Thursday, February 12, 2004

Mob scams 200 million in small charges, shades of Netfill

Officials Say Mob Stole $200 Million Using Phone Bills
Officials Say Mob Stole $200 Million Using Phone Bills
Published: February 11, 2004

Forget gambling, loan-sharking and labor racketeering. New York organized crime figures bilked millions of unsuspecting consumers out of more than $200 million over five years by piggybacking bogus charges on their telephone bills, federal authorities said yesterday.

The scheme, involving a network of companies stretching from Midtown Manhattan to Overland Park, Kan., marked what federal authorities believe was the first time organized crime figures have been charged with using the billing fraud known as 'cramming' to fill mob coffers.

The nationwide scheme was sophisticated, officials said, but the idea was simple: Callers responding to advertisements for free samples of services like psychic phone lines, telephone dating services and adult chat lines were unknowingly charged up to $40 a month on their phone bills for services they never requested and never used...

Small regular charges fraudulently placed in a hard-to-detect fashion across large numbers of victims. Shades of the NetFill scam of the late 90s, with which I had more than a passing acquaintance.

These scams work because the complexity and transaction volume of modern life exceeds the capacity of we mortals. They also work because the intermediaries typically don't suffer (in this case the phone companies, in related scams it's banks and credit card companies), so they're not strongly incented to implement costly security measures.

They'll only increase ...

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