular computer long enough to get a call in.
The current number one cellular crime right now is cloning and it is most prevalent in Los Angeles, Miami, and New York City, according to Houghton. With cloning, the bandits take a valid ESN/phone number combination and reprogram another cellular phone with these numbers. He can then use the re- programmed phone until the fraudulent calls are discovered.
“The industry uses an ESN reader that crooks have been able to pick up on the black market. They use this device to get the proper number combinations and then use computer software, developed by hackers, to reprogram the phones. Once your phone has been cloned, you need to change the ESN. The phone number should stay the same,” he says.
Mark Dymond, vice president and general manager of Music Express in Elmwood Park, NJ, estimates that for the past year he has seen five out of his 40 phones get cloned every month. “We wind up with an additional $2,500 to $25,000 in monthly phone bills because of cloning. These are credited in full. If not, cloning could put a company out of business. It is frustrating though because you have to go through the bill and tell the good calls from the bad,” he says.
According to Dymond, you can’t tell if you have been cloned until you see your monthly bill. “Our average cellular bill is between $300 an $400 each month. We have had one phone get billed for up to $4,000 in charge,” he adds.
7 TIPS TO AVOID CREDIT CARD FRAUD
- Always get an approval code.
- Check the credit card for signs of alterations, i.e. “waffing” or distortion halos.
- Read the fine print on your merchant agreement and talk to banking personnel to make sure you fully understand all authorization procedures.
- Get the client’s proper billing address.
- If taking a phone order, have the client fax a copy of the front and back of both the credit card and his driver’s license. Also have the client fax a letter with his signature authorizing the charge.
- Be alert to common or popular names.
- If a client calls for a pick up at a hotel or restaurant, call the establishment to see if he is registered or has a reservation.
To curtail cloning fraud, Dymond is working closely with the phone company. “We told them what our average monthly bill is and told them to call us if they see excessive usage so we can check it out. The phone company showed our mechanics how to swap ESNs and phone numbers. It only takes a few minutes. We can now put an ESN from one phone on another phone and keep the same phone numbers. This stops cloning until the new combination can be discovered,” he explains.
There are some telltale signs your phone has been cloned, according to Houghton. One sign is if you have a lot of hang ups. Often, the doner will give out your phone number to friends who are instructed to hang up if he doesn’t answer. Also, look for unusual calling patterns. For instance, if two separate calls were made at overlapping times. “Even though subscribers aren’t charged for the fraudulent calls, this is not a victim-less crime. It increases the cost of doing business. In the end, the good consumer gets abused. It’s like shoplifting,” he adds. To best avoid cellular fraud, CT1A offers the following advice:
- Lock the phone or remove the handset and cellular antenna whenever you leave the vehicle.
- Protect sensitive documents such as your subscriber agreement which lists the ESN.
- Immediately report a stolen phone to the cellular carrier.
- Do not leave the phone in an unattended car in a questionable area for an extended period of time.
- Look for unusual calling activity on your monthly bill.
- Report frequent receipt of wrong number calls or hang ups.
- Ask the cellular provider to eliminate overseas or North American toll dialing capabilities if you don’t intend on using them.
5 TIPS TO AVOID SCAN ARTISTS
- Be suspicious of afterhours bookings.
- If client is interested in only going “first class,” watch out-it may be your money he is spending.
- Always check the credit card and double check the person’s identity.
- Be alert to the type of request. Is if after hours? Does the person want a limousine to pick him up in a high-crime area or on a corner? Is he claiming to be an employee of a corporation without having authority to bill that company?
- Never authorize a corporate account without a thorough background check or during non-business hours.