Microchargers charged for chump change charges
The DOJ has launched a legal campaign against what it says are a network of fraudsters that thrive on extracting micropayment charges in order to avoid detection by banks
Law enforcement in the US are taking aim at a ring of companies accused of using microtransactions to covertly siphon money from victims' bank accounts.
The US Department of Justice said it had filed civil suit against to companies it believes have been making unauthorized charges to victim debit and credit cards in a years-long operation that had been flying under the radar of banks' fraud detection systems.
Authorities say that the two networks were each composed of multiple front companies in order to conceal their activity and avoid catching the attention of fraud detection measures.
In both cases, the fraud networks relied on microtransactions, charges so small that they would appear suspicious to banks or catch the attention of the victims when reviewing bank statements.
The DOJ explained that normally when fraudulent charges are detected, banks will issue a chargeback, essentially reversing the transaction and putting the money back into the victim's account.
"A chargeback is a transaction that is refused or reversed by an account holder’s bank," the Justice Department said in announcing the civil suits.
"Because a high chargeback rate can lead to account scrutiny or closure, using microtransactions to artificially reduce the chargeback rate masks the underlying fraud scheme."
What the accused fraudsters allegedly did was split those larger charges down into smaller amounts that neither the fraud detection software or the account owners themselves would spot.
This, it is said, significantly lowered the rate of chargebacks and allowed the attackers to extract millions of dollars in the long haul.
To further this scheme, it is said that the two networks disguised their shell companies as marketing agencies 0r payment processors.
In one case, the fraudsters are said by the DOJ to have teamed up with a group of tech support scammers to help extract money from its victims without their knowledge or permission.
The two accused groups, named as Altitude Processing Inc and CB Surety have both been hit with a request for a temporary restraining order that would bar them from performing any monetary transactions and appoint a receiver to prevent them from selling off assets to avoid repayment.
