Dom Perignon Scam - Who is Responsible  (8 May)

The obvious answer is the scammers, but there is far more to it than that simple answer.

 

Based on an e-mail I received this week, it appears that the Dom Perignon Scam is still alive and well in the UK. Readers may think that there is nothing particularly interesting about that, but in this case, there is. The scamming e-mail came from Jimmy Jatt, a scammer who was first brought to my attention three months ago. In the original con, he asked for a quote on the wine and said that he would arrange to have it picked up by courier. His latest con has a slight variation. He asks the retailer to include two-day shipping charges to New York. One interesting twist in this situation was that instead of offering multiple credit cards for the payments, the asked the retailer to put the sale through in two separate transactions; 50% of the cost to be processed in each transaction. He must be trying to avoid some sort of inbuilt software that red flags suspicious transactions. In the past, the scammers have used multiple cards, so it's possible that Jimmy is running out, or has run out of spare credit cards.

Here is the part that annoys the life out of me and needs to be exposed. The credit card was issued in November last year by Citibank in South Dakota in the United States. If these scammers are true to form and follow the pattern of others in the group, they would have had multiple credit cards issued to them at the same time, from the same issuing institution. For one minute, let's put aside the complete apathy, and inaction by any, and all possible law enforcement agencies that could be involved in stopping these guys, and concentrate on the credit card provider.

Firstly, I cannot understand how a credit card issuing authority could provide multiple credit cards (with different credit card numbers) to one individual at the same time. Surely this would ring alarm bells. What should be ringing even more alarm bells is that the situation occurred not just with just one individual at that particular time; cards were issued to numerous individuals in the same circumstances at the same time.

Secondly, this credit card is now been active for six months. As already mentioned, it was probably issued in a line with other credit cards at the same time. By now, the chances are most of the other credit cards have run the course of their unnatural life and been cancelled. At this point, surely the credit card provider would be aware of what's going on and should have cancelled this card already.

Clearly, Citibank doesn't give a fig. But then they have no reason to be concerned. This fraudulent activity is not costing them one cent. It's the retailers who provide the goods that are paying the piper and wearing the whole loss. When the person that to whom the credit card was theoretically issued complaints that they did not purchase the goods, the chargeback is worn by the retailer, even though they have an authorisation number and think that they are safe. They aren't, as many have found out to their horror, after having been burnt for thousands.

Under the terms and conditions which consumers, merchants and banks operate credit card facilities, Citibank has no legal obligation in this situation, but they certainly have a moral obligation to do everything they can to protect both their customers and the organisations who process their credit card transactions. Unfortunately, when it comes to banking, the words “moral” and “obligation” are mutually exclusive terms. In this case, I am pointing a big finger at the banks and saying that they are the ones who are responsible for this situation continuing. The institutions who are issuing cards without due care, and without sufficient systems in place to stop these frauds far sooner have a lot to answer for, but as no one except those who get burnt care, its unlikely the institutions will change.

All large financial institutions have a fraud department. It seems like the fraud department is only interested in investigating frauds in which the institution may be losing money. If these institutions cared one iota, they would be putting pressure on local and overseas police forces to get involved and stop these scams; frauds that are costing businesses, mainly small ones, millions and millions a year.

But then the financial institutions like Citibank don’t care, unless it’s costing them money.
 

 

Feel free to submit your comments!

From Mark Dignam: Thursday 8 May

 

I was going to write an article about the scams and the banks. To banks, there is only ONE type of risk. To themselves. As long as the risk is pushed to others, they don’t care, even if it ruins the financial system as it stands.

I won’t go on, but I’ve had a few run ins regarding a business partner I kicked out years ago. These days I just trade their shares.

 

Copyright © Ric Einstein 2008