New York Gangs Diversify into Credit Card Fraud, Related Crimes

When I first started practicing criminal defense law, using violence might have been enough to qualify someone for membership in most criminal gangs. But these days, many gangs have discovered more sophisticated tools can have as much a place as mere raw mayhem in their plans. One prominent case in point: credit card fraud.

It’s a major business worldwide, and nowhere more so than in the U.S. Trade press estimates from the credit card and mobile payments industry say this country accounted for almost half of the $16 billion in global losses from credit card fraud (both because the U.S. is such a large target, and because the industry in America has been slower than some of its counterparts in other nations to adopt anti-fraud protections, such as chip-equipped cards).

The growing reach and depth of technology has also incentivized gangs to acquire the skills needed to profit from more systematic ways of generating ill-gotten gains from credit card transactions. There is a consistent and lucrative payoff from being able to exploit data network vulnerabilities and mine the internet for information useful for identity fraud, card counterfeiting, card skimming and a host of other ways to cash in on someone else’s creditworthiness.

Since New York City is a leading world financial center, it should not be surprising to find crimes associated with credit cards to be a major concern here. Younger gang members, having grown up with computer technology, are often better able than longer-term members to find opportunities and turn technology to criminal purposes.

Gangs also appear to have learned devices like payments cards can be harder for police to detect for moving illicit funds, and police report finding payment cards used in drug sales and money laundering. For much the same reason, supporters of overseas terrorist groups have attempted to use credit cards to transfer funds to them.

As credit and debit instruments displace cash, they are likely to be taken up by crime gangs, a trend the NYPD says is on the increase. In mid-December, for instance, 35 people linked to a Brooklyn gang were arrested on charges of credit card fraud. According to prosecutors, the gang ran up $100,000 or more in fraudulent credit card purchases after buying more than 750 credit card numbers from internet-based suppliers, then using embossing machines to make realistic-looking fake cards. Gang members made $1 charges at city parking meters to test if their bogus cards were working.

Similarly, last April dozens of members of a gang were arrested for a similar scheme using stolen card data from Barneys to make bogus credit cards in Brooklyn and Queens for repeated shopping trips for luxury goods that ran up over $400,000 in losses for Barneys and Saks Fifth Avenue.

Former New York City police commissioner William Bratton had noted that NYPD had 250 persons assigned to its financial crime unit, to reflect the growing size of fraud, identity theft and cybercrimes.

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